Whole Food Markets Case

Topics: Organic food, Whole foods, Grocery store Pages: 7 (2003 words) Published: August 17, 2010
Case Analysis – Whole Foods Market
Comfy Shoes Don Meador, Mike Britton, Paige Phillips, Andrew Howery



Introduction: By 2006, Whole Foods Market had evolved into the “world’s largest retail chain of natural and organic foods supermarkets.” Their rapid growth and success is primarily due to being highly selective about what they sell, as well as being dedicated quality standards and core values. Whole Food’s stated mission statement was to “promote vitality and well-being for all individuals by offering the highest quality, least processed, most flavorful natural and naturally preserved foods available.” Situational Analysis a. Firm Analysis (Internal Strengths and Weaknesses) (Based on Appendix A). i. Current strategy and strategic position in industry: Whole Food’s strategy since 2002 has been to open its own large stores, 50,000 square feet and larger, rather than acquiring small chain stores ranging from 5,000- 20,000 square feet. The driving concept behind their merchandising strategy was to create and “inviting and interactive store atmosphere that turned shopping for food into a fun, pleasurable experience.” Whole Food’s wanted customers to think of the store as a “third place” outside of home and work, where they could relax as well as interact with others in a colorful environment.

Financials Analysis: After reading the case and reporting the financial numbers the profit margins from year 2005 have been decreasing each year. The costs of goods sold are on the rise over the past three years and debt over the past three years has risen dramatically to all time highs. Compared to the competitors Whole Foods Market has extremely low revenues and also low EPS. (www.hoovers.com) Assessment of Marketing: In 2005 sales were 1.3 million and rose to 1.7 million in 2007 showing for a increase in sales over the three year time period. As stated in the financial analysis the profit margins have been decreasing each year. According to yahoo financials the market capitalization has been on the rise. Assessment of Finance: Stock price according to yahoo financials is 33.69 but has drastically reduced since 2005. The P/E ratio in comparison is well above the industry average. The prices of whole foods are well above the industry average. Assessment of physical resources: The company’s stores some can be up to eight years of age which is fairly young for the grocery industry. These stores average about 30,000sq.ft. As of 2006, 113 of the company’s 180 stores were 30,000sq.ft. or larger. The stores only get newer as the company

looks to build new large stores in the larger metropolitan areas. Over the next five years the company will need to continue to match the competition with stores that fit what the consumer market is looking for at the current time. Assessment of human resources: The employees are very well trained, knowledgeable and experienced in the grocery industry products making for a better customer experience. The payroll, bonus and other benefits increased from 2004 to 2005 almost $26,000,000 but if well below the competitor’s payroll. Kroger is 571million in 2004 and dropped to 547million which shows one of two things there are more employees and possibly better pay for the workers. The management believed its team members were inspired by the company’s mission because it complemented their own views about the benefits of a natural and organic foods diet. In management’s view, the team members feel good about their job because they feel like that contributes to the welfare of society and to the company’s customers by selling clean and nutritious foods. ii. What are the key Strengths and Weaknesses? One of Whole Food’s strengths is their passion for food and high standards for quality products. They guaranteed 100 percent satisfaction on all items purchased. They have a competitive advantage when it comes to the size of their stores. Very few natural foods stores have stores larger than 20,000...
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