Whole Foods Market Case Study Notes PDF

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whole foods case study notes for fire cases class...

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Whole Foods Market 

May 26, 2014 o $0.38 per share in quarterly earnings report (Wall Street consensus 0.41) o Share price fell to $38.93 o Increase quarterly dividend from .10 to .20 (20%) o Is Whole Foods successful?

The Grocery Industry -

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Low-growth industry bc of fierce competition 2012 – industry $600 billion in sales Demand growth tied to population growth Estimated nominal long-term growth ~2-3% o Kroger, Publix, Safeway, Albertsons o Wal-Mart, Fresh Market, Costco and Sam’s Club Walmart – largest food retailer in 2014 – 25% market share Narrow margins & limited growth opportunities favored large competitors Small competitors were forced to close Loyalty programs, store experience, self-checkout Promoting prepared foods Private-label products – low prices while capturing margins Natural grocers grown rapidly o Helth-conscious customers o Over 20% per year growth since 1990 o 2012 – natural/organic products = $81billion in sales  19-29-year-old population  Whole foods, sprouts, fresh market Whole Foods – position as market leader for natural and organic industry o System to rate fresh produce o Website list of prohibited substances in its products o Labeled genetically modified foods Criticism on nutrition benefits of organic foods

Whole Foods Market -

1978 First natural and organic supermarkets Texas  Louisiana  California Canada – UK “Whole Paycheck” – premium products

Research Report -

Bears perspective: natural/organic market becoming saturated from other companies offering same product at lower costs o Disspointing quarterly reports o 3 miles from Trader Joes o WF – running out of dense, educated, high-income areas

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o Compoetion - lead of revaluate Whole Foods Bulls: believed WF leadership in organic, shifting preferences and organic growth should sustain EF growth o Well positioned o Leader for organic industry o Opportunity to reduce operating expenses  Offset decline in revenue o Take into consideration into lower-income areas - private label products may offer similar, high quality products at better price -CEO John Mackey o WF was best-industry o No competitor offered the quality products that WF could o investments to improve customer experience  Shorter wait times  High quality self-service food...