Whole Foods Market is an American supermarket chain with its headquarters in Austin, Texas. It was established in 1980 with the merger of SaferWay and Clarksville Natural Grocery stores. Today Whole Foods Market has over 400 stores in USA, Canada and United Kingdom with over 91000 employees. The company is traded on Nasdaq with a market capitalization of over $10 billion and is a Fortune 500 company. It is the nation?s largest retailer of organic foods, 5th largest public food retailer, and the 10th largest retailer overall based on 2014 sales rankings (Whole Foods Market, 2015). The company?s mission is to ?promote vitality and well-being of all individuals by supplying the highest quality, most wholesome foods available? (Whole Foods Market, 2013). Some of the company?s core values are: selling the highest quality natural and organic products, support team member excellence, create wealth through profits and growth, serve and support local and global communities.
Marketing Strategy
Segmentation
Whole Foods Market has only one operating segment: natural and organic foods supermarket (Whole Foods Market, 2013). This segment is a $100 billion market with YOY increase of 9% (NFM, 2015). The shoppers in this segment usually are health conscious, have environmental concerns, care how their food is produced and also care how the store associates and employees are treated. Trader-Joes, Sprouts Market are some of the competitors of Whole Foods in this segment. Recently more supermarket chains are carrying organic and natural foods at lower price margins to attract the clientele of Whole Foods.
Targeting
The target customers for Whole Foods Market are individuals and families whose income is well above the national average, lead a healthy lifestyle and conscious of environment. Most of the customers have college degrees and live in upscale sub-urban or metropolitan areas. Another target group of Whole Foods are wealthy customers. These customers usually do not need any discount deals or coupons and will be averse to shopping at Walmart. They will be usually buying high end and expensive selections at Whole Foods (Brandongaille, 2014). The customers at Fremont store were mostly young families, new college grads working for many of the high-tech companies in Bay Area and retirees. Most of shoppers were not just shopping for groceries but sampling the foods and having brunch.
Whole Foods is currently targeting a new group of customers: Millenials. This target group consists of mainly new college graduates with more liberal or progressive values, more conscious about saving money, willing to travel and pay-off college debts rather than spending on expensive products. Whole Foods Market is opening a new line of stores specifically targeting this group of individuals (Bolton, 2015).
Positioning
Whole Foods Market positions itself as the best source for healthiest, natural and organic foods among its competitors and is the first grocery store to be ?Certified Organic? in America. It has voluntarily certified all its stores and operations and till date is the only food retailer that has all store departments in all locations certified (Whole Foods Market, 2015). Whole Foods differentiates itself from its competitors by relying on its stringent high quality standards. It is also certified by California Certified Organic Farmers (?CCOF?), an independent, USDA-accredited, third- party certifier. CCOF?s Organic Certification Program verifies Whole Foods handles organic goods according to stringent USDA guidelines (Whole Foods Market, 2015). One of the key positioning strategy of Whole Foods is its supply chain. It procures its products from local and global producers and ensures that its products are manufactured without violating any labor laws, human rights or animal rights.
Marketing Programs
Product
Whole Foods carries huge varieties of high quality organic and natural products. Some of the products are usually very exotic and not available in other supermarkets. An average store carries 34000 SKUs and much larger stores usually carry about 50000 SKUs (Whole Foods Market, 2015). Due to the focus on carrying high quality healthy foods, we do not usually find products in Whole Foods that are common in other supermarkets. For example, Whole Foods does not carry sugary sodas that are known to cause childhood obesity but instead carries a wide variety of health drinks. 54% of food sold at Walmart is not sold by Whole Foods since they do not meet its quality and health standards (Sarich, 2014). It also has its own label, 365 Everyday Value and is carried in all stores along with other exclusive local and independent brands. It carries a huge selection of cheese, wines and imported beers. Whole Foods does not carry products with hydrogenated fats, animals raised with antibiotics, caged hen eggs, products containing artificial flavors, colors and sweeteners (Whole Foods Market, 2015).
Place
Whole Foods sells its products both in stores and online but majority of the purchases are made in store. They recently signed an exclusive partnership with Instacart and are now delivering groceries to their customers (del Rey, 2016). Whole Foods typically targets premium real estate and takes into consideration lot of criteria before zeroing on a place. An average store is about 35000?40000 square feet, with abundant parking space. A typical store has about 200,000 people living within 20-minute drive, have large number of college-educated residents, easy access to roadways and clear visibility of its signage (Whole Foods Market, Real Estate, n.d.). The two stores I have visited, in Fremont and Palo Alto meet these real estate requirements. Both are affluent suburbs with highly educated population.
Price
Whole Foods Market is known for its premium pricing and has a moniker of Whole Paycheck (Jargon, 2013). Due to its high quality and strict adherence to standards, many of the products are expensive at Whole Foods compared to other supermarket chains. Although many of the regular customers of Whole Foods are not price sensitive, to attract customers from Trader Joes or Sprouts, Whole Foods is now offering more sales on it products than before. Its 365 Everyday Value label is comparatively cheaper than other named brands it carries in stores. They are also offering regular sales on various items including perishables, named brands and also on it own labels (Mohammed, 2015). At the entrance of the Whole Foods store at Fremont, they placed coupon books, which had coupons for that particular week. Various aisles were clearly marked in big yellow boards about the discounts. Banners were placed promoting its mobile app to download more coupons and budget friendly recipes.
Promotion
Whole Foods Market has been generally averse to run ads in either print or visual media. They rely on their brand awareness to get customers to their stores and ensure that the shopping experience will entice the customers to come back. WFM?s marketing expenses has been less than 0.5% of sales for over past 10 years (Bells, 2015). The company did not even have a loyalty program until 2015 and still has developed a loyal customer following everywhere (Horovitz, 2014). The company relies a lot on word of mouth and social media. They have active marketing team on Pinterest, Twitter, Facebook and Instagram with a combined reach of 11 million followers. The emphasis for marketing investments has been on community non-profit partnerships that help grow its business and local communities as well (Whole Foods Market, 2015). This was observed in stores too where focus of banners and on the signage was how Whole Foods is serving the local communities and about its partnerships with non-profits. Each store has its own promotion strategy. Bigger store in more upscale neighborhoods have digital signage and also weekend cooking classes with prominent chefs.
In 2015, the company has revised its marketing strategy after continuous losses and losing the customers to other chains like Costco and Target. For the first time in its history it started a national ad campaign with a budget of over $20 million to get new customers and also to retain its existing customer base (Dobrow, 2014). The focus of the ads is how values matter to Whole Foods and ethically it sources all its food for the greater good of the planet.
Recommendations
Whole Foods is perceived as a very expensive store and not many people are aware of various discounts and sales that happen at store. Regular customers of Trader Joes or Sprouts are not aware that some of the groceries are cheaper at Whole Foods (Mohammed, 2015). It needs to do a better marketing of its 365 Everyday Value brand and also about it weekly sales. Since Whole Foods is trying to target millenials, it can use social media to promote deals rather than traditional media.
Whole Foods needs to rollout its loyalty cards across all the stores. Currently it is being piloted only in few stores. Having loyalty cards and also showing how much the customers saved on their food basket will increase customer loyalty and also ensure that customers return for their weekly groceries. Whole Foods can also send monthly marketing emails, send mobile notifications to these customers of the current deals in stores. Without loyalty cards, sales and discounts do not usually bring back the customers. Whole Foods could also use its mobile app to increase the loyalty in its customers. Having a gamified app, with mobile ordering and mobile payments will increase the revenues as shown by Starbucks (Kell, 2015).
Whole Foods has to ensure that the newly opened stores for millenials entice new customers but not take away the customers from its existing stores. To prevent this, Whole Foods has to clearly communicate and market to the target groups what both these stores have to offer and how they are different from each other while having the same high quality organic products.
Whole Foods needs to aggressively market about it stringent quality standards. Other major supermarket chains are able to provide organic produce at lower price points since they do not follow the same standards as Whole Foods. The USDA rules about what gets classified as organic are hazy and many of the chains are carrying organic produce that may not be strictly organic. Whole Foods need to market that its products are healthier and worth buying. This also helps in maintaining its exclusive and premium brand and retain its wealthy customers.
References:
1) Whole Foods Market. (2015). 10-K Report. Retrieved from http://assets.wholefoodsmarket.com/www/company-info/investor-relations/annual-reports/2015-WFM-10K.pdf
2) Whole Foods Market. (2013). 10-K Report. Retrieved from http://www.wholefoodsmarket.com/sites/default/files/media/Global/Company%20Info/PDFs/WFM-2013-10-K.pdf
3) NFM 2015 Market Overview data charts and graphics. (2015, May). Retrieved from http://newhope.com/nfm-market-overview/nfm-2015-market-overview-data-charts-and-graphics
4) Bolton, Robyn. (2015, May). Whole Foods? Misguided Play for Millennials. Harvard Business Review. Retrieved from https://hbr.org/2015/05/whole-foods-misguided-play-for-millennials
5) Sarich, Christina. (2014, February). Dangerous Ingredients: 54% of Food Sold at Walmart is Banned by Whole Foods Market. Retrieved from http://naturalsociety.com/54-percent-ingredients-ban-walmart-whole-foods/
6) Del Rey, Jason. (2016, February). Whole Foods to Invest in Instacart, Signs New Multi-Year Delivery Deal. Retrieved from http://recode.net/2016/02/23/whole-foods-to-invest-in-instacart-signs-new-multi-year-delivery-deal/
7) Whole Foods Market. Real Estate. (n.d.). Retrieved from http://www.wholefoodsmarket.com/company-info/real-estate
8) Jargon, Julie. (2013, August). Whole Foods? Battle for the Organic Shopper. Wall Street Journal. Retrieved from http://www.wsj.com/articles/SB10001424127887323455104579015162135676136
9) Mohammed, Rafi. (2015, August). Whole Foods Needs a More Consistent Pricing Message. Harvard Business Review. Retrieved from https://hbr.org/2015/08/whole-foods-needs-a-more-consistent-pricing-message
10) Bells, Sonya. (2015, November). Evaluating Whole Foods? Marketing and Purchasing Strategies. Retrieved from http://marketrealist.com/2015/11/evaluating-whole-foods-marketing-purchasing-strategies/
11) Horovitz, Bruce. (2014, September). Whole Foods to test first rewards program. USAToday. Retrieved from http://www.usatoday.com/story/money/business/2014/09/18/whole-foods-rewards-program-grocery-stores-supermarkets-organic-natural-foods/15828413/
12) Dobrow, Joe. (2014, October). The Un-Marketing And Re-Marketing Of Whole Foods. Retrieved from http://www.fastcoexist.com/3037452/the-un-marketing-and-re-marketing-of-whole-foods
13) Kell, John. (2015, July). Starbucks wants your phone as much as it wants to sell you coffee. Forbes. Retrieved from http://fortune.com/2015/07/24/starbucks-mobile-investments/
*** The above analysis was done for Marketing Management course.
