Whole Foods

Running Head: WHOLE FOODS

Whole Foods

Rashed Sulaiman Burgess

Business 599 Strategic Management

Leonardo Serrano

Strayer University

April 25, 2012

Evolution of Whole Foods

Whole Foods was founded in the year 1980. It originated from a market in Austin, Texas that sold only natural and health foods. It evolved in the "world's largest retail chain of natural and organic foods supermarkets" (Thompson & Strickland & Gamble, Crafting & Executing Strategy, 2009). Whole foods have enjoyed rapid growth in stores, and revenues. In the year 2007, whole foods increased their profits to 6.6 billion dollars, and in 2008 they had an increased presence of their stores in other states, as well as Canada, and Great Britain as well. Their objectives were to "have at least 400 stores, and to increase their sales by 12 billion in fiscal year 2010" (Thompson & Strickland & Gamble, Crafting & Executing Strategy, 2009). The company's mission is "to promote the vitality and well being of all individuals by supplying the highest quality, most wholesome foods available. Since the purity of our food and the health of our bodies are directly related to the purity and health of our environment, our core mission is devoted to the promotion of organically grown foods, food safety concerns, and the sustainability of our entire ecosystems" (www.wholefoods.com/company). John Mackey is the founder, and his dream of Whole Foods being a market success, as well as rapid growth continues to come true. He takes pride in the products that are sold, the people he sells too, and the planet we live in.

Organic Retailers

According to the text, the year 2000 is beginning of the trend of organic products being sold in unconventional Super Markets. The popularity of the products has since increased throughout the different states. Different supermarkets started to bolster their selections of natural and organic products. The products covered all the foods groups; cheese, bread, fruits, spices, meats etc. Supermarkets like Wal-Mart Kroger, Publix, and Safeway started to create sections especially for organic foods. The sales of organic foods began to increase, because of consumer demand. Individuals started to eat healthier, because they started to be educated about being more health conscious. The people who took the most heed in this education are our senior citizens, and people who wanted to take better care of their health. My former supervisor Agrid Lipscomb use to always shop at Trader Joes, and bring in organic fruit, and vegetables. She was diagnosed with cancer, and the doctor told her that she had to stop eating foods with pesticides, and other chemicals. Agrid advised me to do the same, because it will make you feel better. This brings me to my next point of individuals being more attentive to the different impurities that are present in their foods and juices they consume. All age groups have started to jump on the healthy bandwagon, and have become more health-conscious. People have started to patronize organic foods and drinks, because they want to avoid the different pesticides, the freshness that comes along with their purchase, and for health and nutrition. Although these foods promote health, the problem is they can be expensive. In 2005, whole foods' survey showed that 75 percent of participants believed that the prices for these foods can be costly. I am a witness, to the prices being too high, and sometimes the food does not have longevity, and this is because of the different chemicals that are not present.

Competitive Forces

The Porter's five forces model is said to be "the most powerful and widely used tool for systematically diagnosing the principal competitive pressures in a market and assessing the strength" (Thompson & Strickland & Gamble, 2010). This model will allow Whole Foods to get a better understanding of the companies they are competing against, the pressures of new entrants, and the threat of rival substitutes, demand, and suppliers. Whole foods face fierce competition. They are ranked #24 compared to other companies such as Wal-mart, Kroger, Costco, and Sam's Club etc. The revenues have only reached 5.6 billions dollars, while the leader Wal-mart has 209 billion dollars. Whole Foods is still the leader in their market segment, because they offer more varieties of organic and natural foods. The introduction of these types of foods were presented by its competitors, but Whole Foods established a goal to make people everywhere aware of eating more healthy and taking better control of their health. When supermarkets wanted to create a small section of organic goods, Whole Foods wanted to create a whole store selling the same products. Whole Food's competitors included stores such as; Fresh Market, Trader Joes, Sunflower Farmer's Market, and Fresh and Easy Neighborhood markets. They wanted to expand by not only opening new stores, but purchasing small owner managed chains that had good personnel, and located in desirable markets. This strategy seemed impossible at first because all of the large stores with spaces of 5,000 - 20,000 were not available. The resolution to this problem was to change the strategy of Whole Foods, and to expand by opening 10 - 15 stores in the metropolitan area. This plan was effective, and was implemented between 2002 and 2006. In the year 2008 Whole Foods went from having 135 to 276 stores. Their success was also due to the purchase of Wild Oats Market, which was struggling and was their biggest competitor in natural and organic foods. Wild Oats had over 100 stores in 23 states.

Their closest rivals are stores like Fresh Market, which is headquartered in North Carolina. This store is a family owned chain of only 77 stores, and has operations in 17 states. The CEO Ray Berry did not create an extravagant ambiance for his store, instead all fixtures and displays were used, because he was using their family savings. Between the years of 1982 - 2000 he began to open stores in other locations, and his revenues began to increase at a 25.2 compound rate, and revenue steadily increased from 193 million in 2000 to 350 million in 2007. Berry's goals were to open 15 - 20 stores annually. The size of the stores averaged 20,000 square feet, and were