Whole Foods: Final Paper
Whole Foods Market, Inc
Managing in the Evolving Workplace
March 5, 2013
From the fairly humble beginning of being a one-store entrepreneur living on the third floor and taking baths in the dishwasher, John Mackey has seen his 1978 Safer Way grocery store grow into an $8 billion a year corporation. As of September 2008, Whole Foods had 264 stores in the United States, six in Canada, and five in the United Kingdom. Whole Food’s is now the leading chain of natural food supermarkets in the United States. The company's stores average 28,500 square feet in size and feature foods that are free from artificial preservatives, colors, flavors, and sweeteners. They also offer many organically grown products. Many locations include in-store cafes and juice bars. Whole Foods has also developed a growing line of private label products such as organic pasta, freshly roasted nut butters, oak-aged wine vinegars, and aromatic teas. After the company was founded in 1980 with a single store, it grew dramatically into a chain of more than 130 stores in 25 states, the District of Columbia, and Canada. It is a Fortune 1000 company, ranked as the 41st largest U.S. supermarket and the 730th largest U.S. company overall. There are few companies that attract the kind of following Whole Foods and its CEO/founder has both among its customers and the national media. Their corporate website averages more than 50,000 visitors a day. Through a long series of acquisitions, John Mackey has created a niche retailer which enjoys lofty profits in a very price competitive industry that is typically characterized by accordingly low profit margins. Whole Foods had 275 stores, and 50,000 plus team members in 2008 with a goal of 1,000 stores open in the future (Whole Foods Market, 2008a).This ever-evolving, often controversial organic retailer is facing several major strategic issues in both its external and internal environment. CEO John Mackey admitted that 2008 was the toughest year in the company’s history. In the first quarter of 2009, Whole Foods posted its first decrease in same-store sales in its twenty-nine year history. Confronting Whole Foods today are such issues as: the deteriorating state of the American economy; the uncertainty of the future of the organic segment of the grocery industry; the increasing competition of the major players in the food industry and their inroads in the organic market; the overall increasing cost of food for American consumers; the company’s struggle to assimilate its acquisition of Wild Oats; and the Federal Trade Commission’s objection to that acquisition in 2007. In 1993 and 1994, Wild Oats was named one of the "500 Fastest-Growing Private Companies in America" by Inc. Magazine. In 1996, it became a public company traded on the NASDAQ Stock Market. The Wild Oats story continued with a period of rapid growth through acquisitions and new store development, which peaked in 1999 with the addition of 47 stores in a single year. Wild Oats operated 109 stores in 23 states and British Columbia, Canada at the time it merged with Whole Foods Market in 2007. Up until 2007 Wild Oats Market was Whole Food’s largest, closest competitor with a little over a billion a year in sales, slightly over 100 stores, and 8,500 plus employees. On February 21, 2007, Whole Foods Market, Inc. and Wild Oats Markets Inc. announced the signing of a merger agreement under which Whole Foods Market, Inc. would acquire Wild Oats Markets Inc.’s outstanding common stock in a cash tender offer of $18.50 per share, or approximately $565 million based on fully diluted shares. Under the agreement, Whole Foods Market, Inc. would also assume Wild Oats Markets Inc.'s existing net debt totaling approximately $106 million as reported on September 30, 2006. Whole Foods and Wild Oats entered into a merger agreement pursuant to which Whole Foods would acquire 100 percent of the voting...
References: Haglock, T. (2008). Whole Foods Market, Inc. Harvard Business School, 34.
Paumgarten, N. (2010, January 4). Food Fighter. Retrieved from The New Yorker: http://www.newyorker.com/reporting/2010/01/04/100104fa_fact_paumgarten?printable=true
Whole Foods Market (2008a). Whole Foods Annual Report 2008.
Yahoo Finance. (2012) Whole Foods Market, Inc (WFMI). Retrieved March 5, 2013
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