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Whole Foods Market Case Study

Essay by   •  July 19, 2011  •  Case Study  •  1,139 Words (5 Pages)  •  3,263 Views

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Whole Foods Market is a chain of grocery-type stores that carry both natural and organic foods (Hoffman, A., etal, 2007). They began with a single store and have grown to become the Nation's Leading Natural Food Chain (Hoffman, A., etal, 2007). Mergers, acquisitions, and several new store openings have assisted in the growth of Whole Foods Market. In 2007, the company consisted of 32,000 employees operating in 193 stores throughout the United States, Canada, and the United Kingdom (Hoffman, A., etal, 2007). The owner, John Mackey created aggressive growth targets for his business and had hoped to reach $12 Billion in revenue with 300+ stores by 2010 (Hoffman, A., etal, 2007). He wanted to accomplish this without sacrificing the quality or reputation of his business.

Synopsis of the Situation

Whole Foods Market vision involves a sustainable future for all children today and in the future to live in a world that values human creativity, diversity, and individual choice, while harnessing human and natural resources without destroying the integrity of our ecosystem and the human race (Hoffman, A., etal, 2007). They believe in engaging in ethical business practices, while providing a motivated and respectful work environment that offers minimally processed, high quality food for a sustainable future (Hoffman, A., etal, 2007) Whole Foods Market is quite different from grocery stores because they only carry natural and organic products that differ by geographic regions and are based on local farm specialties (Hoffman, A., etal, 2007).

Key Issues

When Whole Foods entered the marketplace, there was very little competition and the demand for natural and organic foods was just beginning to spark. Because of this, Whole Foods opened their stores in highly affluent cities where target markets resided, which allowed them to keep advertising costs down, while keeping sales costs up (Hoffman, A., etal, 2007). They focus on their quality and service as a means of differential instead of low prices or coupons. They leverage their charitable contributions and awareness they bring to the treatment of animals as ways in which to gain recognition in the community and throughout the market (Hoffman, A., etal, 2007).

Even though they've grown through acquisitions of companies like Wild Oats Food chain, Allegro Coffee Company, and Pigeon Cove Seafood, they also own several regional bake houses, four commissaries, have their own private label foods companies, and own and operate eight distribution centers (Hoffman, A., etal, 2007). Yet, they still purchase most of their products from regional and national suppliers. This allows Whole Foods to leverage their size, due to the quantity of purchases, in order to receive deep discounts from their vendors, while keeping favorable terms (Hoffman, A., etal, 2007).

Define the Problem

With a business like Whole Foods Market, the problems they could face lie in the quality and types of foods they sell, along with increased competition. Whole Foods' strict quality standards, coupled with potential scarce resources in the supply of organic and natural foods, could bring detriment to their business. Today's consumer is more health conscience and is becoming more economically savvy; while demanding lower prices and more convenience.

Alternative Solutions

A couple of suggestions for Whole Foods Market to be more competitive with their industry include offering coupons, weekly specials, and a rewards card (Hoffman, A., etal, 2007). They also need to consider increasing their marketing budget in order to advertise these offerings. Another suggestion would involve Whole Foods offering their private label foods to grocery store chains and wholesale competitors in order to extend their consumer market. This will reduce the costs of opening new locations, while gaining consumers in those areas they don't currently have stores. A final suggestion for Whole Foods would be to consider looking inside and outside of the U.S. to invest



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