Whole Foods Market Case Study - Strategic Management

Whole Foods Market Case Study - Strategic Management

Introduction

Company Profile

Whole Foods Market, Inc. is a publicly listed company on NASDAQ. It was formulated in 1980. Whole Foods Market (WFM) is a USA based enterprise, headquartered in Austin, Texas. The company deals primarily in organic and natural food products. The business of WFM operates under a supermarket model. In 2011, WFM had store strength of 311, distributed varyingly in USA, Canada and the UK. USA has majority of the brands supermarkets. The exact store strength is 299 stores in 38 states plus stores in District of Columbia. Further, seven and five stores are in Canada and the UK, respectively. The mean size of each store is approximately 38,000 square feet (Reuters, 2012).

The value chain of the company is centralized through it's headquarter operations. It is supported by relevant regional offices, ten regional distribution hubs, an aggregate of twelve baking and kitchen facilities, four processing plants for seafood, two procurement centers for produces and meat products, and operations that handle tea procurement, roasting operations and specialty coffee (Reuters, 2012).

A primarily retailer of organic and other natural products, WFM focuses on perishable food products. WFM's vast array of product lines include: produces, prepared food and catering, bakery, meat and poultry, grocery, other specialty products (tea, coffee, cheese, wine and beer), vitamin and other nutritious supplements, body care, household products, pet products, floral items and educational products including stationary and books etc. Each WFM store holds an estimated 21,000 SKUs. The procurement of these SKUs is streamlined through multiple channels, including direct distributors and specialty wholesalers. Further, this vast SKU collection comprises of approximately 2,600 SKUs, which are essentially WFM branded products (Reuters, 2012).

Case Analysis

Current Strategy of Whole Foods Market (WFM)

Merchandising Strategy

Whole Foods Market has persuasively employed a practical strategy to open large stores, in terms of square feet per store, across the USA. Emphasis is on initiating store units that are 50,000 square feet and higher. This merchandising tactic is based on a concept that aims to generate an atmosphere that is inviting and at the same time, interactive and colorful. The tactical application wants to create a “third place” for shoppers; a place that they ought to be, if not at home or office.

Financial Performance Analysis

Businesses of Whole Food Markets grew in the year 2011, revenues incremented by 12% and aggregated more than $10 billion. Profit margins also showed improvement by rising to 5.4%. This progression was reciprocal to the negative impacts caused by the ongoing global economic downturn, US debt ceiling issues and rising inflationary pressures. The rising prospect of the businesses of WFM is witnessed through revenue growth to levels unseen in the last five financial years of operations. Consequently, store wise data indicate average growth of 8.5%. These growth figures translate into average weekly sales/store of $636,000. Calculations reveal weekly sales/ sq. ft of $874. EBIDTA for the year came up to $835 million, a year on year increase of ...