Whole Foods Market in 2008: 1 Mission, Core Values, and Strategy

OVERVIEW

Founded in 1980, Whole Foods Market had evolved from a local supermarket for natural and
health foods in Austin, Texas, into the world’s largest retail chain of natural and organic foods
supermarkets. In 2008, the company had 276 stores in the United States, Canada, and Great
Britain and 2007 sales of $6.6 billion. Revenues had grown at a compound annual rate of 30
percent since 1991 and 20 percent since 2000. Management’s nearterm growth objectives for
Whole Foods were to have 400 stores and sales of $12 billion in fiscal year 2010. During its 27-
year history, Whole Foods Market had been a leader in the natural and organic foods
movement across the United States, helping the industry gain acceptance among growing
numbers of consumers concerned about the food they ate. The company sought to offer
offering the highest quality, least processed, most fl avorful and naturally preserved foods
available. John Mackey, the company’s cofounder and CEO, believed Whole Foods’ rapid
growth and market success had much to do with its having “remained a uniquely mission-
driven company—highly selective about what we sell, dedicated to our core values and
stringent quality standards and committed to sustainable agriculture.” Mackey’s vision was for
Whole Foods to become an international brand synonymous with not just natural and organic
foods, but with being the best food retailer in every community in which Whole Foods stores
were located. He wanted Whole Foods Market to set the standard for excellence in food
retailing. Mackey’s philosophy was that marketing high quality natural and organic foods to
more and more customers in more and more communities would over time gradually transform
the diets of individuals in a manner that would help them live longer, healthier, more
pleasurable lives. But as the company’s motto “Whole Foods, Whole People, Whole Planet”
implied, its core mission extended well beyond food retailing. At its web site, the company
proclaimed that its deepest purpose as an organization was helping support the health, well-
being, and healing of both people—customers, team members, and business organizations in
general—and the planet. Whole Foods’ stores were highly appealing places to shop.
Management put considerable emphasis on attractive stores, a colorful décor, and appealing
product displays. The company got very high marks from merchandising experts and customers
for its presentation—from the bright colors and hand-stacked fruits to the quality of the foods
and customer service to the wide aisles and cleanliness. Most stores featured hand-stacked
produce, instore chefs and open kitchens, scratch bakeries, prepared foods stations, European-
style charcuterie departments, sampling displays, and ever-changing selections and
merchandise displays. Whole Foods’ merchandising skills were said to be a prime factor in its
success in luring shoppers back time and again. The company’s newest and biggest stores were
generating average weekly sales in excess of $600,000 (over $30 million annually). The focus of
the case is on Whole Foods’ strategy and operations in the rapidly developing natural and
organic foods segment of the roughly $850 billion food retailing industry in the U.S. The
company is interesting in several important respects: it is an up-and-coming grocery chain—one
that is making a name for itself and starting to move into the ranks of the industry leaders; it
“walks the talk” in striving to live up to its core values (which are pretty impressive and are
featured in the case); it is deservedly ranked among the best companies to work for in America
(the only grocery chain to make the list each of the past 9 years); it has a pretty impressive
strategy; and until 2008 when the economy soured, its fnancial performance was quite good.
Whole Foods Market in 2008: 1 Mission, Core Values, and Strategy CASE TEACHING NOTE 532
Case 1 Whole Foods Market in 2008: Mission, Core Values, and Strategy But in late 2008, the
company’s rapid growth strategy and recent acquisition of rival Wild Oats Market had strained
the company’s financial resources; moreover, deepening recessionary conditions had caused
the oncebuoyant sales at Whole Foods stores to stagnate. Can and should the company cut
back on new store openings, despite having signed leases for the facilities? Are other strategy
changes needed? And was the acquisition of Wild Oats proving to be as good a move as had
originally been thought?

ASSIGNMENT QUESTIONS

3. Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do
you like/dislike about the company’s motto “Whole Foods, Whole People, Whole Planet?” Do the motto
and the principles underlying it (Exhibit 1) really matter at this company or are they just nice words and
cosmetic window dressing? Explain.
Ans: Yes, John Mackey has a good strategic vision for Whole Foods because it is realistic and above the
normal expectations of what a vision should be. As the healthy eating patterns change in the
population as well as the demands, Whole Foods strives to supply that demand by offering products
that will fit the needs of living a better life style. In doing so, the chemical and hormone free
products also help for a more agriculturally sustainable practice.

Personally, I like the motto of “Whole Foods, Whole People, Whole Planet”. I like the play on words
involving “Whole” in each important factor of their core values. I believe that the principles
underlying these visions really matter and that Whole foods does in fact live up to them. The
company promotes for fine and high quality products that are organic and free from any genetically
altering factors. The company promotes for a high quality of service and a competent team of
people representing them. The company also strives to see a more sustainable agriculture from the
products they supply. They believe in being responsible to the community and the planet.

4. Do Whole Foods Market’s core values as presented in case Exhibit 3 really matter? Are they “real” or
just cosmetic window dressing? What evidence can you cite to support your answer? Have Whole
Foods’ core values contributed to the company’s success? Why or why not?

Ans:

Yes, I agree that the values as presented in case Exhibit 3 really matter to Whole Foods Market. They
aim for high quality products and supply thousands of organic food and gourmet products. They have a
high regard for quality and standards in what is offered to their customers. Whole Foods focus on the
quality of their products selling organic, preservative free products, wild or aquaculture fish and
products that are environmentally friendly. Using this information I believe that they are “real” towards
their core values which is why their company has been successful in the market.