Whole Foods Market: in a class of its own

At the beginning of 2012, a statement by Whole Foods in the USA made people prick up their ears: their long term development aim was to have 1000 stores. The company currently operates around 300 stores. Expansion faltered during the economic crisis, but now their share value is again rising strongly and new stores are to be launched. Clever self-marketing, their own online further training for already well trained staff, their own foundation, projects and much more are the solid basis for the success of the Whole Foods concept. (Picture: Whole Foods Market – a lot of space, a lot of goods, and a lot of service)
Whole Foods Manager Walter Robb, the second in command after the founder John Mackey, explained recently at a business congress that the good figures for 2011 had spurred the company on to set a target for the next ten years: to develop an ambitious expansion plan that entailed opening another 700 stores. 22 new launches are planned for 2012. Whole Foods Market (WFM) cut its rate of expansion drastically during the economically difficult recent past. (Picture: We’re to see the name on more than 20 new store fronts in 2012)

Robb admitted that they had learned a great deal from the economic challenges and the downturn in their development. He is quoted in Forbes Business Magazine as saying that they were now gaining ground again on their competitors, especially those in the conventional trade. He pointed out that their prices had been adjusted. Three categories of store size should secure their competitiveness and also guarantee flexibility at various locations: the smallest stores will measure approximately 2,300 m², and the medium stores will be between 2,300 m² and 4,600 m². In big cities like New York or Chicago stores with 6,500 m² could be launched. (Picture: The fruit and vegetable department is always a showpiece at WFM, seen here in Haight Street in San Francisco)

A rise in turnover of about a billion US-dollars in one year - from 9 billion in 2010 to 10.1 billion in 2011 – has created for Whole Foods Market a comfortable basis for further expansion. According to the trade magazine Natural Food Merchandiser, in 2010, 291 stores had only 1.3 billion dollars less turnover (9.08 billion US-dollars) than the 1,016 natural products supermarkets with a retail area of more than 6,000 ft² (560 m²). The current successful phase at WFM seems to be stable, with the first quarter of 2012 registering 8.4 % growth. After plunging to 7 US-dollars in 2008, shares have again risen to over 80 US-dollars. (Picture: WFM has had its ups and downs over the years)

With the help of the Whole Foods Market in Monterey, we can illustrate some of the special features of the Whole Foods concept. For the last 14 years, this store has been an outlet in the Del Monte Shopping Center in this Californian port that has about 30,000 inhabitants. There are plenty of parking spaces. The store is open every day from 8.00 to 21.00. Around 165 employees ensure that everything runs smoothly. Feature number 1: of the approximately 60,000 articles in the product range, about 20,000 across all the product groups belong to the value-for-money WFM own brand 365 Everyday Value. According to Whole Foods, the brand is not totally organic, although it is 100 % non-GM. The company is a member of the Non-GMO-Project, which is an association that certifies products, lobbies and organizes a non-GMO-month every year. (Picture: Whole Foods Market in Monterey/California)

Feature number 2: in 2009, Whole Foods was the first food retailer to seek organic certification from the prestigious Californian certifier CCOF. So far, only a few retailers have followed suit. However, WFM has been criticised again and again for the fact that only ca. 40 % of the product assortment is certified organic. Critics maintain that Whole Foods creates the impression of being 100 % organic, whilst the company defends itself by quoting its philosophy that promises healthy food products, even though they are not exclusively organic.

WFM points to its approach of improving the world: “We want to bring about positive change in the food industry, raise awareness of quality on the part of American consumers and make our planet a healthier place to live in,” is how Leonard Chabiel from WFM Monterey summarises the strategy. The rest of the offer in WFM stores is natural, i.e. grown naturally and carefully, processed without the use of preservatives, selected in keeping with the WFM’s quality standards or is fair trade. (Picture on left: In-store communication of Whole Foods’ quality standards)

The programmes Health starts here and ANDI-eat right America are ways in which Whole Foods puts its philosophy into practice. The index ANDI (Aggregate Nutrient Density Index) categorizes foods according to their healthy nutritional value: the higher the number of points, the healthier the product (see picture on right). Whole Foods also campaigns in a programme for animal welfare, for protection of the environment with a programme for recycling plastic yogurt pots and glass bottles, with Whole Trade for fair trade and with the Whole Planet foundation to combat poverty. These programmes are backed up by marketing measures, and they give customers the feeling of being a part of these positive campaigns. Whole Foods’ customers are drawn into these activities, and there is a direct appeal to them: “Help us help a million more people”. The company deals with these topics on a grand scale and in an eye-catching way. Scarcely any free surface is left unused to get across the messages. Thus Whole Foods addresses the themes that surveys show are important to customers with awareness: health, animal welfare, regionality and environmental protection. Organic is a theme that is quite a way down the list of preferences of many American consumers. (Picture: Help a Million campaign against poverty)

Chabiel’s explanation of how they design their product range is pragmatic: “We listen to our customers.” The sales figures for all the roughly 60,000 articles are evaluated every week, and this helps with making decisions on the listing and placing of products. In the Whole Foods system the decision and the responsibilty for buying a product lie with the consumer – whether a regional product that any store can buy in from a radius of 200 miles, organic, fair, natural or products from conventional agriculture. Transparency is now ensured by an improved system of labelling. However, the clever arrangement of products can give the customer the impression that all products are very healthy. When designing the product range, at WFM they like to be guided by Europe, says Leonard Chabiel: “That’s where lots of innovative ideas and good products keep coming from.” (Picture: Room for messages on the shopping bags too)

Whole Foods also has its own philosophy regarding pricing. The basic principle applies: “Good products are never cheap.” And yet there are various ways to differentiate prices, of which one is couponing. You find a coupon-book in the customer magazine and individual coupons attached to products that sometimes offer big price reductions, such as a discount of $2 on a pizza. The cost of the discount is borne by the manufacturer and wholesaler. The own brand 365 Everyday Value is sold at better prices than other brand products, but it is noticeable in the stores that there is little price advertising. Instead, the company tries to create a high-value shopping experience and a feel-good ambience, so that consumers can experience the value of products. (Picture on left: Image poster in San Francisco: Eat what you love and love what you eat)

Interesting and another feature (number 4) is the decentralized organization of the network of stores and the company’s continuing training. With each store responsible for buying and placing goods, based on the weekly business analysis, there are department teams (about 15 people) who are responsible for different product groups. Training à la Whole Foods: to keep up-to-date, each member of a team takes ten courses a year on topics like product knowledge, food safety, sustainability and organic farming at the WFM-Online-University.

They also have face-to-face seminars. Chabiel says that this system has worked well over the last six years and helps them to maintain their position vis-à-vis 35 competitor specialist stores in the region.
(Picture: Staff belong to teams and they undergo continuous training)