Capstone Presentation Company Background v Founders John Mackey

Capstone Presentation

Company Background v Founders: John Mackey and Renee Lawson Hardy and Greg Weller and Mark Skiles v 1980 Safer Way Natural Foods and Clarksville Natural Grocery merged creating Whole Foods Market v Merger established blue ocean and now Whole foods is the iconic brand for natural foods and practices v Grown to over 340 branches in the US, Canada, and the UK and is now a $11. 7 B company

Mission Statement v The motto highlights their mission: v Whole foods: We obtain our products locally and from all over the world, often from small, uniquely dedicated food artisans. v Whole people: We recruit the best people we can to become part of our team. We empower them to make their own decisions, creating a respectful workplace where people are treated fairly and are highly motivated to succeed. v Whole Planet: We recognize the connection between our lives, our communities and the environment

Core Values v Selling the highest quality natural and organic products available v Satisfying and delighting our customers v Supporting Team Member happiness and excellence v Creating wealth through profits and growth v Caring about our communities and our environment v Creating ongoing win-win partnerships with our suppliers v Promoting the health of our stakeholders through healthy eating education

Competitive Strategy Analysis: Revenues v 2008 v $7, 954 million v 2009 v $8. 032 million v 2010 v $9, 006 million v 2011 v $10, 108 million v 2012 v $11, 699 million

Competitive Strategy Analysis: Product Differentiation v Price Premium v High Quality v Harris Interactive Study v 82% said prices impacted grocery shopping v 72% will continue to buy natural and organic foods

Corporate Strategy Analysis: Pricing Strategy v Revamped v Value Offerings v Expanding Market Base with Lower Prices v v The Whole Deal Virtual Value Tour Price Promotions Discounts v Expansion

Corporate Strategy Analysis: Quality v High Quality v Strict Quality Standards v Foods free of artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats v Foods that are fresh wholesome, and safe to eat v Seafood v Highest farmed seafood standards in the industry v First to offer Marine Stewardship Council certified seafood v Meat and Animal Welfare v 5 -Step™ Animal Welfare Rating Standards

Financial v Whole Foods v 4% v Kroger’s v 1. 5%

SWOT Analysis v Strengths v Market Leader v Growth v Quality and Store Customization v No. 19 on Fortune’s World’s Most Admired Companies list v Weaknesses v v Concentrated in US Relative Slow Growth Pricey Perception Limited number of suppliers v Opportunities v Expansion v Consumer Health Trends v Increasing number of US organic farmers v Threats v Supermarkets introducing organic products v Consumers downgrading v Increasing food prices and inflation

Porter’s Five Forces v Potential Entrants v Low v Suppliers v Medium v Buyers v High v Industry Competitors v Medium v Substitutes v Medium

Whole Foods’ Strategy: The Whole Foods Experience v. Case Study v Shopped at least twice a month v Toronto v WFM Customer v Affluent v Educated v White v Income v Varied, but generally much higher than the urban average v. Customer Values v Environmental Sustainability v Local or organic food v Labor Justice v Fair Trade v Community Building v Shopping at a local market to strengthen community relationships

First Visit Experience v I was amazed. I loved it at first sight. They say, can you fall in love at first sight? Yeah, you can! v The pleasures and the special role in their daily routines of the WFM shopping experience v “Outing”, “Vacation”, or “A retreat from the mundane world of work and family responsibility”

10 Xers v. What it is not v Is not the Fastest companies v Not the ones looking for the turbulent markets v Not the most innovative v The most radical changes v. What they are v The ones that know when to be fast and when to be slow. v They find what works and why v The stay consistent as possible to great as stable environment to grow

The Blue Ocean v Didn’t compete with the big and established v They expanded the boarders of the market v They gleaned a new industry from the old one

Fire Bullets then Cannonballs v Why build new stores in new locations when somebody else has done it for you? v Whole Foods acquired its main competitor v They have an established customer base v They know the local market and community

Whole Foods Market’s Key Issues v. Three of their most obvious key issues in the media in 2013 consist of the following: v v v The consumer’s want for Non-GMO labeled products on all products that contain do not contain genetically modified organisms Whole Foods trying to expand into smaller areas with lower income populations to increase consumer base and have a larger number of store locations CEO John Mackey’s strong, radical, libertarian views and push for more “Conscious Capitalism” which could be hurtful to the company

Options for Non-GMO labeling v Whole Foods has the option to either commit to labeling all of their Non-GMO products, which they have stated will take up to 5 years to complete with much research and investment costs, to provide customer satisfaction. v Whole Foods has the option to opt out of labeling all their Non-GMO products in order to be able to spend more money on new store locations and not have to deal with the disparagements from those who oppose the movement.

Options for Store Expansion: Goal 1, 000 in US v Whole Foods has the option to continue to expand into smaller and lower income areas in order to reach their goals of eventually having 1, 000 stores in the U. S. v Whole Foods has the option to only locate their stores in their traditional wealthy, large income areas, which is where their business seems to thrive most. This will better ensure guaranteed success in new store locations. There could be a chance that this option may not provide the company with being able to have 1, 000 stores in the United States.

Options for CEO John Mackey’s Public Behavior v John Mackey can continue to be outspoken on his views of politics and business that will most likely ensure the business of people who believe in the same views as he does. v John Mackey can make the choice to become more reserved on publically speaking about his political views, which may ensure to keep more of his customers happy and not cause consumers with different views to protest or boycott Whole Foods.

Whole Foods Market’s pledge to consumers “When Whole Foods Market fails to measure up to its stated Vision, as it inevitably will at times, we should not despair. Rather let us take up the challenge together to bring our reality closer to our vision. ”

Industry Analysis: Business and Economic Characteristics v Health conscious individuals v Increasing popularity worldwide v Rapidly growing industry v Creation of Blue Ocean v Competitor inspiration v Supply strain

Industry Changes v Consumer demand increase v Supply shortage v Government involvement v WFM remaining profitable v Innovative company v Strategic adaptations

Competitive Forces v “Rival digestion” v Acquiring various companies v Increasing market share v Relationship maintenance v Grape supplier in Chile v Strategy innovation v On the path to 10 X

Strong Competitors v Traditional Grocers v Walmart v Low prices v Similar products v Kroger’s v High quality products v Competitive prices

Weak Competitors v Organic/natural grocers v Sprouts Farmer’s Market v Privately owned v Not a lot of expansion v Natural Grocer’s v Recently publically traded v Bland atmosphere v Regardless of competitive prices and quality

Future Competitive Moves? v Build brand image v Focus more on core competencies v Increase advertising v Consider Endorsements v Extend relationships v Expand into more countries

Keys to Competitive Success v Innovation v Core Competencies v Supplier Relationships v Expansion

Further Industry Analysis v Highly volatile and increasingly competitive market v Many new entrants into the industry v Volatile prices in costs of food v Whole Foods is not a cost leader v Key factors v Strong growth strategy v Commitment to quality of goods

Driving Forces for Change v New Paradigm for customers in America v New entrants into the marketplace v Labeling laws and regulations v Number of new entrants into the market v Genetically modified products v Number of customers v Customers seeking diet foods v New value on eating healthier v Additional labeling and regulations v New FDA regulations and labeling for GMOs v Foreign markets and expansion v Need for international presence

Competition Issues v Lack of economies of scale v Need for expansion in the UK and Canada v Need for reduction in store space v Walmart and giants v Global supply chains v Competitive advantage

Ambition of Whole Foods v Push for differentiation and value v Quality over cost v Reduction in stores that it is expanding in to v Growth won’t save the company v Use of lower ranged product line 365 organic

Questions?