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Whole Foods Market, Inc. Essay Sample

Whole Foods Market, Inc. Pages
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Whole Foods Market, Inc. (WFM) lives through their motto of “Whole Food, Whole People, Whole Planet.” WFM opened their first store in Austin, Texas with 19 employees in 1980. Today, WFM has 311 stores in the US, Canada and the UK, and employs more than 72,700 employees. Whole Foods Market is one of the largest natural and organic food retailers in North America. WFM has grown to its size today mostly through mergers and acquisitions of such brands as Bread and Circus and Natures Heartland. In 2011 and 2012 Whole Foods Market was added to the Fortune 100 “Best Places to Work” list. Fortune Magazine (2012) STRENGTHS

Whole Foods is known for having a commitment to high quality organic products. WFM was the first nationwide grocer to have the “Certified Organics” seal. In their annual report, WFM advertised: “We have high standards and our goal is to sell the highest quality products we possibly can. We are buying agents for our customers and not the selling agents for the manufacturers.” Not only can they help you select the best food, they can also help you select natural, organic health and beauty items. WEAKNESSES

While the company proudly stands by its American grassroots by having 97% of its revenue generated domestically, there’s very little emphasis in reaching internationally. Furthermore, the company’s store fronts such as distribution centers, bake-houses and grocers have long-term lease obligations and are subject to its risks. With long-term leases, relocation and lease renewals become problematic. Some have dubbed the store “Whole Paycheck,” meaning you could spend your entire week’s wages shopping there. Cost and target customers aside, according to the company’s Form 10-K, they have enjoyed a 13% growth over FY 2011 totaling $4.1 Million in total gross profit but with nearly $3 Million in direct store expenses. Consequently, the company’s net profit totals at only $470,000. Such overheads and expenses can cast doubt about the stability but also many growth opportunities. OPPORTUNITIES

The ability for more farmers to become certified Organic is being made possible by the USDA making amendments to the 2002 Farm Act. Greene (2012) Congress initiated a national cost-share program to help defray the costs of certification incurred by organic crop and livestock producers and provided new research funding to determine desirable traits for organic commodities and identify marketing and policy constraints on the expansion of organic agriculture. The Food, Conservation and Energy Act of 2008 are also increasing the amount to fund many programs to offer financial assistance to organic farmers. THREATS

The formula for traditional supermarkets to stay in business, amidst competition from big boxes and more recently dollar stores, has become this: Combine providing an experience along with lower prices. One of the biggest threats to Whole Foods Market is the existing larger stores, such as Trader Joe’s who can match dollar for dollar in revenue but with a much narrower product selection and smaller storefronts. Alternatively, Trader Joe’s is a comparable competitor to WFM. Their Mission and Vision statement is “our mission is to bring our customers the best food and beverage values and the information to make informed buying decisions.

There are more than 2000 unique grocery items in our label, all at honest everyday low prices. We work hard at buying things right: Our buyers travel the world searching for new items and we work with a variety of suppliers who make interesting products for us, many of them exclusive to Trader Joe’s. All our private label products have their own “angle,” i.e., vegetarian, Kosher, organic or just plain decadent, and all have minimally processed ingredients.” This motto at trader Joe’s is written on both chalk at every store but on the hearts of every employee. The concept came about in 1967 at Pasadena, California with their first store that stands still today. To lighten the mood and create a unique atmosphere Hawaiian shirts became their trademark attire for every worker. STRENGTHS

Trader Joe stands by their mission statement as being a neighborhood store and a private label brand. The firm offers organic, locally sourced produce and ingredients, offering a wide variety of fresh items that are hard to find enabling the business to enjoy a distinctive competitive advantage. Additionally, through local sourcing Trader Joe’s continued involvement in local events through food donations, gift baskets and providing in store and online recipes and health guides. Apart from the many strengths of Trader Joe, the most significant is their commitment to quality at lower prices. Trader Joe has worked hard to manage the balance by sourcing directly from their suppliers. The firm states that “every penny we save is every penny our customer saves.”

Similarly to WFM, their employees are its most valuable resource they possess, and as such they are treated fairly and trained to provide the first class service to Trader Joe’s customers. Each customer is given personal attention and the company is very open to customer feedback. Delighted customers have displayed loyalty since to the brand name since 1967 (CNNMoney, 2010). Perhaps Trader Joe also keeps in line with their mission in being a private label consisting up to 80% or 4000 different products. To keep cost down, manufactures deliver directly to the distribution centers who then deliver just the right amount of supply daily to each store. The private label’s ingredients and benefits are clearly shown on each packaging. WEAKNESS

In keeping prices down, Trader Joe’s has continuously kept vendor relationships a secret to discourage competition. While the benefits and cost savings are passed directly to the customer many have questioned the organic and vegan standards of the products sourced. With the advent of the social media world, many larger chain grocers have rapidly embraced the digital frontier; Trader Joe’s still remains the neighborhood store. Despite being the neighborhood store, a family can’t do all their shopping there. The limited selections mostly appeal to urbanities, college kids and environmentally conscious buyers. The limited selection may seem a good idea in simplifying distribution but in reality introduces doubt in customers about making the right choice. The limited selection also places them in a very niche market with a very narrow expansion base. While the mantra of “less is more” seems logical, having a narrow selection doesn’t help consumers in making the confident decision. OPPORTUNITIES

As a niche market with a targeted audience and a specialized private label, opportunities for expansion can be significant. Trader Joe’s rigorous vendor selection process makes themselves a coveted account with manufacturers. Increase in online presence through social media and advertising can widely benefit their already glamour-like reputation to the likes of Hollywood star Jessica Alba who too runs an eco-friendly infant care product line. Remodeling and expanding the storefronts to accommodate more parking, more browsing space to allow a more comfortable shopping experience. Last but not least, Trader Joe’s owned by Germany’s Albrecht family who also operate Aldi Nord grocers. With the financial stability and backing of such an empire, pushing into new international markets wouldn’t be difficult. THREATS

As the price of gasoline gets continues to rise, many consumers are cooking at home and not driving to “pick-up”. The rise in wholesale prices of food is also a threat due to consumers having less money available for convenience items. In comparing the two grocers I find WFM involved with more significant environmental impact. WFM gives back to the community through various charities such as Whole Planet Foundation® and Whole Kids Foundation™. Whole Foods is also environmentally conscious through their Green Mission initiative giving back over 4.3 Billion megawatt hours of wind-based renewable energy and earning six EPA Green power awards from 2004 to 2010. These initiatives provide opportunities to developing, impoverished nations and in turn create products for its retail stores. By doing this, WFM connects the consumers domestically in the United States with people from around the world and bridges the social gap between them.

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