An Overview of Whole Foods Market Company
Whole Foods is a Texas company which specializes in organic and natural food products. It is a very large supermarket chain which has over 300 stores across the world. Of these, 290 are in the United States, five in the UK and six in Canada. The company is ranked third in terms of environmental conservation efforts in the US and this has made its products very popular with consumers. The Whole Foods Market firm began operating in 1978 and after a merger with Clarksville grocery two years later, the brand name was developed (Whole Foods Website, 2011). It has grown over the years mainly due to the development of natural food products which are popular with consumers as well as numerous acquisitions in different regions of the world. Consumers are nowadays aware of the bad effects cholesterol has on their health and they strive to consume healthy foods (Keller, 2008). Since Whole Foods Company provides natural foods, its products are consumed in large quantities by the market.
In addition, consumers are aware of the danger of environmental destruction especially after adverse effects such as global warming and adverse weather patterns became visible (Lerner & Wilmoth, 2006). They strive to associate themselves with firms which develop products in environmentally friendly ways. Since Whole Foods firm is ranked third in terms of environmental conservation efforts, its products are also popular with consumers. Finally, the firm is associated with corporate social responsibility which is a strategy aimed at attracting and retaining local communities as major consumers. These are some of the strategies which have ensured success of the firm.
The paper will evaluate the Whole Foods Market Company in detail. It will trace its history and factors which have encouraged its success over the years. The paper will also discuss its various causes and philosophies its supports. Adverse publicity received will also be assessed. Finally, opportunities available for Whole Foods will be discussed to show how the firm can improve its long term performance. The discussed issues will be summarized at the end.
History of the Whole Foods Market
The Whole Foods Market began operating in Texas after its founders believed that a supermarket chain which dealt with natural foods would be feasible for the Texas market. These founders were Hardy and Mackey of Safer Ways firm and Skiles and Weller of Clarksville Grocery. The first outlet began operating with 19 employees and it was opened in 1980 (Whole Foods Website, 2011). Since there were few natural food outlets in the US, it was very successful. There are several companies which have either been acquired over the years which supply these products, and which have contributed to the success of Whole Foods. These include Bread & Circus, Wellspring Grocery, Mrs. Gooch’s, Whole Foods Company, Bread of Life, Fresh Fields, Merchant of Vino, Amrion, WholePeople.com. Allegro Coffee, Food for Thought, Nature’s Heartland and others.
The firm began after Hardy and Lawson opened the first outlet in 1980 after borrowing over $40,000 from friends and family. They lived in the store after being forced to vacate their apartment for storing food in it. In 1982, the couple acquired SaferWay after a partnership with Skiles and Weller (Bratton et. al., 2004). After a year, the firm suffered huge losses which amounted to over $300,000 after floods destroyed stock and machinery since they were uninsured. However, support from investors, vendors, creditors, neighbors and customers ensured that the firm recovered from this loss. From 1984 to 1990, the firm began numerous acquisitions which saw the opening of outlets outside Texas to North Carolina, California, Los Angeles, Massachusetts, Detroit, Boston and Florida. Later, the firm ventured outside the US to Canada and the UK in 2004.
Since then, the company has generated large sales revenues due to the development of customer loyalty. The company has sold products which are in high demand with consumers. There is a trend towards eating healthy foods due to the realization of the dangers of obesity and natural foods have gained in popularity. The CEO has also led the firm through numerous challenges and motivated staff to ensure they meet the market demands and needs. Finally, environmental conservation concerns and corporate social responsibility approaches have played a key role in attracting consumers to Whole Foods. Consumers are aware of the dangers of environmental degradation and the corporate social role of organizations and they identify themselves with organizations which meet these two needs. Whole Foods is one such firm and consumers readily purchase its products leading to long term growth.
There are certain values which Whole Foods stands for and which have ensured the success of the organization in the past decades. The first value is the sale of high quality organic and natural products which are available on the market (Whole Foods Website, 2011). This is achieved through sourcing producers with the best quality of natural foods across the world. The second value is to satisfy the customers. This is achieved through selling products of high quality which meet market needs. The third value is supporting the happiness of team members. This value is achieved through motivating employees through non-economic and economic motivational forms to encourage them to achieve their potential. The fourth value is creation of wealth through profits and growth. Leadership, acquisitions and supporting community causes as well as supply of high quality products attracts customers to Whole Foods and this leads to long term profitability.
The fifth value which Whole Foods believes in is caring for the environment and communities. This value is achieved through corporate responsibility programs implemented through the Whole Food Foundation and environmental conservation practices such as recycling of plastic bags. The sixth value is the promotion of sustainable relationships with suppliers. This ensures timely acquisition of products and it is achieved through developing mutual program schedules of supply of products and cultivating sustainable relationships with suppliers. The final value is promoting healthy eating among consumers. This is achieved through providing consumers with organic and natural food products which are grown without genetic modification from producers.
Purchases and suppliers
There are various vendors and suppliers who supply Whole Foods with products at the international, regional and local levels. Most of the purchases are made at national and regional level. This is because at these levels, purchase of large volumes of products attracts discounts from distributors and vendors. This reduces the product costs and increases profitability. The firm sells products which are unique and local, which consumers identify themselves with. Whole Foods cultivates a sustainable relationship with suppliers to ensure high quality products are delivered in a timely manner. Strict conditions are made to producers to ensure that the products are healthy for consumers. In some stores, there are employees who are responsible for sourcing local products for sale in the outlets.
Causes and philosophies it supports
The Whole Foods Market supports various causes which have formed part of its philosophy. These causes are in line with environmental conservation and corporate social responsibility concerns. They will be briefly discussed below;
It has been discussed that the Whole Foods Market undertakes several measures to ensure that environmental conservation measures are achieved. One of these measures is joining the Marine Stewardship Council. This organization aims at advocating for responsible and sustainable fishing practices globally in order to ensure that the fish resource is not depleted for future generations. Since the firm sells sea food, its advocacy for responsible fishing practices has worked well for consumers of fish products. Whole Foods is also committed towards energy conservation and specifically the use of renewable energy sources. It was the first company to use 100% renewable energy power in its operations in 2006. The firm is ranked as the second largest consumer of green energy in the United States. Energy used in Whole Foods is sourced from geothermal energy sources, biomass, solar, small hydro and wind energy sources. This is a big achievement considering that many larger firms have not wholly embraced the idea of using renewable energy sources. This has made its products popular with consumers who are keen with environmental conservation concerns. Due to the increased awareness of environmental destruction effects, many consumers are opting to purchase products developed by firms which conserve the environment such as Whole Foods.
Elimination of plastic
This is another cause which Whole Foods believes in. In 2008, the company began getting rid of all plastic disposable bags in all its stores countrywide (Gregory, 2003). When consumers purchase products from Whole Foods, they have the choice of either reusable bags or paper bags developed from recycled materials. In addition to the move to get rid of plastic bags, the firm also developed “better bags”, which are colorful and large grocery bags which are developed from bottles which are recycled. The firm implements this cause through informing consumers of the dangers which plastic poses to the environment. There are also campaigns which encourage consumers to use reusable bags such as the “bring your own bag” campaign which encourages the use of reusable bags and discourages the use of plastic bags due to their adverse effects to the environment. The move towards elimination of plastic is in line with the firm’s environmental conservation concerns. It is also a strategy which has worked well with consumers since as it has been discussed; consumers are attracted to firms which believe in environmental conservation concerns. This has partly led to the long term profitability of the firm.
Public support for universal healthcare
The Whole Foods Market Company supports universal healthcare for all. Its CEO Mackey has on several occasions publicly given his support for universal healthcare either through interviews or editorial columns. In 2009, he expressed a strong support for healthcare although he cautioned against fast tracked reforms which would create massive deficits in funding of healthcare (Diller et. al., 2006). His strong opinion on healthcare I the Wall Street Journal was widely supported by the public since most of them share similar sentiments. The public support for healthcare resonates with majority of the public and this has positively affected Whole Foods Company. There has been increased sales and profitability due to support of public causes such as universal healthcare which is a huge problem in the United States especially considering that almost half of the population is either underinsured or uninsured at all.
Treatment of animals humanely
Whole Foods supports the humane treatment of animals. The firm was petitioned by People for Ethical Treating of Animals in 2002 in order to ensure that animals sold by Whole Foods are treated well. Although the firm complied with these demands, it later experienced protests from animal rights activists who complained that it purchased duck products from a firm which mistreated ducks in Texas. As a result, Whole Foods took steps to ensure that a repeat of that incident did not occur. The firm also developed a foundation known as the Animal Compassion which has an objective of encouraging producers of animal products to treat animals humanely and naturally. Certain practices on ducks such as bill trimming, plucking feathers while alive, toe punching, bill heat treatment, toe removal, slitting webs and others were discouraged. The firm did not purchase ducks from producers who did not adhere to these demands. It also stopped selling live crabs and lobsters except for a store in Portland which met humane standards.
Whole foods supports community causes which are in line with its philosophies through its corporate responsibility programs. These programs aim at empowering communities through supporting causes such as disease prevention, community projects, training and education, research funding, donations and sponsorships and others. The firm commits at least 5%of revenues earned in select days towards charitable causes. Individual stores have been empowered to donate labor, money or food to charitable cases at their discretion. There are two major foundations which are supported by Whole Foods. The first is the foundation known as the Animal Compassion which has an objective of encouraging producers of animal products to treat animals humanely and naturally. The other foundation is the foundation known as Whole Planet which strives to provide poor communities with access to credit as a means of empowering them. This fund provides loans at low interests to rural communities and over $10 million was loaned out in 2006.
Adverse publicity received
Whole Foods has received adverse publicity over the years either due to investigations on its operations or law suits filed against it. The company was accused of failing to label toxic products on its fish. A massive recall of these products was conduced as a result. In 2004, Whole Foods received notice for a lawsuit in California on the basis of contamination of its salmon products. The CEO was investigated in 2006 by the securities exchange over postings on a social website over the future performance of Whole Foods. However, two years later the charges were cleared. In 2008, the company was sued by the California AG due to contamination of its household cleaning and personal care products which contained Dioxane, a contaminant. During the same year, the company recalled its beef stocks over contamination from one of its producers, Coleman Natural Beef.
Strengths of Whole Foods
There are various strengths which are associated with Whole Foods and which have ensured that it has been successful over the years. The first strength is the strong brand name. Whole Foods is an established brand which consumers recognize across the world. The strong brand name makes consumers keen to purchase products from the firm since they associate them with high quality and health safety. This is a strength which the firm has over new and recent competitors. Another strength is creation of customer loyalty. Customer loyalty has been created through the sale of high quality products over the years and Whole Foods’ support for community causes. Many consumers are therefore attracted to products from this firm and they are unlikely to purchase those of competitors hence leading to high sales levels and profitability of Whole Foods.
The third strength of Whole Foods is its large size and global presence. The firm is present in three countries of the world and almost all the US states. Due to its large size, it enjoys the economies of scale especially in terms of obtaining discounts, finance and raising capital. Most small scale firms which sell organic products do not have access to this advantage. The fourth strength of Whole Foods is its extensive distribution network. The firm has distribution networks which cover all its stores and it has a good relationship with suppliers. As a result, products reach consumers on time and this creates customer loyalty. Finally, the corporate responsibility cause, environmental conservation cause and sale of products which are healthy are three huge benefits of Whole Foods products. These causes are popular with the market and many consumers purchase products from Whole Foods since they believe in similar causes.
Weaknesses of Whole Foods
There are a few weaknesses which are associated with Whole Foods Company. The first is the adverse publicity received over the years. It has been discussed that the firm has received negative publicity due to instances of contaminated products which necessitate product recalls as well as various lawsuits filed against it. It is important to end any negative publicity associated with Whole Foods since this may erode the goodwill gained over the years. It may also damage customer loyalty generated over the years and this may translate to future low sales revenues of this problem is not effectively addressed. Another weakness is that Whole Food lacks a supply chain which is professional. The firm relies on local supply chains which may be difficult to control due to many outlets which Whole Foods has in the United States (Olins, 2003). Outsourcing certain services in the supply chain and hiring professional consultants may resolve this challenge.
Finally, the last weakness experienced by Whole Foods is the huge costs of expansion. Whole Foods expands at a very fast rate and opening new outlets is very costly. There are certain costs and losses which occur during the first few months of operation. Opening more outlets than may be handled may create losses for Whole Foods in the near future and force the firm to close some stores. This may damage the goodwill and customer loyalty developed over years due to negative publicity by the media.
Opportunities which may improve long term performance
There are many opportunities which Whole Foods should take if it is to remain a top organic food brand and enjoy long term profitability. The first opportunity lies in expansion into developing countries and emerging markets. Whole Foods Company has many outlets in the US and a few in Canada and the UK. However, there are few producers of natural foods and organic products who focus on emerging markets and developing countries. Many consumers of foodstuffs across the world are aware of the importance of healthy foods. Expansion into these markets would generate long term profits since they are very few competitors who sell organic and natural foodstuffs. Another opportunity which Whole Food has to improve long term performance is to streamline its distribution channel. The firm should outsource its supply chain services and employ consultants who will ensure that the distribution channels are more effective. There are various challenges involved in supplying products to a firm with over 200 outlets in the US and these can be dealt with by employing experts such as consultants or outsourcing firms (Bragg, 2006).
Another opportunity which Whole Foods should use to attract new customers is using rewards and promotions. Due to the economic downturn, consumption has fallen since disposable income by consumers also fell. However, Whole Foods may offer promotions, rewards schemes or discounts in order to attract new consumers to their stores. This approach will ensure that their sales volumes rise and that the firm achieves long term profitability (Kotler & Pfoertsch, 2006). The approach will also ensure that the firm remains the market leader as far as sale of organic and natural food products is involved. Finally, Whole Foods should increase the stringent checks on products sold in order to ensure that they are of high quality and not contaminated. The firm has built its brand name through the sale of high quality products. The negative publicity received over contamination of products may erode the brand name and goodwill. Whole Foods should strictly monitor its producers in order to ensure only high quality products which are healthy are supplied to the stores.
Summary and conclusion
Whole Foods, a firm specializing in organic and natural food products has been discussed in detail. The Whole Foods firm began operating in 1978 and after a merger with Clarksville grocery two years later. It has grown over the years mainly due to the development of natural food products which are popular with consumers as well as numerous acquisitions in different regions of the world. Since then, the company has generated large sales revenues due to the development of customer loyalty. The Whole Foods Market supports various causes which have formed part of its philosophy. They include environmental conservation, elimination of plastic, public support for universal healthcare, treatment of animals humanely and corporate responsibility. These causes are in line with environmental conservation and corporate social responsibility concerns. This has made its products popular with consumers who are keen with environmental conservation concerns as well as healthy eating and corporate responsibility causes.
The firm’s strengths include the strong brand name makes consumers keen to purchase products from the firm since they associate them with high quality and health safety. Another strength is creation of customer loyalty through the sale of high quality products. The third strength of Whole Foods is its large size and global presence which makes it enjoy the economies of scale especially in terms of obtaining discounts, finance and raising capital. The firm has distribution networks which cover all its stores and it has a good relationship with suppliers. Finally, the corporate responsibility cause, environmental conservation cause and sale of products which are healthy are three huge benefits of Whole Foods products. Weaknesses include the adverse publicity received over the year, poor supply chain network and high expansion costs. Opportunities include expansion into developing countries and emerging markets, streamlining its distribution channel, attracting new customers is using rewards and promotions, and increasing the stringent checks on products sold in order to ensure that they are of high quality and not contaminated. These approaches will ensure that their sales volumes rise and that the firm achieves long term profitability.
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