Whole Foods Market
Company: Whole Foods Market, Inc. NASDAQ Global: WFM Company Category: Natural and Organic Food Supermarket Founders: John Mackey and Renee Lawson owners of SaferWay Natural Foods, and Craig Weller and Mark Skiles, Owners of Clarksville Natural Grocery Year Founded: 1980 Headquarters: Austin, Texas Company Motto: “America’s Healthiest Grocery Store” Company Logo:
Company Overview Whole Foods Market owns and operates the world’s leading chain of natural and organic food supermarkets. Each store breaks down into 12-13 departments with product offerings from Grocery (bulk, frozen, dairy, including in-house 365 Everyday Value Brand), Prepared Foods (hot production, cold production, and Catering), Produce, Specialty (beer, wine and cheese), Bakery, Coffee/Juice Bar, Meat, Seafood, and Whole Body [8].
The Brand
Whole Foods Market has done their homework. Before you enter the store, they have done all the heavy lifting on ingredients for you by offering only the highest quality natural and organic products. Whole Foods Market believes that people have the right to know what is in their food. “It’s true that natural and organic products are increasingly available in stores and online, yet no one does what we do. We hold the idea of food to a higher standard, banning more than 75 ingredients commonly found in other stores, and we believe our unparalleled quality standards and selection are a large part of why we maintain a broad base of loyal customers and attract new customers aspiring to a natural and organic lifestyle” [4]. 1.
Product Attributes
•
•
Each and every product offered is carefully evaluated; third party auditors inspect the stores every month to hold the company accountable for their set standards Foods featured are free from artificial preservatives, colors, flavors, sweeteners and hydrogenated fats Foods are fresh, wholesome and safe to eat
1.
Product Attributes (con’t)
•
• •
Provide food and nutritional products that support health and well-being Organically grown foods and are sought out and promoted o
Organic agriculture is an ecological production management system that promotes and enhances biodiversity, biological cycles and soil biological activity. It is based on minimal use of off-farm inputs and utilizes management practices that restore, maintain and enhance ecological harmony. "Organic" is a labeling term that denotes products produced under the authority of the U.S. Department of Agriculture's Organic Rule. The principal guidelines for organic production are to use materials and practices that enhance the ecological balance of natural systems and that integrate the parts of the farming system into an ecological whole.
100% Organic = Products containing only organically produced ingredients; products may display the USDA organic seal
Organic = Products consisting of ingredients that are at least 95% organically grown, products can display the USDA organic seal
Made with Organic = Products consisting of ingredients that are 70 – 95% organically grown; products cannot display the USDA organic seal
Natural = Whole Foods Market definition of ‘natural’ is products produced without artificial preservatives, colors, flavors, sweeteners and hydrogenated fats
•
Health Starts Here is Whole Foods’ in-house healthprogram. Within the program, the definition of healthy
eating is based on the following four key elements:
o
Plant-Strong  Emphasize fresh vegetables, both raw and cooked; fruits; legumes/beans; nuts; seeds and whole grains
Eat a colorful variety of plants to ensure you’re getting the best nutrients for your body, which leads to feeling satiated Whole Foods Choose foods that are real, fresh, natural, organic, local, seasonal and unprocessed Eliminate the consumption of refined, highly processed foods and foods void of nutrients, such as artificial flavorings, colors, preservatives, sweeteners and hydrogenated fats Healthy Fats Get your healthy fats from plant sources, such as nuts and avocados Minimize extracted oils and processed fat
o
o
Industry Overview The basic purpose of the Market Analysis is to define the overall industry (category) for your brand. Indicate: A.) Opportunities: The company is currently operating internationally in the UK and Canada. They have the opportunity to expand in the fastest growing markets (China and South Africa) •
•
•
Traffic-Boosting Measures: Comp trends have begun to improve lately, as Whole Foods has endeavored to shore up its competitive position by strategically cutting prices and stepping up its advertising/branding efforts. The company, notably, just launched its first national TV ad campaign that aims to emphasize the concept’s commitment to food quality, public health, and environmental sustainability, and that is generating a lot of excitement in the employee ranks. And pricing tests are going well so far, with cuts already making a difference in terms of unit sales.
B.)
•
•
Threats: Faces threats from mainstream and traditional grocery retailer ( Kroger, Target, Walmart, and Trader Joes)
Conventional supermarket chains, not to mention mass merchants (e.g., Wal-Mart Stores (WMT - Free WalMart Stock Report)) and local mom-and-pop grocers, are increasingly stocking organic and natural food items in an attempt to jumpstart their top lines in what is a fairly mature industry. This could force Whole Foods to reduce prices further in the coming quarters, which would likely squeeze gross margins and profits. Cannibalization: Same-store sales have been hampered in certain territories, such as Boston, where the company has two or more units in close proximity to each other. This could become more of a problem going forward, as Whole Foods tries to take the domestic unit base from 400-plus to 1,000 and beyond.
COMPETITORS SERVING SAME TARGET MARKET: DIRECT COMPETITORS: In recent years, the organic food trend has grown rapidly in popularity, escalating into a national trend. As the market for organic and ethically cultivated foods has quickly developed, the demand for both local and national organic grocery stores has grown with it, creating new competitors for Whole Foods and rejuvenating the market for Whole Food’s familiar competitors like Trader Joe’s. A new company called Natural Grocers by
Vitamin College. NGVC went public in 2012, and since then has been rapidly growing in it’s net worth. The one-year price target consensus by analysts estimates for NGVC is around $25. It closed April 5 at $22.05 and has a market cap of nearly $494 million.
Research has indicated that prices range 7% to 10% lower at Natural Grocers than at Whole Foods. According to an article published in Yahoo’s finance website in April 2013, “NGVC keeps the overhead and costs lower per store and then passes those savings along to its satisfied customers. That's doable when one considers that WFM stores usually have four times more square footage per store and that requires more employees per store and higher energy costs.” (2)
Direct Competitors
Market Cap: Employees: Qtrly Rev Growth (yoy): Revenue (ttm): Gross Margin (ttm): EBITDA (ttm): Operating Margin (ttm): Net Income (ttm):
WFM KR 20.41B 35.88B 88,000 375,000 0.10 0.11
SFM 5.52B 14,000 0.21
PVT1 N/A N/A N/A
Industry N/A N/A 0.00
14.63B 106.48B 2.84B 0.35 0.21 0.30 1.35B 4.88B 244.31M 0.07 0.03 0.07 588.00M 1.62B 99.23M
N/A N/A N/A N/A N/A
N/A 0.00 N/A 0.00 N/A
Image citation (3) Target Market Served: 1.
Pricing- WFM has improved earnings per share by 7.9% in the most recent quarter compared to the same quarter a year ago. They have demonstrated a pattern of positive earnings per share growth. WFM has increased its bottom line earning $1.47 versus $1.26 in the prior year. The net income has increased by 6.3%, going from $142 million to $151 million. (4)
2.
Product Attributes – Whole Foods Market supports strongly on mandatory labeling of GMO- derived foods. WFM has set a deadline, by 2018 all products in the U.S
and Canadian stores must be labeled to indicate whether they contain GMO. (5) 3.
Media Strategies
•
Whole Foods Market is running its first national marketing campaign. Jeannine D’Addario, VP Communications led this new strategy. The main goal is to make the WFM brand stand out amongst the competition in the organic market. The tagline is “ Values Matter” and featuring images of farms and livestock.
•
WFM uses their Facebook and blog platforms to promote more of their products information, health, recipes, and cooking tip content. This is a great way to engage with the
customers as well as educating them. (6)
B. Discuss the competitor's strengths and weaknesses: Direct and very general competition of WFM: The Kroger (KR), Sprouts Farmers Market, Inc. (SFM), privately held (PVT1)Trader Joe's Company and the remaining Grocery Stores (Industry). Market Share
•
To compare market share between WFM, Trader Joe's, Kroger Co. and other grocers, it is important to define and categorize them first. WFM
Kroger Co. Wallmart Target Meijer
Grocery Channel Definition Fresh Format
Supercenters
Description • • •
• • •
Trader Joe's Limited Assortment Save a lot Aldi
• • •
Kroger Co. Traditional Albertsons Supermarket Ralphs Publix
• • •
emphasizes perishables offer ethnic, natural, organic items hybrid of large traditional supermarket and mass merchandiser offer wide variety of food and non-food items average more than 170,000 s. f. devote as much as 40% of space to grocery items low-priced grocery store offer limited assortment of center-store and perishables fewer than 2,000 SKUs offering a full line of groceries, meat and produce at least $2 million in annual sales carry between 15,000 and 60,000 SKUs
Created based on Retail Research conducted by JLL.
Marketing Each Whole Foods Market store has a Marketing Department Team unique to each store - they are responsible for creating the vibe of the store, bringing the personalities of the workers to life, designing the store to fit the community, and incorporating their interpretation of company values into each store. The Marketing Department does sign-making, event planning, and social media for their store [8].
Social Media/Engagement • • • •
Facebook page Twitter Whole Foods Market App Customize your Whole Foods Market page (www.wholefoodsmarket.com) by choosing your store
Advertising
[11]
Advertising (con’t)
Whole Foods Market launched its first ever national brand campaign “Values Matter,” on October 20, 2014 to highlight its groundbreaking quality standards, healthy offerings and key milestones as a pioneer in the natural and organic food industry. By communicating the company’s deeper purpose and its history of celebrating food and the people who produce it, the multichannel advertising initiative will demonstrate the values of “America’s Healthiest Grocery Store” [8]. • “Whole Foods Market has been subtly telling our story for decades, and now is the time to overtly communicate what we’ve spent more than 35 years creating as change agents in the food world,” says Jeannine D’Addario, Whole Foods Market’s Global Vice President of Communications. “We are excited to share our stories, and to have deeper conversations with our customers so they can make meaningful choices about what they decide to buy and support” [8]. Brand Equity •
•
Brand Equity is the set of assets and liabilities linked to a brand that add to or subtract from the value provided by the product or service.
•
Whole Food’s brand equity is all about the “Whole Foods experience.” You experience their motto Whole Food, Whole People, Whole Planet with every trip to the store.
•
According to 2014 Harris Poll EquiTrend (EQ) study measured brand equity for more than 1,500 brands across 170 categories, finds traditional grocery store brands rank highest overall in three of
Conclusion Whole Foods Market has created “customized assortments for local store environments”.Currently we are attuned to the fact that the wellness trend means there’s a demand among lowincome shoppers for healthful foods, therefore Whole Foods
strive to provide lower-cost options for people by category, brands and price points [12].