Whole Foods Market Strategic Review

Strategic Review

Whole Foods Market is one of the top retail stores dealing with organic and natural foods in the United States. The company operates and owns a chain of organic and natural foods supermarkets across the United States and Canada. In essence, the company has been able to reach large number of customer by operating through several subsidiaries, and Whole Foods is the first company in the United States to be awarded the first "Certified Organic" grocer. Whole Foods Market was incorporated in 1978 and started the organic and natural foods business in 1980. Within the last 35 years of its operations, the company has become the largest retailer in the organic and natural foods. The success that the company has enjoyed over the years makes the Whole Foods and ABC Company considering integrating their business portfolios.

Objective of this report is to provide a top-notch advice to the Whole Foods Company on the strategy move to integrate with the ABC Company.

Mission

Whole Foods mission is "to promote the vitality and well-being of all individuals by supplying the highest quality, most wholesome foods available." (Annual Report, 2013 p 1). The mission of the Whole Foods is to use high standards and quality as its pertinent. The company core mission is also to devote to the promotion of healthy eating, organically grown food as well as sustainability of the entire ecosystem. The company aims to set a standard of excellence within the retail food industry.

Vision

Our vision statement is to expand beyond being a food retailer. To fulfill our vision, we will measure our success towards customer satisfaction, return on assets, and team member satisfaction. We strive to enhance a better communication with our stakeholders to achieve a financial success.

Core Values

Whole Foods aims to create values for its major stakeholders, and the company core values are as follows:

To sell organic and natural products that commands the highest quality in the market.

To nourish, satisfy, and delight our customer.

To support our team member excellence and happiness.

To create wealth through growth and profits.

To support and serve our global and local community.

To practice and advance our environmental stewardship.

To create a win-win relationships with our suppliers, and Promoting the core health of our stakeholders using a health heating education.

The study provides the situational analysis of the company to enhance a greater understanding of the current business and financial performances of the Whole Foods.

Situational Analysis

Since 2002, Whole Foods Market has opened the large stores across the United States ranging from 30,000 to 50,000 square feet, and the company has used the management guidance to plan the footage. In the last few years, the average footage for the company stores is 35,000 square feet with the trends reaching 40,000 square feet. The driving move behind the company merchandizing strategy is to create interactive and inviting stores that will enhance a pleasurable shopping experience for customer. In essence, the Whole Foods has designed its stores in colorful and strategic methods to make them becoming a relaxing environment for people when moving out of work in the evening.

The company has also recorded annual financial growths in the last 5 years. At the end of the 2013 fiscal year, the company recorded the revenue of $12.9 billon with net income of $551 Million. Moreover, the company recorded the total assets of $5.5 billons at the end of 2013 fiscal years. The company net margins also increase from 1.47% in 2009 to 4.27% at the end of 2013 fiscal year. Moreover, return on assets increase from 3.32% in 2009 to 10.17% in 2013. The return on equity also increases by same rates from 7.58% in 2009 to 14.35% at the end 2013 fiscal year. The table 1 provides the summary of the company 5-yaer financial ratios.

Profitability

TTM

2013

2012

2011

2010

2009

Net Margin %

4.11

4.27

3.98

3.39

2.67

1.48

Asset Turnover (Average)

2.50

2.38

2.44

2.44

2.32

2.24

Return on Assets %

10.28

10.17

9.71

8.28

6.19

3.32

Return on Equity %

15.06

14.35

13.71

12.77

12.01

7.58

Return on Invested Capital %

14.88

14.25

13.63

11.71

9.98

5.94

SWOT Analysis

This section provides the SWOT analysis of the Whole Foods Market revealing the strength, opportunities and weakness and threats the company is facing in the market environments.

Strengths

The superior financial records are one of the strengths of the Whole Foods. Within the last 5 years, the company has recorded an increase in the annual revenue and net income, and the financial strengths have assisted the company to purchase its product from suppliers in a large scale thereby enjoying the economies of scale. The economies of scale that the company is enjoying make the Whole Foods to offer its product at a lower price. Moreover, the Whole Foods Market guarantees 100% quality foods for its customer and the company offers high quality product in the market making the customer to trust the product that the company offers for sales.

The size is strength of the Whole Foods Market. In the United States, very few companies can boast of stores reaching up to 35,000 square feet. Moreover, the Whole Foods has a customized layout to attract customers in the environment that it is operating. The company strengths also lay on its dynamic management and skillful team members who deliver a sustainable value to its stakeholders. In essence, the company has created a very strong brand to attract affluent and young shoppers.

Weaknesses

The weakness of the Whole Foods lies on the costs of marketing and growing organic food product, which have increased between 25 and 75%. As being revealed in the company financial statements, the costs of goods sold increase yearly. (Morning Star, 2014). Thus, the company has been facing challenge in reducing its costs of production. Another weakness of the Whole Foods is that number of farmers producing organic foods is limited and their supply cannot meet the overall demand of American markets. Thus, the increase in the demand for the organic foods leads to increase in high price than non-organic foods.

Opportunities

In the United States and outside the United States, increasing number of consumers is aware of how important is to eat healthy foods. Increase in the awareness makes the Whole Foods to attract large number of customer because of the high quality food that the company offers for sale. Moreover, the U.S. government has enacted various legislations to combat unhealthy foods making the Whole Foods to attract more customers.

Threats

Whole Foods is facing competitions from big and small companies across the United States and outside the United States. Trader's Joes is one of the major competitors of the Whole Foods. Typically, Trader's Joe's has more than 375 stores across the United States and offers similar products to what the Whole Foods offers. Trader's Joe's also run smaller stores and both companies have the opportunities to dominate the market. The Fresh Market is another major competitor that offers similar product. However, the Fresh Market commands a significant smaller share because of its smaller size. More importantly, Whole Foods has some direct competitors that are attempting to break into the natural and organic food market. For example, a company such as Safeway is trying to offer natural and organic foods product, however, large firms have ability to sell at lower price because they enjoy economic of scale.