Case Study Analysis Narrative Format

Case Title: Evergreen Natural Markets Date: December 22nd 2015

Student: Kristopher Tilley Course: Management

Firm Overview and Introduction to the Case

Evergreen Naturals Markets was founded by Donald Slater near the Jefferson county line in Evergreen,
Colorado. The store started as a small business, but in 1970s Slater took over two small independent
grocery stores, who offered him an alliance to reach economies of scale; option that Slater did not take,
instead he decided to buy the store while leaving the current owner as the store manager, a practice that
still prevalence today after each new acquisition. In the 1980s Evergreen Natural Markets acquired three
more stores, converting the company in the first independent multi-site grocer specialized in natural
foods. Each store featured gourmet, natural, and organic products, while being able to offer low prices,
and high-quality service. Unfortunately in 1998 Slater suffered a tragic accident that ended his life. His
daughter Kathleen Norton assumed the direction of the firm. In 2004 Evergreen built two distribution
centers enabling them to have an efficient distribution system that supports the growing number of stores.
Evergreen operates within the grocery food retail industry; the company manages several different
businesses like, canned food, perishable goods, frozen organic/natural fruit and veggies, organic/natural
food and baked goods. Evergreen had grown so much arriving to the point where the small retail had
opened its first’s stores out of their current geographical location. But new acquisitions means new
changes and the need the re-design the whole marketing plan and management style. Also, the firms
faced new issues like, the entry of new competitors, the well-known existence of giant retailers offering a
more convenient shopping experience to customers than Evergreen, along with the lack of an Evergreen
private label. Internally, the company faced big issues like, higher turnover rate during transitional periods
within the new acquired store. This forced Evergreen CEO to think in a new renovated way to lead the
company individually but as a whole. As a result Norton implemented new training programs that
empowered employees while lowering turnover rates. Also, the company developed additional values to
its line of products to differentiate their store brand from the rest. Evergreen implemented shopping
services for disable, elderly and people without access to reliable transportation, plus a more personalized
service in-store.

Internal Perspectives

One of the biggest issues that the company faced internally after acquiring new stores in new areas was
the employee’s reaction, their resistance to change and higher turnover rate. After acquiring Arugula
Grocers, CEO Kathleen Norton question herself about whether or not the actual model will remain
effective outside the Evergreen base or if this newest acquisition will seriously test her leadership skills
and, in particular, her ability to swiftly convert the new chains’ managers, employees, and systems to the
Evergreen way. The more stores they buy the less time for a personalize supervision in each store.
Employees were having hard time adapting to a new way to do everything. This type of employee’s
insecurity and lack of motivation increased the rate of employee turnover. In the other hand, the bigger

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 the store grew the more pressure the felt of lacking a private brand label. While Evergreen offers around
20,000 SKU’s, their competitor (big retailers) carry more than 60,000, this means 3 times more products
than they do; a fact that makes the competitor a more convenient place to shop than at Evergreen. To
keep competitive in such a market, Evergreens decided to add value to its products by adding special
shopping help to those without transportation, the elderly and disable. To deal with this internal issues,
especially those relate directly to employees, Evergreen decided to create a great training program to
educate, teach and guide its new employees adapting to the “Evergreen way” this training program
motivated employees and decrease their turnover, and bringing them all aboard.

External Perspective

The grocery industry is in continuous development. Its customers are becoming more health and
financially conscious. Consumers are expecting better quality, and more organic products. Customer’s
new trend is to support products that are “made in US” versus “made in china”. In smaller towns, people
tend to support more small local retailers. In general the grocery/retail industry is dominated by giant
retailers that account for almost 50% of market sales. Due to the growth of diverse customers, the
industry had expanded its line of products at the point that some retailers offer international items in high
demand. For example, Wegmans store offers a great variety of Goya (Mexican brand) products to cover
the Hispanic demand. For the last years, the industry had found new ways to retain customers and offer
better prices. Grocery stores now may offer a 2 hour free day-care, store coupons, special prices for store
card holders, points to redeem in futures purchases, and even personalized shopping with home delivery.

The retail market is in constant change, locking special deals with suppliers that allow them to offer the
lower prices in the market. Also, bigger retailers offer three times the amount of products than Evergreen,
which attract more consumers to shop at their stores. Because of this Evergreen concentrates on providing
a “unique value” by offering a more personalize service to its customers. Their products are
differentiating from others stores. Evergreen perishable foods are grown by local farmers, which show
support to local small business owners (a big deal for many customers). Also, Evergreen products are
fresher and healthier. Other external issues that Evergreen face after acquiring new stores in a new city, is
the way how they will have to approach its consumers and gain market share. Diet habits changes by
areas, while some in the north part of the country may worry about consuming less fat and more greens,
others in the south only worry about a great flavor and joy. Because of these differences, Evergreen had
encountered the need to re-educate the market and create the need of purchasing their specialty products.

Solutions

 Design and implementation of products with its own store label. Having their own label would
help to reinforce and positioned their brand name in consumers mind. It also will help to increase
loyalty. Create a private label will imply a considerable financial investment at first, but in the
long run it will all worth it. Off course, brand success don’t happened magically, Evergreen would
have to come out with a great design, package and price in order to sell it all.

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  Effective internal communication to avoid malicious rumors that discourage employees and
increase turnover. The company should take the time to sit with employees ahead of time to give
them a head ups on what is coming in the near future. If employees hear such important and
relevant information first hand from the management people, then would feel more secure, and
will appreciate to be involve and taking in care. This would decrease turnover rates and increase
employee loyalty, when company is successful at retaining employees; they are equally
successful at reducing their operational cost that can be passed into lower prices.
 Implementation of a points-reward system. Today, consumer is used to be rewarded for shopping
at your store and no other one. If Evergreen implement a reward program, they will be raising
consumer loyalty and creating a reason for customers to come back to shop again. The downside,
this free points that translate in discounts or free items have to be financially cover from
somewhere, so Evergreen would have to found out the best way to cut somewhere to put it into
this reward program.
 Stronger use of social media to promote their unique adding values within the market. Since
everybody is always connect to any type of hand device checking social media websites, it is vital
for any company today to keep up with it. According to a report published by Texas Tech
University, “brands who engage on social media channels enjoy higher loyalty from their
customers. The report concludes “Companies should take advantage of the tools social media
gives them when it comes to connecting with their audience. A strategic and open social media
plan could prove influential in morphing consumers into being brand loyal.” (Web) Evergreen
should use this social media to promote their products, positioned their brand in a broader way
and support campaigns that promote its products. The downside, media can be your friend or your
big enemy. If something goes wrong be sure everybody would know it in a heart bit. How
companies express their ideas is very sensitive, avoiding personal opinions is the best way to go.
 Maintain economic of scale to reduce cost, enabling lower prices of their products in comparison
with competitors. “Costs per unit can decrease as the volume of production increases for different
reasons. First, fixed costs of production can be spread over a larger number of units as the volume
of units produced increases. For example, if your fixed cost is $1,000 and you produce 10 units,
the fixed cost per unit is $100 ($1,000/10 = $100), but if you product 50 units, the cost per unit is
only $20 ($1,000/50 = $20). Second, you can often save money by obtaining discounts for bulk
purchases of raw resources used in production. Finally, costs may be reduced because the increase
in volume may justify you acquiring specialized equipment and specialized labor that lead to
more efficiency”. (Web). The good part is that Evergreen would be able to compete with great
quality products at affordable prices. The bad, Evergreen will have to buy their fresh products
from a bigger supplier and not from local farmers that can only produce smaller amounts.
 A more aggressive marketing strategy that is suitable for each market where the chain acquires or
opens new stores in order to keep ahead of new and current competitors. Advertising cost
companies thousands of money every year. But worst yet, not always the company see that
money back in increase sales. Advertising is like a gamble game you try your best hand and hope
for the best. In an article called “Seven Benefits of A Strategic Marketing Plan” states that some
of the benefits of having one are: “A plan keeps your marketing efforts aligned with corporate
goals and objectives, A plan keeps your marketing efforts proactive, A sound plan makes it easy
to evaluate new opportunities, A plan gets your whole organization on the same page, A plan
helps you to keep sight of the big picture, A marketing plan facilitates measurement.” (Web)

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 Although, it is important to keep in mind that this plan should be re-design every time when need
it in order to target the right market in the right way.

The retail industry is very criticized by consumers for the low wages its employees get for their hard work
even after reaching records annual revenues every year. But the retail industry doesn’t run free, the
primary federal entities that retailers deal with are the U.S. Department of Labor, or DOL, and the Federal
Trade Commission, or FTC, but the U.S. Department of Homeland Security plays an ever-larger role in
the area of web content and cyber security. “The FTC is the only federal agency with both consumer
protection and inter-business competition jurisdiction. If the DOL is the major force in retailer-employee
relationships, it is the FTC that plays a major role in retailer-consumer relationships.” (Web)

Resources

http://www.forbes.com/sites/jaysondemers/2014/08/11/the-top-10-benefits-of-social-media-marketing/

http://study.com/academy/lesson/economies-of-scale-definition-benefits-examples.html

http://www.mikegastin.com/content/seven-benefits-strategic-marketing-plan

http://www.investopedia.com/ask/answers/070815/how-does-government-regulation-impact-retail-
sector.asp#ixzz3v6x9iquK

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