Whole Foods Market

Founded in 1980 as a local supermarket for natural and health foods in Austin, Texas, Whole Foods Market

had by 2006 evolved into the world’s largest retail chain of natural and organic foods supermarkets. The

company had 179 stores in the United States, Canada, and Great Britain and 2005 sales of $4.7 billion;

revenues had grown at a compound annual rate of 20 percent since 1998. 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.” The company’s

stated mission was to promote vitality and well-being for all individuals by offering the highest quality,

least processed, most flavorful and naturally preserved foods available.

But as the company’s motto “Whole Foods, Whole People, Whole Planet” implied, its core mission

extended well beyond food retailing. John Mackey’s vision was for Whole Foods to become a national

brand synonymous with not just natural and organic foods, but with being the best food retailer in every

community it served. In pursuit of this vision, the company’s strategic plan aimed at expanding its retail

operations to offer the highest quality and most nutritious foods to more and more customers and promoting

organically grown foods, food safety concern, and sustainability of the entire eco-system. The company’s

long-term objectives were to have 400 stores and sales of $12 billion by 2010.

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, in-store 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 $775 billion food retailing industry in the U.S. The company is interesting

in several important respects: it is very much an up-and-coming grocery

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