whole foods
TRANSCRIPT
Kelley ParriginKat Keivens
Bo GhassemiKathy Flores
Miranda NiederleSheridan SandsJessica NelsonSeda McCarthy
Whole Foods Vision
• Our vision of a sustainable future means our children will be living in a world that values human creativity, diversity, and personal choice.
Mission
• Whole Foods — We search for the highest quality, least processed, most flavorful and natural foods possible .…
• Whole People — Our people are our company. They are passionate about healthy food and a healthy planet….
• Whole Planet — We are committed to helping take care of the world around us….
Values
• Selling the highest quality natural and organic products available
• Satisfying and delighting our customers
• Supporting team member happiness and excellence
• Creating wealth through profits & growth
• Creating ongoing win-win partnerships with our suppliers
• Caring about our communities & our environment
The General Environment
Whole FoodsWhole Foods
The General Environment
Demographics -
• Only one demographic governs WFI:
• Each store is located in a neighborhood where 40% have a college degree.
• This ensures being in an area where people know about nutrition.
The General Environment
Economic – • WFMI has grown
with the rising trend of health and fitness consciousness.
• It depends on this trend to continue and to grow.
The General Environment
Political/Legal –
• In the U.S, Japan, and the European Union “Organic” standards are certified by legislation.
• In other countries laws or standards may not exist.
The General Environment
Socio/Cultural –
• Representative on the National Organic Standards Board
• Health conscious
• Consumer awareness-health education
• Sustainable agriculture
The General Environment
Technological –
• Business Processes– Website– Paperless ordering system
• Green Mission– Power monitors– Wind power– Solar and Biomass
The General Environment
Global –
• More than 270 stores in North America and the United Kingdom
• Whole Planet Foundation
• Whole Trade Guarantee program
Industry Environment Analysis
Whole FoodsWhole Foods
Threat of New Entrants
• Other organic supermarkets or competitors
• Effects on Whole Foods market
Bargaining Power of Suppliers
• The greater bargaining power of Whole Foods Market could also squeeze existing suppliers who will have fewer market options
• Supplier challenges– Number of suppliers
• Supplier loyalty– Different manufacturers
Bargaining Power of Buyers
• Buyer Dominance– WalMart
• Grocery market insensitivity to economic conditions – For example, WalMart vs. Whole Foods
Threat of Substitute Products
Rivalry Among Competing Firms
Internet Grocers
Local Farmers’ Markets
Restaurants and Fast Food Chains
Wholesale clubsConvenience
stores
Supermarkets
Mass Merchandisers and
Super Centers
Whole Foods
Internal Capability Analysis
Strengths
• Quality food
• Customer “Experience”
• Store and Corporate Culture
• Image and Branding
• Loyal Customer Base
• Great Store locations for target market.
Weaknesses
• Prices are high- “Whole Paycheck”
• Lacking on International Operations
• Narrow target market
• Marketing- rely on word-of-mouth
Opportunities
• Expand private label brand– Possibly work with large chains for generic
distribution
• Expand food selection
• In store classes
• Invest in marketing about the benefits of eating healthy and organic.
Threats
• Economy- downturn leads to less disposable income and less luxury
• Market intrusions and competition
• Lax regulations on organic foods
Value Chain Analysis
Primary Activities • Partnering with Vendors
– Owns and operates downstream suppliers
– Low interest loans – New store inventory
Value Chain Analysis
Primary Activities• Purchasing Goods
– Stringent Quality Standards
– Regional and National Suppliers
– Local Suppliers
• Managing and Distributing Inventory– JIT operations
Value Chain Analysis
Primary Activities• Store Operations
– Duplication– Customization
• Marketing and Sales– Full service – Rich sensory
experience
Value Chain Analysis
Support Activities• Human Resources
– 360 Review Process– 100 Best Companies– 90% Employee
Satisfaction
Value Chain Analysis
Support Activities• General Administration
– Best Corporate Citizen– Top-notch mgmt– Talented real estate team
Resources and Capabilities
Tangible Resources• Financial
– Capacity to raise equity
• Physical– Stores– Distribution Centers– Support Facilities
Resources and Capabilities
Tangible Resources• Organizational
– Just-in-time logistics– Innovative evaluation
and control systems
Resources and Capabilities
Intangible Resources• Human
– Strong bench strength– Widespread involvement &
knowledge transfer
• Innovation– Creative solutions
• Reputation– Brand name– Competitive advantage
Resources and Capabilities
Organizational Capabilities• Highly adaptive business
model• Leveraging supplier
relationships• Outstanding customer
service
Stakeholder Agenda
Sustainable Competitive Advantage?
• Challenging because….– Exit barriers are low– Market is being infiltrated by lower priced,
more readily available stores.– People looking for one stop shop– Direct Competitors are making it even harder
for Whole Foods to differentiate themselves.
Business Strategy
• Expansion– Whole Foods is expanding internationally– Expects to have a sizeable market position in
Europe 20 years from now– Hopes to become a global company
• Roping in Customers• Captive banners• Giving customers a sense of “virtue”
Business Strategy
• Information Sharing– Collects and distributes sensitive information
to everyone.
• Community Giving– Donate food and money to fight poverty
worldwide
Organizational Strategy
• Caps on executive compensation– No exec. Makes more than 14x the employee
average
• Teams– Whole Foods is committed to self managing
teams which do their own hiring and scheduling.
– To be hired, individual must be voted on by 2/3 of their team during “trial” period
Organizational Strategy
• "Whole Foods is a social system,It's not a hierarchy. We don't have lots of rules handed down from headquarters in Austin. We have lots of self-examination going on. Peer pressure substitutes for bureaucracy. Peer pressure enlists loyalty in ways that bureaucracy doesn't.“ John Mackey, Founder and Chairman
Ethical Issues
• Treatment of animals– Existing standards for humane animal
treatment can always be improved– Thrives to help animals flourish and do it in a
way that is cheap enough for customers to buy
• 14 Page code of conduct– Addresses expected and desired employee
behavior
Financial Analysis
• NASDAQ since 1992• Retail Grocery Business
segment• Ranked 26th according to revenue• 2008 Sales just under $8B• Acquisitions $700M loan
Financial Analysis
Financial Analysis
Ratio Measures 2008 2007 2006 Kroger Safeway Industry
Net Profit MarginNet profit / Revenues
Profitability1.4% 2.8% 3.6% 1.71% 2.16% 3.65%
Return on Equity (ROE)Net Income / Total Equity
Profitability7.75% 12.56% 14.76% 24.40% 13.29 17%
Revenue per employee Efficiency 151,056 123,527 135,816 232,184 216,669 367,217
Current RatioCurrent Assets/Current Liab.
Liquidity.93 .85 1.22 .94 .88 1.15
Total Debt/ Equity ratio Debt/EquityFunding .62 .52 .01 1.56 .81 N/A
Interest Coverage Debt Mgnt 6.49 70.69 9,969.03 5.05 5.17 N/A
Financial Analysis
Less than 1 1-3 3-5 More than 5 Total Year Years Years Years Long term debt obligations $ 897,698 $ — $ — $ 897,698 $ — Estimated interest on long term debt obligations
126,956 40,591 64,010 22,355 — Capital lease obligations (including interest)
41,125 2,089 4,179 4,179 30,678 Operating lease obligations(1) 6,017,763 261,467 627,483 641,428 4,487,385 Total $ 7,083,542 $ 304,147 $ 695,672 $ 1,565,660 $ 4,518,063
The following table shows payments due by period on contractual obligations as of September 28, 2008 (in thousands):
Due before Sept 28, 2009
Due After 9/2009 and Before 9/ 2011
Due 9/2011 and 9/2013
Due After 9/2013
$897,698 / $2,706,705 (Gross Profit 2008) = 33%