Whole Foods Memo free essay sample

In conclusion, a recommendation for Whole Foods Markets, based on the analysis, will be given. Internal Analysis Fundamentals and Core Values of Whole Foods Markets The cornerstone of Whole Food’s strategy is to carry the highest quality, lowest processed-foods, and the most flavorful and natural preserved foods available. Whole Foods deepest purpose is to help support the health, well being, and healing of people (customers, the Whole Foods team, and businesses) and the planet. John Mackey, cofounder and CEO of Whole Foods, attributes the rapid growth and success of Whole Foods to developing and maintaining a uniquely mission-driven company; a company that is highly selective about what is sold, that remains dedicated to its core values and high quality standards, and is committed to sustainable agriculture. Whole Foods wanted to be the international brand for natural and organic foods and be the best food retailer in every community in which Whole Foods Markets were located. We will write a custom essay sample on Whole Foods Memo or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The chief elements of Whole Foods strategy are as follows: * Selling the highest quality products. Whole Foods Markets featured 30,000 natural, organic, and gourmet food products and non-food items. In 2007, Whole Foods was the world’s biggest seller of organic produce (comprising 67% of Whole Foods total sales, compared to the 40-50% of sales in other supermarket chains). High quality products included fresh perishables, baked goods, meats, and seafood, which differentiated Whole Foods from other supermarkets and attracted a broader customer base. To uphold a 100% guaranteed satisfaction to Whole Foods customers, Whole Foods had stringent product quality standards and customer commitments: Carefully evaluate each and every product sold. * Feature foods that are free of artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats. * Passionate about great tasting food and the pleasure of sharing it with others. * Commitment to foods that are fresh, wholesome and safe to eat. * Seek out and promote organically grown foods. * Provide food and nutritional produ cts that support health and well being. * Satisfying and delighting customers. Whole Foods Markets places a strong emphasis on satisfying and maintaining a commitment to the customer. As part of its merchandising strategy, Whole Foods wanted to create an inviting and interactive store atmosphere for a fun and pleasurable shopping experience. Whole Foods wanted its customers to view Whole Foods as a â€Å"third place,† third to home and the office. A few Whole Foods stores even offered valet parking, home delivery, and massages! To maintain communication with the customers, Whole Foods stores feature â€Å"take action† centers, where customers could leave feedback and comments. Whole Foods wanted to turn highly satisfied customers into advocates for Whole Foods Markets. Customers could get personal attention in each store department and team members of Whole Foods were knowledgeable and enthusiastic with customers. * Team member happiness and excellence. Whole Foods Markets was founded because its cofounders believed that the natural foods industry was ready for the supermarket format. When the first store opened in 1980, it contained a staff of only 19 people. With this immediate success, the company expanded to 276 stores in 38 states, with teams of 85-600 members per store, and a total of 54,000 by 2008! Whole Foods had a team approach towards its store operations. Having happy employees that helped create happy customers advanced the long-term success of Whole Foods Markets. The team approach promoted strong corporate culture and a work environment where team members could flourish, build a career, and reach their highest potential. Team members are motivated and inspired by Whole Foods’ strategic vision. The process for bringing in a new team member was thorough and the whole team at a store is involved. Team leaders at each store receive a salary and a possible bonus based on EVA (Economic Value Added), a system Whole Foods used to measure performance. In 2004, 86% of employees said they enjoyed their job and 82% felt empowered to do their best work at Whole Foods Markets. Whole Foods Markets offered gain-sharing programs to reward team members according to the store’s contribution to Whole Foods operating profit (additional 5-7% of team members wages). Whole Foods encouraged stock ownership through three programs: A team member stock option plan (based on job performance and length of time employed at Whole Foods), a team member stock purchase plan (based on purchasing stock at 95% of market price), and a team member 401 (k) plan. To maintain high customer service all team members are continuously evaluated and take place in competitions against other Whole Foods Markets in that region. In 2007, around 750 team members were on the EVA-based incentive compensation program. EVA calculations were used to measure profitability and encouraged and motivated team members to succeed. * Creating wealth through profits and growth. As the leader of natural and organic foods in the United States, the management and growth objectives for Whole Foods Markets was to have 400 stores and sales of $12 billion annually by 2010. By 2008 Whole Foods Markets consisted of 276 stores in the United States, Canada, and Great Britain. In 2003 Whole Foods Markets became the first national â€Å"certified organic† grocer in the United States and its organic sales were $17 billion in 2006, up 22% from 2005. In 2000 more organic foods were sold in US supermarkets than in natural food stores. Whole Foods struggled to find suppliers to supply all their stores. Whole Foods Markets looked to exceed because consumer demand was growing 20% annually and consumer enthusiasm allowed retailers to have high profit margins. Once Whole Foods became public in 1992 its growth strategy was to expand by opening new stores and acquiring smaller, owner-managed chains. Between 2002-2006, Whole Foods opened 10-15 bigger stores in metropolitan areas. Acquiring Wild Oats natural supermarkets was a big step for Whole Foods and allowed Whole Foods to enter 15 new metro areas and 5 new states. John Mackey believed that the addition would give additional bargaining power, boost utilization of the company’s facilities, and allow expenses to be reduced. (The Wild Oats acquisition will be discussed in further detail later as part of Whole Foods strategy analysis. With the increased costs of growing and marketing natural and organic products (25-75% more than normal foods), prices for natural and organic foods were higher. Whole Foods emphasized this increased price through its strategy of selling premium products at premium prices. Whole Foods was profitable every year except for 2000, in which it had a net loss o f $8. 5 million. It’s net income increased at a compound average rate of 17. 6% yearly between 2003-2007, and reached $182. 7 million in 2007. (A deeper analysis of Whole Foods financial strategy will be discussed later. ) Caring about communities and the environment. As part of Whole Foods motto, Whole Foods emphasized sustainable agriculture and helping the planet. Whole Foods strived to demonstrate social conscience and community citizenship by donating 5% of its after tax profits to non-profit or educational organizations. Whole Foods Green Mission Task Force promoted environmentally safe practices, including Whole Foods switch to biodiesel fuel for its fleet of vehicles. Whole Foods used renewable energy credits to offset its electricity use and in 2005 created a non-profit Animal foundation and a non-profit Whole Planet foundation. Whole Foods participated in the Whole Trade program and the Local Producer Loan Program. As part of being involved with the community and current issues, Whole Foods publicized its position statements on current issues to the public. Strategies of Whole Foods Markets As discussed, the foundations of Whole Foods Markets are built on high quality, customer satisfaction, employee satisfaction, and community as well as environmental consciousness. Their strategies to maintain these underlying foundations will be discussed and analyzed in the following. * Differentiation strategy. Whole Foods Markets thrive on selling only the highest quality, freshest, and healthiest foods available so that the health and well being of people can be increased and maintained. Whole Foods strategy for doing so is to acquire high quality products from local, national, and international suppliers and to provide the appropriate merchandising mixes and concepts. Although these products must be sold at higher prices because their costs are higher, the value of purchasing these products has a deeper importance and Whole Foods actively emphasizes these reasons. Whole Foods offers healthy recipes and guides to healthy lives in all their stores. Only 0. 5% of revenues are used on advertising (much lower than normal supermarkets), but it is done efficiently and towards the directed audiences. Once â€Å"organic† gained a consistent meaning and was a selling point, the differences in Whole Foods products were clear. The higher nutritional value and gain from natural and organic foods was becoming an increasing trend and Whole Foods had the right mixture and selection to offer. Factors that affected this upward growing trend of natural and organic products included healthier eating patterns, higher concerns about food purity and safety, increasing health trends among many groups, and the positive environmental factors that organics had. In a 2005 Whole Foods survey, 65% of consumers had tried organic foods (an 11% increase from 2004), 27% had consumed more organics than the previous year, and 10% consumed organics several times a week (compared to 7% in 2004). The products Whole Foods offered that contributed towards its high differentiation success from normal supermarkets consisted of the following: (% refer to the categories of organic foods and beverages purchased most frequently by those participating in the survey: * Fresh fruits and vegetables (73%) * Nondairy drinks (32%) * Breads and baked goods (32%) * Dairy products (24. 6%) * Soups and Pastas (22. 2%) * Meats (22. 2%) * Snacks (22. 1%) * Frozen foods (16. 6%) * Ready to eat meals (12. 2%) The higher prices of organic and natural products were the primary barrier for most consumers.