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Whole Foods Market Case Study

Whole Foods Market Case Study

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Whole Foods Market Case Study

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  1. Whole Foods Market Case Study By: Dan McLindon Kyle McDaniel Jeremy Smiley Tom Anderson Ray Moorman

  2. Whole Foods Key Question Can Whole Foods remain competitive in face of major changes in the competitive environment?

  3. Overview of Whole Foods

  4. What is changing in the external environment?

  5. PEST Analysis for Whole Foods

  6. What are the changes in demand?

  7. Overview of the Market

  8. How is supply changing in the food retailing industry?

  9. Porter’s Five Forces Heating Up Cool To Warm

  10. Porter’s 5 Forces – Whole Foods Market

  11. Whole Foods Answer

  12. How is the competitive landscape changing?

  13. Changes in the Competitive Landscape Should they really welcome competition? • Local, regional, independent, national, and specialty stores are all competitors. • CEO say it is a gateway for customers to try natural/organic foods or opportunity for the competition? Take a look at Store Sales Growth Sales growth has been cut in half since 2004!

  14. Changes in the Competitive Landscape We may be seeing a revolution in the food retailing business. Supercenters – Marketplaces – Wholesale Clubs Will the competition force Whole Foods to rethink their strategy?

  15. What is Whole Foods Strategy? • Marketing • Growth • Operational

  16. Marketing Strategy • Product • High Quality Natural and Organic Food and nonfood items • Offerings vary based on store size and tastes of local clientele • Exotic offerings and product variety • Ex) Japanese eggplant, 40 cheeses, 20 coffees • Private label products • Emphasis on perishables (fruits/veg., bakery goods, meat, seafood) – 67 % of sales

  17. Marketing Strategy • Price • Goal is competitive price at highest quality • Organic foods are 25 – 75% more costly to grow and market • Price and Quality are competing forces • Whole Foods chooses to focus on Quality, therefore prices are higher than conventional grocers

  18. Marketing Strategy • Place • No standard store design. Layout customized for site and product mix. • Colorful, inviting, fun • Gathering place to learn, interact, eat, and grocery shop • Presentation • Highly regarded food displays, cleanliness, wide aisles

  19. Marketing Strategy • Promotion • Primarily rely on word-of-mouth recommendations • 0.5% of revenue spent on advertising • Most marketing spend is for in-store signage and events • Store personnel is knowledgeable and personable

  20. Growth Strategy • New stores and acquisitions of small owner-managed chains in desirable markets • Ideal store size is 45,000 – 60,000 sq. ft.

  21. Operational Strategy • Team-based management of store operations • Many personnel, merchandising, and operating decisions made at store level • Buying responsibility at the national and regional levels for volume discounts • Own and operate many distribution centers: 2 for produce, 9 bake houses, 5 commissary kitchens for prepared food, and a central coffee roaster

  22. What are the strengths, weaknesses, opportunities, and threats for Whole Foods?

  23. SWOT AnalysisWhole Foods

  24. What are the future challenges for Whole Foods?

  25. Future Challenges • Conventional Grocery Stores over saturate Market & offer Organic & Natural Foods • Convince new customers to shop at WF rather than more convenient stores • Pricing – being able to compete against the conventional grocery chains • Getting more people in the store

  26. Recommendations for Whole Foods Market

  27. Recommendations • Lower Price to Compete with Grocery Stores • Add a customer rewards program for frequent buyers • Mail coupons to customers in a targetted marketing effort • Expand Private Label Selection • Lowers mfg costs, could offer discounts to customer for using WF brand products

  28. Recommendations • Personalize Service at WF • 3 days after purchase, email Thank You cards to customers after purchases • 7 days after purchase, email 10% coupon to use on next purchase • Email recipes • Advertise, Advertise, Advertise • Mail fliers to local zip codes – show locally grown foods, classes offered, items on sale, coupons

  29. Recommendations • Catering • Offer catering to local businesses & events • Stop rebranding Wild Oats stores • Halt expansion until WF builds up more cash • Focus on profitable stores and use that philosophy to improve unprofitable stores • Look at option of selling some underperforming Wild Oats stores