Overview

John Mackey started the Whole Foods Market in 1980. The company’s revenues have steadily increased for the past ten years. This is unheard of in the grocery category. However, the past year revenue has only grown by 2%. It appears in the past several years the rate of change in revenues is on a declining path, which is a trend companies should never welcome.

On a positive note, the company continues to maintain a positive free cash flow, which is important to keeping the operation running smoothly. This is quite a feat for any company, let alone one in the grocery category.

The company suffered a $400,000 loss due to flooding in 1981. They were not insured. Had it not been for the help of the community and business concerns, the company may not have seen it through. They were able to reopen its doors about a month later.

How the Company Started

The company began in 1980 with the merger of SaferWay and other supermarkets to become Whole Foods Market.

Mackey and a friend borrowed from friends and family to open a store known as SaferWay. This was in 1978 for an amount of $45,000. Mackey later partnered with others to SaferWay and another supermarket to form Whole Foods Market. In 1980. The company is a public company so they can use this as a mechanism to raise capital.

Initial Problems

Mackey is a bit of a controversial person. He believes in responsible capitalism and tries to implement environmental policies. However, he has often been at odds with unions.

He feels that the company pays well enough and is a good place to work. This reasoning has been able to keep unions from forming to this day.

The product offerings are not cheap. This has given rise to the nickname, Whole Paycheck, which means it will take your whole paycheck if you shop there.

Recently, Trader Joe’s and other organic markets are giving Whole Foods a run for its money. Trader Joe’s offers affordable organic products. However, the size of their stores is much smaller.

Traditional supermarkets have started offering organic products. This will eat into the profit margins for Whole Foods.

The company received criticism (and still does) for offering GMO products. It maintains that all supermarkets have GMO product offerings. However, many feel that GMO has no place in a store that touts itself as being organic.

Why it Works

A strategy that has worked well for the company is acquisitions. Instead of competing with others, the company buys up the competition. This also allows them to branch out in areas where the store doesn’t have coverage.

Many of the stores are large, which allows them to offer diverse lines of products. These choices attract customers from all walks of life.

Whole Foods Market supports the areas they encompass. They create microloans to fund farmers in areas where stores reside. They try to keep buying as local as possible to maintain support for those communities.

Customers often use the store to hang out and even go out on dates. They can order meals and eat them in store. This increases the chances of people grabbing items that they may need, on their way out.

The company prides itself on choosing the highest-quality products to offer to consumers.

The blog on WholeFoodsMarket.com shows events and happenings for the company dating back all the way to 2006. While many companies include news about what is going on with their companies, not too many go that far back.

The company has high-quality standards that it adheres to. It does market research on its products to ensure that each meets or exceeds those standards. According to their website, they evaluate all of their products, which number in the thousands.

There is a wide variety of products catering to specialty diets. This includes vegan, gluten free, low sodium, dairy free, etc. The company keeps up-to-date with trends in this area and tries to cater to all of them.

Promotion:

The company has enjoyed word-of-mouth expansion. People happily spread the word about high-quality and healthy foods, especially as this trend continues to grow.

The press that Mackey receives for his controversial stances has helped draw more customers into the store. People who are unfamiliar with the store become interested based on the stories presented in the news. This is bound to keep some of them coming back.

The company promotes transparency with its GMO offerings. They have the initiative to be completely transparent in all of its offerings of GMO products by 2018. It offers a guide on its website with GMO avoidance while shopping.

Whole Foods offers coupons and gift cards. People love these promotional entities.

The company is catering to millennials with its 365 stores. These are lower-priced alternatives to the main Whole Foods stores.

Features:

Employees generally tend to like working for Whole Foods. They give the co-CEOs’ a 67% approval rating. The co-CEOs are John Mackey and Walter Robb. These reviews come from Glassdoor.com.

When evaluating reviews, the recent reviews tend to hold the most weight as it may reflect recent changes the company has made. For Whole Foods, the most recent reviews are positive.

Many reviewers state that the benefits are great. It’s important to note that many of the cons listed are done in a manner as to help management rectify them. People who are disgruntled with their companies would likely be harsher in their reviews.

The company has a rating for what they call Responsibly Grown. It shows customers a rating of Good, Better, and Best for the produce the company sells. This has caused concern among growers, as the ratings seem too harsh and will cost money to get to the standards the company requires.

Mackey stated on his blog that the growers did not understand the ratings and had tried to give them clarification on the matter. For organic growers, this is especially troublesome due to the high cost to maintain the government’s organic certification.

Lessons Learned By The Business

• The company learned early on to shift with consumer tastes. They started out catering to the organic market, then shifted to high-end gourmet. It has now come back to the organic label due to the increase in demand.

• The company believes in adhering to team values. This is why it feels it doesn’t need to unionize and have fought efforts towards its employees doing so.

• Whole Foods believes in being good community members. It donates to food banks in its local areas and heavily encourages volunteerism among its employees. It has several foundations that help to alleviate poverty worldwide.

• The company prides itself on its ethical business practices. By sourcing locally, and adopting fair trade policies, it carries this throughout the organization.

• It’s easier to sell to people who are knowledgeable about the products you sell. The company has taken the initiative to inform customers about its products. It does this via the website as well as in the store.

How Other Businesses Can Learn From This

Educate your consumers whenever given the opportunity. In Whole Foods case, they have literature about ingredients in the foods they offer. They even offer cooking classes.