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Wednesday, July 16, 2014

The Worth of Values


 

 

 
The Worth of Values

 

An Analysis of Whole Foods Market and

Its Strategies for Success


          Shereef Zaki


            Josh Howatt

            Chu Guoy

            Stephen Feyer


 

October 9, 2013


How did they do it?

 

American consumers have many options to purchase groceries and supplies. While supermarkets have existed for many decades, growing and adding services to provide ever-greater convenience to their customers, one fast-growing chain – Whole Foods Market – has stood out as an exceptional new entrant in this typically competitive and closed industry. A segment of customers are highly loyal to Whole Foods, despite what many other consumers perceive as astonishingly high prices. What value do Whole Foods customers receive, and what strategies has the company executed to deliver this value?

 

This study will examine the strategies Whole Foods has used in the standard-cycle supermarket industry over its 30-year history. Whole Foods has successfully scaled nationally, implemented effective organizational learning processes, established a uniquely-differentiated product selection, and continually innovated so as to avoid failure via neglect.

 

Brief corporate history

 

John Mackey and three co-founders launched Whole Foods Market in 1980 in Austin, Texas, to provide a full-service supermarket format for natural foods. At the time, according to company history, there were fewer than a half-dozen natural-foods supermarkets in the U.S. Whole Foods Market has since grown to be the eighth-largest public food and drug retailer in the U.S. and currently ranks #264 on the Fortune 500. During fiscal year 2012, Whole Foods had $11.7 billion in net sales and an operating income of $744 million.[1] Whole Foods Market has over 340 stores and can be found in the U.S, Canada, and the U.K.[2]

 

A standard cycle industry

 

As a grocery store, Whole Foods operates in a standard-cycle industry. The grocery industry as a whole displays many classic characteristics of this cycle of economic time, including a focus on building and retaining market share, cost minimization, standardization, uniformity, and scale barriers. Whole Foods displays most of these typical characteristics. Because of its industry, the business is best analyzed through the lens of a standard-cycle analysis, and in particular through the framework of cost leadership versus differentiation.

 

Horizontal integration, and first mover advantage

 

Traditionally, consumer options for natural foods consisted of neighborhood co-operatives, local establishments, and farmer’s markets. Whole Foods was immediately successful with the insight that natural foods could be successful in a supermarket format, and quickly moved to expand. In 1984, Whole Foods spread to Houston, Dallas, and in 1989 to Palo Alto, California. Profits grew due to the company’s nearly unchallenged position as a natural foods supermarket. Whole Foods sought to gain economies of scale through horizontal integration – the acquisition of similar stores in new markets.

 

To this end, beginning in 1988, Whole Foods went on an acquisition spree targeting smaller natural food grocers, buying Whole Food Company in New Orleans, Wellspring Grocery in North Carolina, Bread & Circus in Massachusetts and Rhode Island, Bread of Life in northern California and Florida, and others – a total of 17 acquisitions, culminating in the 2007 merger with Wild Oats Markets, which at the time operated 109 stores in 23 states.[3] Since this time, Whole Foods has focused on opening its own large stores of about 50,000 square feet in established markets and smaller stores of less than 40,000 square feet in medium-sized markets. The company aims to operate 1,000 locations by 2020.[4]

 

Whole Foods has used a strategy of horizontal integration to grow its footprint fast enough that other supermarkets cannot grow from scratch to copy its format. Whole Foods was the first mover in the industry segment of natural-foods supermarkets, and has used expansion to maintain this first mover position as an advantage: Many consumers think of Whole Foods as the best – or only – destination for natural foods, even though this is no longer true. The horizontal integration strategy has been essential to profitable growth to date.

 

Demand creation and economies of scope

 

Almost from the beginning, Whole Foods created a new destination for affluent customers. With its supermarket format – including such important features as a house brand, prepared foods, a butcher shop, and a bakery – Whole Foods is an attractive store for many customers who did not initially care about its concept of natural foods, and does not alienate the original base of consumers who demand organic, environmentally sound, vegan, gluten-free, and other specialty categories. In other words, Whole Foods has successfully created demand for its niche categories.

 

One way in which Whole Foods has satisfied a broader affluent customer base is through inclusion of gourmet products. A store in Pittsburgh, for example, includes exotic products such as Himalayan salt, Madagascan chocolate bars, and Norwegian sparkling water. Emergent epicurean trends are satisfied with quinoa, soy, kale, and cold-pressed juices. Whole Foods does not simply carry mustard, it supplies Pommery cognac-scented moustarde in varieties ranging from “cassis” to “gingerbread”. Such specialties are not sold at the nearby Giant Eagle, and may only otherwise be available at small specialty stores.

 

By growing quickly, Whole Foods enabled the economies of scope that standard-cycle retailers depend on to compete in their competitive, low-profit industries. Presenting an attractive upscale experience, the company built demand for its niche natural foods products. With growth, Whole Foods gained the ability to source both its specialty categories and gourmet offerings with great efficiency. In other words, Whole Foods began to operate at scale.

 

Scale orchestration

 

Whole Foods has successfully grown using many ideas of scale orchestration. For example, Whole Foods implemented a three-tiered leadership development program that incorporates rotations throughout store teams and in various locations, reinforcing standardization of processes and customer experience. An added benefit of rotational leadership development is that knowledge-sharing with regards to evolving best practices can occur seamlessly and spread quickly across locations. Additionally, there is a mentoring program for young employees who want to rise through the ranks, and every store has a discretionary budget to allow employees to seek outside training, such as English language instruction.

 

Compared to other grocery chains Whole Foods is unusually devolved to the store level, but the chain certainly uses the modern systems and management techniques that enable it to keep thousands of products stocked at hundreds of stores with minimal waste. Operational standardization has led to a consistent and no-surprises customer experience throughout all Whole Foods stores. For example, in any Whole Foods in Manhattan, a customer will find the same system for approaching a cashier: stand in a color denoted line and wait until the register-number appears in that color on an LCD screen. Standardization gives local management breathing room to stock local products and cater to local tastes. Brand loyalty emerging from this local/national hybrid model has created a customer experience that only Whole Foods can provide.

 

Successful execution of a scale orchestration strategy quickly gave Whole Foods an advantage over the cooperatives and specialty stores that presented its early competition, and placed the company in the category of national supermarket chains. Now competing with Safeway, Supervalu, and Wal-Mart, Whole Foods has the reach and demand base to gain a foothold among the biggest players – but needs more to gain an enduring advantage.

 

Core competency

 

Whole Foods Market has achieved a subtle edge over its competitors, allowing it to grow faster than the retail grocery industry as a whole. This advantage is rooted in a unique core competency that is applied consistently across the enterprise.

 

Describing its core competency, Whole Foods will instead talk about its corporate culture. Founder and Co-CEO John Mackey, in his book Conscious Capitalism, describes four tenets of the culture he calls conscious capitalism: stakeholder integration, higher purpose and core values, conscious leadership, and conscious management and culture. This leadership method “simultaneously creates multiple kinds of value and well-being for all stakeholders: financial, intellectual, physical, ecological, social, cultural, emotional, ethical, and even spiritual”.[5] These tenets translate concretely into such products as organic produce and cruelty-free meat, environmental programs, benefits voted on by employees, low salary caps for executives, deep supplier partnerships, and numerous nonprofit initiatives. But core values are not the same as core competencies, and indeed, many businesses are unsuccessful despite sharing these values.

 

Whole Foods’ core competency lies in its ability to translate social values, summarized by Mackey’s conscious capitalism, into economic value perceived by its customers. This competency is most easily illustrated by a market comparison. Recently, a Whole Foods Market in Pittsburgh was observed to sell conventional (non-organic) bananas for $0.69 a pound. A Giant Eagle supermarket, a half-mile distant, sold conventional bananas for $0.54 a pound on the same day. Given the competitive nature of the grocery business and the commodity status of bananas, there could be little difference in the cost of goods for these two stores. Whole Foods does not have substantially fewer customers, nor substantially higher labor or facility costs, compared to a supermarket in the same neighborhood – so it cannot face highly different overhead costs. Yet its customers willingly pay an additional $0.15 per pound for identical bananas.

 

How is it Whole Foods Market stays in business when it charges more for groceries? The answer is that Whole Foods imbues all its products – even commodities – with additional value, without sacrificing other consumer desires. Whole Foods customers believe that an item as simple as a banana can embody the social values of conscious capitalism, and therefore they will pay more for bananas. It is immaterial whether this value is real or measurable, as it is certainly perceived by customers. Insofar as this value is created at a cost less than $0.15 per pound of bananas, Whole Foods realizes a sustainable stream of rents from its unique advantage. How has the corporation built this core competency?

 

Social value drivers

 

In order to build a core competency from a strong mission, Whole Foods Market must first sustain that mission. John Mackey founded his first grocery store in 1978, envisioning it as a food cooperative without the politics, and built in the principles of conscious capitalism years before naming them. Foremost, Whole Foods sells healthy food, defined as natural, nutritious, and often organic products. The company treats its suppliers as partners, and devotes resources to encouraging their success and improving their environmental performance. Whole Foods actively supports local charitable causes and global nonprofit activities in nutrition and microcredit. Employees work toward collective goals in a supportive, flat organization. These and many other efforts combine to form the core social values of Whole Foods and are at the heart of marketing efforts.

 

To maintain its core competency, Whole Foods has trained its customers to view grocery purchases as capable of containing social value. Over the last two decades, Whole Foods has drawn on the growth of the sustainability, environmental, free-trade, and other movements to create demand for its products. Although these social phenomena were often initially anti-consumption, Whole Foods tailored its offerings and marketing efforts to sell these social goods as physical goods. For example, Seventh Generation paper products advertise a goal of sustainability and resource stewardship that appeals to customers who share these values – and cost almost twice as much as products without these missions. By presenting the benefits of socially valuable products, without the confrontation of social movements, Whole Foods allows consumers to participate in these movements through their shopping habits.

 

Whole Foods has brilliantly trained its affluent customers to believe they are contributing to social betterment by consuming (the authors are split whether Whole Foods’ social values contribute meaningfully to human betterment, or are primarily marketing). There can be little doubt, however, that this consumerization of social values is a conscious strategy; John Mackey continually reveals himself to be a hard-nosed competitor and big-picture thinker, and he certainly intends the impacts of his company’s actions.

 

Whole Foods uniquely offers this psychic value to its customers without sacrificing the other benefits consumers demand from grocery experiences. Recent research has clarified the uniqueness of Whole Foods Market’s advantage. Grocery customers can locate products that embody their preferred social values, but to do so they may need to patronize farmer’s markets or cooperatives, and may sacrifice variety and convenience. Whole Foods provides the full supermarket experience along with a social mission, and so it is “a place where consumers can enjoy the pleasures of consumerism with a clear conscience”.[6] Researchers J. Johnston and M. Szabo found that most Whole Foods customers primarily valued conveniences such as free parking, prepared meals, and one-stop shopping – the features of modern supermarkets – and shopped at Whole Foods because they could realize these benefits while feeling virtuous about social and environmental problems. The number one complaint was high prices, yet these customers continued to patronize Whole Foods.[7] Whole Foods has built a full-service supermarket, fully competitive with any Safeway or Giant Eagle on variety, that adds the further dimension of fulfilling a social mission.

 

Now affluent families can enjoy butter from humanely raised cows, which may be indistinguishable in taste or other objective measures of quality from butter sold in other stores, but costs $0.80 more per pound at Whole Foods. The company has captured burgeoning social values, shaped them to create product demand, and convinced a group of customers that the company’s products contain these values. No other supermarket chain has accomplished this trick, and in fact, it may be unique in American business today. Whole Foods has applied this strategy across product categories, across geographies, and across economic time – truly, it is a core competency of the organization.

 

Lack of cost leadership

 


Product
Whole Foods
Giant Eagle
Eggs, 1 doz. (cage-free; brown)
$2.59
$3.39
Skim milk, 1 gal.
3.77
3.58
Orange juice, 59 oz.
2.99
2.89
Sugar, 4 lb.
3.79
2.78
Water bottles, 12 x 12 oz.
1.99
2.50
Bananas, 1 lb.
0.69
0.54
Black beans, 15 oz.
1.29
1.19
Potatoes, 5 lb. (Yukon gold)
5.99
4.99
Butter, unsalted, 1 lb.
2.79
1.99
Whole wheat bread, sliced, 1 lb.
3.89
3.69

A recent local market review confirmed the price differential attributable to Whole Foods Market’s competitive advantage. Prices for common grocery items were compared at the Whole Foods and Giant Eagle supermarkets in Pittsburgh’s Shadyside neighborhood. In most cases, Whole Foods had higher prices for commodity products, which are objectively identical between the two stores. Whole Foods transfers additional value to commodities by listing countries of origin for all produce and sourcing practices (such as “fair trade”) for many products. In some cases, Whole Foods does not carry commodities perfectly comparable to those sold at Giant Eagle; for example, Giant Eagle sells cheaper eggs, but Whole Foods only sells cage-free eggs, and Giant Eagle’s price for its cage-free subcategory of eggs is higher.

 

Where the stores carry the exact same product, the two stores tend to have the same price or trade price leadership. For example, both stores sold cans of Amy’s brand organic soups at $2.69 per can. Both stores carried Newman’s Own and Rao’s brand tomato sauces, with each store having a price advantage in one of the two products. This observation supports the idea that Whole Foods adds value to its products because of its social mission; as these brands are manufactured identically for both chains, Whole Foods cannot easily add more value at retail than its nearby competitor.

 

For some common products, Whole Foods carried only more expensive, but not identical, variations. For example, Giant Eagle sold eggs as cheaply as $1.85 per dozen, while Whole Foods sold its cheapest eggs for $2.59. However, the Giant Eagle eggs were not cage-free. Giant Eagle sold a single roll of paper towels for $1.00, or 1.88 cents per square foot, while Whole Foods sold only recycled paper towels starting at $1.99 a roll, or 3.21 cents per square foot. Giant Eagle had 5-ounce cans of conventionally fished tuna for a low $0.68, while Whole Foods only offered pole-caught tuna in identically sized cans for $1.49. A Whole Foods customer is likely to perceive and value the Whole Foods version of these common products highly enough to pay the substantial price difference.

 

One area in which Whole Foods actually showed a price advantage was in local produce. Both Giant Eagle and Whole Foods carried locally sourced green peppers, each naming a Pennsylvania farm where the peppers originated. Whole Foods had a superior offering, with large, perfect-looking peppers priced $0.50 less than Giant Eagle’s slightly misshapen offerings. This price advantage in local produce is an example of Whole Foods Market’s latest successful renewal cycle, discussed below.

 

Differentiation

 

Like most standard-cycle businesses, Whole Foods uses inexpensive visual differences to accentuate differences from its rivals; despite its unique characteristics, Whole Foods in most ways is still a typical supermarket. In-store advertisements and signs are hand-lettered, providing a homey feel. Instead of metal and plastic, the company uses wood veneers and earth tones throughout the store. Signage on walls and in checkout areas discusses charitable initiatives, employee interests, nutrition, and food sourcing practices. Where local producers are used, placards describe the farms and lead customers to the nearby products. Employees are pierced, tattooed, friendly, and adorned with flair of their choosing. In the authors’ experience, Whole Foods Markets are sure to place any live plants for sale in front of the door, so customers may feel like they are heading into a garden or forest when they enter the store. These visual cues bolster the company’s missions of supporting local communities, partnership with suppliers, positive employee relationships, and environmental sustainability, all aspects of the social value that the company uses to support prices. These visual cues support the company’s core competency.

 

The key non-cosmetic points of differentiation, besides the social mission discussed above, relate to things the chain does not do. Thinking about the primacy of the company’s values to its strategies, the reasons these differences have been implemented can be ascertained.

·         No loyalty program. Whole Foods shoppers are not asked to swipe a card at checkout. The company takes a customer-focused rather than producer-focused approach to marketing, discouraging the idea of loyalty programs. More simply, Whole Foods customers are already loyal and a program would be redundant.

·         No pharmacy. Whole Foods stores do not include pharmacies, unlike almost all other full-service supermarkets. There are two reasons for this difference. First, the company’s mission promotes holistic health through nutritious food and other means, and having a pharmacy would greatly conflict with this element of the company’s key value driver. Second, supermarkets use pharmacies to bring in customers, and typically do not make money on them. As Whole Foods Market’s mission alone brings in business, it can dispense with this customary necessity of the contemporary supermarket industry.

·         No plastic bags. Whole Foods encourages its customers to use reusable bags, and only offers disposable paper bags. The company removed disposable plastic bags, the current bĂȘte noire of environmentalists, from all stores in 2008.[8] This detail may be the most visible difference attributable to the company’s environmental values.

·         Little advertising. Typically, Whole Foods only uses large-scale advertising to announce a store opening. The company as a whole spends on marketing and advertising at about 20% of the supermarket industry average rate.[9] The company is so unique in so many ways that its customers don’t need to see advertising. They will shop at Whole Foods regardless of the presence of specials or alternate stores. This point of difference is a consequence of the others.

 

Visualizing differentiation and cost leadership

 

*Reported operating margin includes significant non-U.S. business.

Sources: (Major, The Super 50 - Introduction / Methodology 2012), (Major, Crunching the Numbers 2011), (Market Force Study Finds Consumers Perceive ALDI as Grocery Price Leader 2011), (Best and worst supermarkets 2012), (Yahoo! Finance n.d.)

 

The above chart shows an analysis of cost differentiation and cost leadership across 14 of the largest grocery chains in the U.S. Several sources of consumer surveys were used to evaluate perceptions of cost and unique or desirable features attributable to individual chains. The results show a dispersion of differentiation and cost leadership consistent with strategy theory.

 

Whole Foods anchors the highly differentiated/high-cost area of the chart. Now the 11th largest U.S. grocer by revenue, the business is universally considered an expensive destination. Occupying the opposite corner is Wal-Mart, the low-price leader. As the number-one U.S. supermarket chain, Wal-Mart proves that most consumers value low price above differentiated experience.

 

A cluster of supermarket chains fill the center of the chart. The most recent operating margins of each public company demonstrate, approximately, the expected isoprofit relationship. Notably, the distressed Supervalu and Bi-Lo/Winn-Dixie chains occupy a position close to competitive “Hell”, the latter chain born of an ongoing rescue attempt by private equity firm Lone Star Funds. Ahold is also in this position (note that the reported profit margin includes a substantial non-U.S. business).

 

Finally, two chains find themselves near competitive “Heaven”. The excellent regional supermarket chain Wegmans finds itself in an enviable position. Trader Joe’s, also a heavenly firm, is an interesting contrast to Whole Foods. The company serves the same demographic, and embodies virtually the same social values, but runs a different business model. Compared to Whole Foods Markets, Trader Joes stores are smaller, do not provide prepared foods and other supermarket services, and provide a limited selection of house brands products. Mackey is highly complimentary of Trader Joes in his book. Perhaps he knows the profit margin of his privately-held competitor.

 

This chart reveals that Whole Foods and Wal-Mart have staked out opposite positions in the standard cycle supermarket business, achieving fast growth and profits as a result. The chart suggests that Wal-Mart may be the fiercest competitor Whole Foods faces, due to its scale and position. (Interestingly, both companies are famously non-union, unlike most of their competitors.) Trader Joe’s and Wegmans are also serious competitors, but, as smaller firms, they are less significant than Wal-Mart. Whole Foods can blunt their threat by continuing to execute its fast-growth strategy. Whole Foods and Wal-Mart, specializing in differentiation and cost leadership, respectively, have squeezed the rest of the industry, which has largely failed to specialize on either axis. Within this grand framework, Whole Foods has pursued overlapping renewal strategies to stay ahead of the competition.

 

Convergence and renewal

 

As Whole Foods has succeeded and grown, it has not been immune to the competitive pressures of the supermarket industry. Other chains have converged on its traditional strength in organic foods.

 

Whole Foods is probably the best-known retailer of organic food in the U.S. As such, the company has been able to attract the customers who purchase organics and, over time, to play a key role in increasing demand for organic food. This market has grown quickly; from 2003 to 2010, Whole Foods saw its revenue increase nearly three times, while U.S. retail sales of organic food increased about 2.6 times over the same period.[10] Although Whole Foods slightly increased its share in organics in this time, the rapid growth of the market as a whole points to the entry and increased presence of other retailers. Most notably, Wal-Mart announced plans in 2006 to double its sales of organic food, and the Bentonville giant is now estimated to be the number one U.S. retailer of organics, one place ahead of Whole Foods. Every full-service supermarket has a section devoted to organics today.[11] The industry has converged toward Whole Foods, blunting the impact of its organics strategy.

 

The story is much the same for sustainable, gluten-free, fair trade, and other products carrying healthful or environmental labels. Though Whole Foods is still a standard-bearer in these areas, most supermarkets have added such products to attract customers. Although Whole Foods would argue that its competitors are creating demand for the products that are its specialty, the company no longer has a lock on many niche categories. Whole Foods has led a series of renewals in niche food categories, but currently faces different levels of convergence from its competitors in each, including full convergence in organics.

 

To counter convergence, Whole Foods has started a new renewal cycle in local foods. Local is the latest food trend presented as more healthy, socially conscious, and environmentally friendly than conventional agriculture. Whole Foods highlights its local foods with signage and photos of farms and farmers, shaping a new market category to pull ahead of its competitors. The company provides a high degree of autonomy to its individual stores, an early strategic choice that has strengthened its latest renewal. Whole Foods is able to use its local autonomy to build relationships with local suppliers. All meat and produce at Whole Foods is labeled by its origin, providing a level of detail other supermarkets may be unable to match at this time. Other supermarkets are now starting to carry local produce, but as it is hard to imagine Wal-Mart executing such efforts, Whole Foods’ local strategy is currently an advantage that its competitors have yet to match.

 

No control point

 

Though it orchestrates its operations as finely as any competitor, Whole Foods does not apply any particular control point to protect its business. Casual observers, such as Internet message board users, assume that Whole Foods can extract excess rents from suppliers and force high prices on customers. In reality, Whole Foods competes fiercely for supply of many products, and concerns itself above all with maintaining harmonious relationships with its suppliers. The higher prices are attributable to perception of higher value, as described above, and the many consumers who don’t perceive this added value no doubt prefer Wal-Mart. In short, Whole Foods is as potentially susceptible to deterioration of its business over several years as grocery also-ran The Great Atlantic & Pacific Tea Company (A&P). To date, however, Whole Foods has managed to stay ahead of its competition by running just a bit faster.

 

Red Queen effect

 

Whole Foods inhabits an industry notable for its application of the Red Queen effect: In the grocery business, you have to constantly change and improve just to maintain your position. Whole Foods encourages local experimentation and rapidly scales successful ideas, enabling the company to run a bit faster than its competition. The most talked-about local innovation, later rolled out nationally, was the introduction of a taproom in a northern California Whole Foods in 2010.[12]

 

Other current experiments include lifestyle classes, yoga, community service partnerships, and new in-store dining options. All these initiatives help to stave off competitors who are attempting to attract Whole Foods’ affluent customers with niche and gourmet products. Notably, many of these innovations can be seen to benefit from Whole Foods Market’s core competency of creating economic value out of social values. So even if, for example, a Whole Foods yoga studio is a successful profit driver, competitors may not be able to copy the innovation easily.

 

Whole Foods may also modestly benefit from the experience curve. With newer stores and systems, Whole Foods starts with a cost advantage over competitors because of better site selection and energy efficiencies, among other reasons. The experience curve may not be as significant a factor in the grocery industry as it would be in manufacturing, but so far as it is present, Whole Foods will benefit. This fact is ironic given that Whole Foods also once gained from the first mover advantage.

 

With so many successfully applied strategies, it is perhaps no wonder Whole Foods Market has been the most remarkable supermarket growth story in a generation.

 

A whole future

 

To its devoted customers, Whole Foods is a shopping nirvana. To those on the outside, it is an enigma – and yet, its rapid and sustained growth points to a successful use of strategy.

 

Starting with a novel concept, Whole Foods used its first mover advantage and horizontal integration to capture a profitable market, moving into the standard-cycle realm of national supermarket chains. With growth came economies of scope and growth in demand: As Whole Foods expanded, it created new customers for its products. Through a meticulous attention to image, in ways both cosmetic and material, Whole Foods presented its products as consumable vessels of virtue, the embodiments of environmentalism, fair trade, personal health, and many other growing social movements. Whole Foods enabled its customers to buy these virtues, and thereby enjoys higher prices and an advantage over competitors that has endured for at least 15 years, even as competitors have moved to stock many products that nominally feature the same social benefits. Truly Whole Foods is a differentiated business, not a cost leader.

 

Now at scale, Whole Foods has continued to find new social movements to capture, creating new renewal cycles to ensure its unique core competency is unthreatened. At the same time, individual stores innovate and provide a steady stream of new ideas, so Whole Foods stays ahead of the competition. With such fast growth, Whole Foods can gain the cost advantages of new capital investment.

 

Whole Foods has been a huge winner in the grocery industry, but though its strategies have sustained advantage for many years, none guarantee an enduring advantage. The company will keep growing quickly to stay ahead of two highly differentiated competitors that each have cost leadership, Trader Joe’s and Wegmans. It will also continue to work meticulously to protect its image, on which depends its core competency and ability to extract excess rents. Although the outcome of further growth and competitor responses cannot be predicted, it is certain that Whole Foods will remain a touchstone of fascinating analysis and conversation for many years to come.

 

 

 

 

 

 

Sources Referenced

 



 



Best and worst supermarkets. 5 2012. http://www.consumerreports.org/cro/magazine/2012/04/best-worst-supermarkets/index.htm (accessed 9 28, 2013).

Horovitz, Bruce. Whole Foods sacks plastic bags. 1 22, 2008. http://usatoday30.usatoday.com/money/industries/food/2008-01-21-whole-foods-bags_N.htm (accessed 10 4, 2013).

Hyman, Julie. Whole Foods Expanding to Urban, Small Markets. 10 29, 2012. http://www.bloomberg.com/video/whole-foods-expanding-to-urban-small-markets-xHt5Wrt_R6SXTY7gWcXGZQ.html (accessed 10 6, 2013).

Johnston, Josee and Szabo, Michelle. "Reflexivity and the Whole Foods Market consumer: the lived experience of shopping for change." Agricultural Human Values, 7 2010: 17.

Mackey, John, and Sisodia, Raj. Conscious Capitalism: liberating the heroic spirit of business. Boston: Harvard Business School Publishing Corporation, 2013.

Major, Meg. Crunching the Numbers. 4 2011. http://www.progressivegrocer.com/inprint/article/id1684/crunching-the-numbers/ (accessed 9 28, 2013).

—. The Super 50 - Introduction / Methodology. 5 2012. http://www.progressivegrocer.com/inprint/article/id2735/the-super-50-introduction-methodology (accessed 9 28, 2013).

Market Force Study Finds Consumers Perceive ALDI as Grocery Price Leader . 4 25, 2011. http://www.marketforce.com/press-releases/item/market-force-study-finds-consumers-perceive-aldi-as-grocery-price-leader/ (accessed 9 28, 2013).

"Market Trends." Organic Trade Association. http://www.ota.com/organic/mt.html (accessed 10 2, 2013).

Warner, Melanie. Wal-Mart Eyes Organic Foods. 5 12, 2006. http://www.nytimes.com/2006/05/12/business/12organic.html (accessed 10 2, 2013).

"Whole Foods Market Annual Reports." 9 30, 2012. http://www.wholefoodsmarket.com/company-info/investor-relations/annual-reports (accessed 10 4, 2013).

Whole Foods Market. Whole Foods Market History. http://www.wholefoodsmarket.com/company-info/whole-foods-market-history (accessed 10 8, 2013).

Yahoo! Finance. http://finance.yahoo.com/ (accessed 9 28, 2013).

 


 




[1] (Whole Foods Market Annual Reports 2012)
[2] (Whole Foods Market n.d.)
[3] (Whole Foods Market n.d.)
[4] (Hyman 2012)
[5] (Mackey 2013, 32-33)
[6] (Johnston 2010, 306)
[7] (Johnston 2010)
[8] (Horovitz 2008)
[9] (Mackey 2013, 286)
[10] (Market Trends n.d.)
[11] (Warner 2006)
[12] (Mackey 2013, 246-247)