Whole Foods Market Analysis Gloria Iris Management 521 April 17, 201 02 Randy Schumacher Abstract As a mutual fund manager will be deciding whether to invest in Whole Foods Market, a Fortune 500 Company. The growth rate from 1991 to 2011 is 26%, with a remarkTABLE consistency from year to year. Their resilience is noted in their decision making processes which resulted in a successful recovery from the recession. The SOOT Analysis shows strengths in their growth strategy and expanding product line. Their flagship acquisition in London of 80,000 square feet in 2007 appears to be a major step in expanding outside the US.
Sales have doubled since then and 66% of the British adults now consume organic food and drinks. Their weakness is the fact they haven’t expanded into the global market except for Canada and the ELK. There has also been several recalls on brands purchased by the company. The opportunities appear to be significant in this retail market. There is an increasing desire for organic, healthy products which bodes well for the success of opening new stores. The threat is competition as the demand grows and more stringent coagulation. Rental increases is also a concern.
In making a decision on whether to invest in Whole Foods Market, the welfare and needs of the internal and external stakeholders need to be considered. Growth depends on Bonds and Stockholders. The company must show consistent growth in order to be TABLE to have availTABLE borrowing outlets. The employees are instrumental in keeping the customer feel wanted and satisfied with their shopping. The surrounding community wants to feel compatible with Whole Foods facilities, products and service. And the distributors supplying the Meany’s product need to know there is a commitment from their customers.
Whole Foods Market is a unique, organic food and natural product supermarket chain located in the US, Canada and ASK. As a wholly owned subsidiary, they are headquartered in Austin, Texas and employ approximately 64,200 people: 13,300 are part-time and 2,700 temporary employees (Denominator, 2012, p. 4). They have an increase in revenue in 201 1 from the previous year of 12. 2%, an increase of 25% in operating profit and net profit increase Of 42%. (“Event Brief Of IQ , 201 2 Whole Foods Market Earnings”, 2012). These figures are significant in recognizing the company’s success in recovering from the recession which hit them in 2008.
Presently, the organic food market is fragmented with many small mom and pops which presents many opportunities for growth by Whole Foods. Fred Meyer, a discount chain, carries an increasing array of organic foods, but not the quality and quantity of their high end competitor. The company’s strength is in its focused growth plan. “The Company’s strategy to grow through identical store sales growth, acquisitions, and new store openings has enTABLEd it to grow at a compounded and annual growth rate of 26% during 1991-2011”. (Denominator, 2012, p. 6).
They have formalized their square footage for new and renovated stores by past analysis of their successes and failures. The expansion into the UK market, in particular the 2007 acquisition of 80,000 square feet in London could be a major step into a market outside of the LIST. Sales have doubled and 66% of the British public consumes organic food and drink. (Live Business News, 201 2, p. 3) Their weaknesses lay in lack of expansion into international operations, product recall of certain rand’s, and increasing rental costs. Recalls are an issue.
They have had to withdraw Whole Foods Market Dairy Free bakery products because it contained milk which was not On the label. Texas had to recall cheddar cheese products because of an e-coli contamination and there was a possible Salmonella contamination for the Whole Foods, Carob Energy Nuggets in 2009. They have not been TABLE to successfully expand into markets other than a few stores in Canada and the I-J. They have not been TABLE to obtain competitive prices from their distributors for these stores because of the low volume.
Whole Foods also has a weak advertising budget and relies heavily on Internet and word of mouth, a disadvantage when their competitors advertising strategies are expanded into other markets. (Live Business News, 2012, p. 7) Leases for space and equipment have increased significantly from 4. 8 million in 2004 to 201 million in 2007. Future growth could be impacted. The increasing demand for organic foods and the new emerging life styles of the American public appear as great opportunities for Whole Foods Market. “According to industry estimates, the sales of organic food increased here fold since 2000 to exceed $28. Billion in 2010” (Denominator, 2012 p. 7) With this increase in sales, the company is still the only chain catering and availTABLE to this market. They are continually expanding their product base to include such foods for customers with special dietary needs. The trend of the American family is moving towards eating at home and eating healthy. Competition in the food retailing market is intense. Currently, Whole Foods does not experience significant competition in the organic food, natural products, and vitamin supplement area. But, as the demand and desire grow, so will the competition.
The threat Of the retail, supermarket chain Of succumbing to its competitors, or lagging behind in being innovative is always present. Regulation will increase as the market share increases. The FDA, FTC, CAPS, SAID and the EPA will become more stringent, which will increase the cost of goods. To complete this phase of the analysis it is necessary to ascertain if and how Whole Foods Market satisfies its internal and external stakeholders. PR Newswire US reports that “Whole Foods Market Named to World’s Most Ethical Companies’ List.
In response to this honor John Mackey speaks of the core values and” unique culture, growth and success. ” “That success comes from making sure all our stakeholders-Team Members, customers, suppliers, shareholders, our communities and the environment- are part of our vision” (p. 2). Fortune Magazine for the last 15 years has ranked Whole Foods as one of the “100 Best Companies to Work For” in America. (PR Newswire US, 2012, p. 3). Taking into consideration the employee discontent during the economic turn down, I believe the ranking outweighs measures taken to reduce costs through front line employees, as a temporary phenomenon.
Whole Foods Market has reduced its supply of some products such as fish in order to ensure the purity of product. They have investigated suppliers who claim to be providing one product when, in fact, they are selling an inferior replica. Their dedication to the customer and the product is a significant stakeholder value. Conscious capitalism has become a popular phrase for corporations. Whole Foods claim they practice this philosophy. This is a tricky balance between keeping the stockholders pappy and ethical business practiced with a higher purpose.