Soumya Kethu, Yijie Qiu, Eugene Wong, Tianyi Lu,Edmund Chow

WHOLE FOODS

• Company Background

• Marketing Problem • Market Situation • Product Situation • Competitive Situation • Distribution Situation • Microenvironment

Situation• Initial Research • Proposed Solution

Company Background • Founded in 1980 by John Mackey and Renee Lawson Hardy • First store was created in Austin, TX with 19 staffs • Expanded through acquisition – Now 373 stores in U.S. and U.K. • 8th largest public food and drug retailer in the U.S. and #232 on Fortune 500 • 17 companies under the parent company Whole Foods Market including:

• Wild Oats • Fresh & Wild • Nature’s Heartland • Fresh Fields• Wellspring Grocery

Whole Foods Motto

Marketing Problem: Whole foods seems to have developed an image of being higher-end and expensive therefore limiting its consumer base. Whole Foods needs to re-brand itself in order to increase market penetration as a result of increased competition within the organic food market .

Market Situation

• Increase in competition in the organic food market. • Customers are finding alternatives at their local

neighborhood markets and mainstream supermarkets. • With numerous options, customers are looking for fresh,

healthy produce at cheaper prices. • First Quarter 2014 earnings increased by 10% to 4.6

billion but comp sales growth decreased to 5.6%.

Product Situation •Whole Foods offer a broad and differentiated selection of high-quality natural and organic products with a strong emphasis on perishable foods. • Product selection includes: • Produce and floral, grocery• Meat, Seafood • Bakery, Cheese • Prepared foods, catering• Drinks, Nutritional supplements, vitamins, • Body care, household products• Lifestyle products including books, pet products• Exclusive Brands and 365 Everyday Value Brands

Whole Food stores carry on average approximately 21,000 SKUs (Stock Keeping Units). Approximately 30% of sales, outside of prepared foods and bakery, were organic and had a contribution margin of approximately 5% in the fiscal year of 2013.

2013Perishables: Prepared Foods and bakery

19%

Other Perishables 47%Total perishables 66%Non-perishables 34%Total Sales 100%

Figure 1. showing annual percentage sales by product category

Figure 1.2 showing Net Sales (in Billions)

Competitive Situation

Whole Foods

Trader Joes

Safeway

Kroger

0 20 40 60 80 100 120

Whole Foods Competitors - Revenue (in billions)

Whole Foods

Trader Joes

Safeway

Kroger

0500 100

0150

0200

0250

0300

0

Whole Foods Competitors- Number of locations

Number of locations

Trader Joes • Products:

• Private Label Staple Foods, organic foods, specialty foods

• Positioning: • “Give customers the best food

and beverage values that they can find anywhere and provide them with the information required to make informed buying decisions”

• Marketing Strategy: • Limited stock with specialty

products at low prices

Whole Foods • Products:

• 365 Everyday Value, Whole Foods Exclusive, organic foods, specialty foods

• Positioning: • “Whole food, Whole people, “Whole

Planet” • Help support the health and well

being of people, organizations and planet

• Marketing Strategy: • Take spotlight off of costs and focus

on customers’ health and state of the world as a whole

Safeway Inc• Products:

• Supermarket, grocery, pharmacy, fuel

• Positioning: • Offer customers superior quality

products, a unique shopping experience, and customer focused service while generating long-term profits for shareholders

• Marketing Strategy: • Promote personalization and

mobility for its customers through “Just for You” program

Krogers• Products:

• Convenience Store, Specialty super market

• Positioning: • Be a leader in the merchandising

and food industry by enforcing 6 values: honesty, integrity, respect for others, diversity, safety, inclusion

• Marketing Strategy: • Customer 1st Strategy – provide

customers with a shopping experience that will make them want to return. The key area of the strategy is meeting expectations for quality and safety

Macroeconomic Situation• Rising cost of living

-healthcare-unemployment-inflation• Gasoline costs and fuel costs• Stagnant recovery of the US economy

Distribution Situation

Distribution Situation (cont.)• First store in Austin, TX • Currently 365 stores in U.S., Canada, and U.K. • Long term, CEO sees about 1200 locations • Store layout the key focus in on being comfortable and attractive • Expanded mostly through acquisition and creating Everyday Value

Brand • Expanding caused self-cannibalization of sales - the new stores

opening seemed to eat up sales from the older stores. • In terms of distribution channels, Whole Foods gets a majority of

their produce from local farms located across the U.S.• In terms of the retail experience, consumers can purchase

groceries in store as well as ordering online.

Initial Research Results

29%

54%

17%

How would you rate the prices at Whole Foods compared to other grocery chains ?

1 - signficantly cheaper

2 - slightly cheaper

3 - about the same

4 - pricier

5 - too pricy to be considered

Describe Whole Foods in 3 Words

43%

20%

16%

12%

8%

What would you pay a premium for?

locally grown produce organic produce varieties from other coun-tries prepared food (salads, sandwiches, etc.)Specialty Foods (exclusive products not available in other stores

Proposed Solutions • Stock as much local produce as possible rather than importing• Reduce COGS by minimizing transport costs and import

tariff • “Local” as a selling point

• Increase sampling in stores • Promote sales of specialty products and adds value to the

shopping experience • Emphasize quality, variety, and service in PR

• Costumers perceive Whole Foods’ value as worth the markup