Whole Foods Market began as a small local supermarket for natural health foods but grew to 289 stores in the United States, Canada, and Great Britain. The company was built on the value of providing customers with the highest quality products, most flavorful naturally prepared fresh foods available, and market them in appealing store environments. The company developed a mission statement that went far beyond food services with the slogan “Whole Foods, Whole People, Whole Planet”. The strategy of the company was based on the CEOs, John Mackey, vision of known as an international brand synonymous with carrying the highest quality natural and organic foods available and being the best food retailer in each area they operated. The food service industry was beginning to change as customers began to search for high quality products instead of simply quantity. Several factors contributed to this change. Customers were becoming more health consciousness and understood that the food they consume is directly related to their level of health. Consumers were also becoming concerned about the safety of the food they consumed. They were afraid of the effects that pesticide residues, growth hormones, artificial ingredients, and other chemicals could have on the body. Concern for the environment also became a priority. Customers felt that organic farming had a positive effect on the environment. By buying organic, the customers were contributing to healthier soil and water conditions. This is where Whole Foods Market made its strategic moves.
Strategy making and executing is a five step process that a company uses to develop its strategy. The process is developing a vision, setting objectives, crafting a strategy, execution of the strategy, and monitoring performance and make corrective adjustments. Whole Foods had established their vision, “Whole Food, Whole People, Whole Planet”, set the objective of wanting to be the best, and was ready to craft the strategy. The strategy was based on growth, store location, product line, and pricing.
Whole foods growth strategy was focused on opening new stores and acquiring small, owner managed chains that had capable personnel and were located in desirable markets. They had difficulty finding potential stores because the stores were one store operations and below the desired size. Whole Foods missed numerous opportunities because of this desire. While a smaller store is not desirable, a small store could be opened as a specialty store and only carry a specific product instead of the one stop shop store. Opening a Whole Foods Meat or Produce store would be very appealing and give customers a taste of what a whole store could bring them. The store location strategy was focused on locations in upscale areas or urban metropolitan areas. Most stores were in high traffic shopping areas. This was a good strategy as the stores were convenient for the desired customers. Whole foods offered a product line between 20,000 and 50,000 items, depending on the size of the store, which included natural, organic, and gourmet food and nonfood items. This strategy aligned with the needs of the customers. They were able to provide the natural and organic products that the customers desired. The cost of growing, distributing, and marketing organic products was 10 to 40 percent higher than non-organic items. This made the pricing strategy difficult. Whole foods was even criticized by the media and referred to as “Whole Paycheck”. They believed that if the food was healthier for the customers, they would be willing to pay more. This could been seen as taking advantage of customers who simply wanted to be healthier.
Whole Foods strategy was in full motion and they were monitor their performance. In 2008, the economy took a downturn and reacted to offset the damage. They initiated cost containment measures related to cost of goods sold, direct store expense, and general and administrative expenses. The company want back and reevaluated there strategies and made revisions to the pricing, location and growth strategies.
Whole Foods Market largest competitors are Fresh Market and Trader Joe’s. Fresh Market operates in 18 states in the Southeast, Midwest, Mid-Atlantic, and Northeast. They marketed themselves by superlative services, attractive fresh produces displays, daily product sampling, and upscale grocery boutique. Each department always had an employ in the area to help customers as needed. Trader Joe’s is a specialty supermarket chain that operated in 25 states, with most stores in California. They offered different prices and products by region and state. Also, they offered no weekly specials, cents off coupons, or promotional discount. They offered customers upscale variety of baked goods, organic foods, fresh fruits and vegetables, imported and domestic cheeses, gourmet candies, and other exotic items the company buyers had come upon. Whole Foods Competed with their competition with their merchandising strategy, focusing on marketing and customer service, and purchasing and distribution strategies. Each store was customized to the building and the store’s target customers. They wanted to make shopping for groceries a fun and pleasurable experience rather than just buying groceries. Whole foods kept pricing down by spending less on advertising and marketing. They relied on word of mouth and email newsletters. This showed their commitment to “Whole Planet” by no wasting paper to publish weekly advertisements that would only save customers cents. Employees were renamed to team members and were given the autonomy to exert their best efforts on customer service. Whole Foods Market offered high quality foods and made every effort to keep the costs low. They empowered the employees and happy employees provided top quality customer service.