Strategic Management Fundamentals

Whole Foods Market : Founded in 1980, in Austin, Texas From Local supermarket for natural and health foods to the world largest retail chain of natural and organic foods supermarkets Early 2008 : 276 stores in USA, Canada, UK Revenues : + 30% per year since 1991, and 20% since 2000 (= SLOWDOWN) >>objective : 400 stores, $12billion sales in 2010 CEO : wanted Whole Foods Market to set the standard for excellence in food retailing : high quality natural and organic products change habits : better diet, to live longer, healthier Whole Foods, Whole People, Whole Planet support the health of both people (customers, team members) support the planet

Natural & organic foods industry Definition of natural foods : minimally processed free of artificial ingredients, preservative, non-natural chemicals) Definition of Organic food: food grown and processed without the use of pesticides, antibiotics, hormones, synthetic chemicals, artificial fertilizers, preservatives, dyes, additives, genetic engineering+ - eco friendly agriculture - livestock mgmt - protection of the integrity of the organic product (no radiation, GMO...) 100% organic product, Organic product (95% certified ingredients), made with organic ingredient (70%) $62 billion (7,3%) of $850 billion in total US grocery store sales in 2007 In the 90s : growth of sales by a double-digit rate Since 2000 : around 7-9% (= Slowdown) More organic sales (from 23billion in 2005 to 28,2 in 2006) than natural food sales (from 13,8 billion in 2005 to 17 billion in 2006) (= Emphasise on organic food???) 31% of organic food sales in 2006: through mainstream supermarket 24% through leading natural food supermarket (Whole Foods, Wild Oats, Trader Joes 22% through small natural grocery stores >>Major food processing companies: invest in organic to capitalize on growing consumer interest More and more certified organic farms (higher prices) (= more providers) 2000: 1rst year in which more organic food was sold in us supermarkets than in independents stores (14,500 stores) (be careful of traditional supermarket: emphasise on differentiation or be leader with low prices??) Why?: Higher margin, growing demand From niche market to the fastest-growing segment of food sales Why? - better education about food and health - care for safety of food - environmental concerns Principal barrier for most consumers in trying/using organic products: higher prices (= lower prices? Or justify the high price? Luxury products?) Other barrier: Availability (not every products are natural or organic) (= propose more references?) and loyalty to non-organic brands too (= create a new Brand with a strong image? Develop communication!)

Competitors: Local- Regional_national supermarkets Speciality Grocery stores Health and Natural foods stores From a limited selection of natural&organic product to an aggressive increase Benefit for Whole Foods?: - help fulfil the company mission improving the health of people&planet - new customers, by gateway experience (=Again: differentiation) Competitors: Wild Oats: ranked second behing WF Pb: Too much stores, too much names, ways of operation, inconsistent product selection and customer service from one location to another Diagnostic: - Slowdown of revenues, due to slowdown in sales - More competition from traditional supermarkets - Crisis: prices too high for some people, even if they want to buy organic food - Convenience of supermarket where you can buy everything you need (even if it is not food) whereas in WF you almost only have food