Whole Foods Market's Growth Strategies and Future Prospects


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Case Details:

Case Code : BSTR244
Case Length : 22 Pages
Period : 1978-2006
Pub Date : 2007
Teaching Note : Available
Organization : Whole Foods Market
Industry : Retail
Themes: Growth Strategy
Countries : The US

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

The Whole Paycheck?

One of the biggest criticisms against WFM was that the company's high profitability was a result of the premium prices it charged. As WFM charged a premium on most of its products, detractors labeled the company as 'The Whole Paycheck' or as 'Wholesome healthy for the Wholesome wealthy' (Refer to Exhibit VII for a comparison of prices between WFM and some of its competitors).

WFM was also criticized on the grounds that it spent a lot on maintaining store ambience, and transferred the costs to the customers. For instance, the rent for WFM's store at the Time Warner Center was reported to be approximately $450 per sq ft, which was quite high...

Emulating Whole Foods

Inspired by WFM's success, several mainstream retailers had announced plans to include more natural and organic foods in their product lines. Several retailers were also redoing their stores to try and create an ambience similar to WFM.

In mid-2006, Wal-Mart Stores Inc. (Wal-Mart), the largest retailer in the world with a reputation for low prices, announced that it would increase the range of organic foods in its stores...

Outlook

Notwithstanding Mackey's positive prognosis, analysts said that WFM was not without its share of troubles. Mackey had announced that he expected WFM to become a $10 billion company by 2010, but analysts questioned whether it could grow to that size by maintaining the same business model it had followed since its inception.

The impact of the problems facing WFM seemed to have become manifest when the company announced its fourth quarter results for the quarter ended September 2006, in late 2006...

Exhibits

Exhibit I: A Note on Organic Food
Exhibit II: Acquisitions and Subsidiaries of WFM
Exhibit III: Annual Income Statement
Exhibit IV: Whole Foods Market - Regions
Exhibit V: A Snapshot of WFM and Some of its Competitors
Exhibit VI: Whole Foods - Whole People - Whole Planet
Exhibit VII: WFM and its Competitors - A Comparison of the Prices of Some Products
Exhibit VIII: Natural Food Retailers and Traditional Grocers - A Comparison


 

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