Businessmodel of Whole Foods Market

Customer Segments

Whole Foods serves a range of consumer demographics across local communities in the US, through its network of supermarket outlets.

Whole Foods typically attracts customers that are more affluent, with an interest in eating healthy and sustainable foods, and do not mind spending extra money to purchase organic and fair trade products. Recent reports suggest that a typical Whole Foods customer is a female between the ages of 25 and 39 with more than $1,000 in discretionary monthly income, typically working in a professional environment.

Whole Foods has recently attempted to diversify its customer base and compete with low-cost grocery chains such as Aldi and Trader Joe’s by launching its own chain of discount outlets. These lower price stores will principally target millennials, who are also typically interested in eating healthily and sustainably but have less disposable income.

The US continues to be Whole Foods’s principal market, accounting for more than 96% of the Company’s sales in 2015. The Company’s remaining sales are shared between Canada and the UK.

Value Propositions

Whole Foods provides value to its customers in the following ways:

• Its brand name and industry standing, with the Company established as one of the most popular grocery chains in the US, with its name bringing with it a certain prestige as it is associated with more affluent shoppers;
• Its diverse catalogue of premium products, with the Company offering a broad range of high-quality products and produce, including packaged goods, frozen food, dairy, meat, bakery products, prepared foods, beverages, body care, pet foods, and household goods;
• Its commitment to organic and sustainable sourcing, with the Company dedicated to sourcing organic and high-quality produce from sustainable growers and producers, and participating in sustainability projects;
• Its sales reach, with the Company serving an extensive domestic customer base through its network of 412 stores across 42 US states, as well as ten stores in Canada, and nine stores in the UK; and
• Its accessibility and flexibility, with the Company serving numerous communities directly, as well as offering online shopping services on desktop and mobile platforms. ### Channels

Whole Foods operates a website at www.wholefoodsmarket.com, through which it provides information on its services, locations, and values. The Company also operates an online store, which allows customers to browse the Company’s full portfolio of products, place orders, and arrange grocery deliveries independently. Additionally, Whole Foods offers holiday meal catering services, which can be organised via the Company’s website.

Whole Foods primarily reaches its customers through its network of physical retail outlets. This principally comprises 412 stores across 42 US states, and the District of Columbia, including a significant presence in California, Texas, Massachusetts, and Florida. The Company also serves customers in the UK through a network of nine retail outlets – primarily in and around London – as well as ten outlets across Canada.

Whole Foods’s retail infrastructure is supported by significant procurement, production, and distribution network, including regional offices, distribution centres, bakehouse facilities, commissary kitchens, specialist seafood-processing facilities, a produce procurement centre, and a specialty coffee and tea procurement and roasting operation.

Customer Relationships

Whole Foods provides a full range of products to its customers on a self-service basis through its online sales channel, which enables customers to browse products, place orders, manage customer accounts, and arrange deliveries without interacting with members of the Company’s sales and support personnel. The Company’s catering service can also be accessed on a self-service basis.

Whole Foods provides a more personalised service to its customers through its international network of retail outlets, where the Company’s sales staff are able to directly assist customers, advise them on products, and handle complaints and product returns in-person. The Company seeks to provide excellent customer service in a bid to encourage recurring business, and set itself apart from its competitors.

Whole Foods also operates a customer support force, which can be contacted over the phone or via an online contact form, and is able to provide personalised assistance in relation to various issues. The Company also provides a range of online resources to its customers, including health eating advice, recipes, delivery and returns information, and store locations.

Alternatively, customers are able to stay up to date with the Company’s corporate developments, and interact with the Company directly through its social media accounts, including with Facebook, Twitter, Pinterest, Google+, Instagram, YouTube, and Snapchat.

Key Activities

Whole Foods is natural and organic foods supermarket chain operator. The Company operates a single operating segment, which is concerned with the operation of a domestic network of 442 stores, which include 412 retail outlets across 42 states in the US, as well as in the District of Columbia.

The Company also operates internationally, with 10 stores in Canada, and 9 stores in the UK. Whole Foods offers an extensive catalogue of products, spanning all areas, including produce, packaged goods, bulk, frozen, dairy, meat, bakery, prepared foods, coffee, tea, beer, wine, cheese, nutritional supplements, vitamins, body care, pet foods, and household goods.

The Company is committed to offering products that are produced organically and sustainably, operating an extensive procurement network. Whole Foods also offers products under its own brands, such as Allegro Coffee, Whole Foods Market, Whole Paws and Engine 2 Plant-Strong.

Key Partners

Whole Foods works closely with a network of partner companies and organisations in order to provide its customers with high-quality products and services. These partners can be categorised broadly as:

• Supplier and Procurement Partners, comprising a network of growers, farmers, producers, and manufacturers that supply various goods, produce, and products that make up the Company’s product catalogue;
• Agriculture and Sustainability Partners, comprising various growers, scientists, and sustainable-agriculture experts that work with the Company to develop responsible and sustainable methods of farming produce;
• Whole Trade Certifier Partners, comprising various no-profits and institutions dedicated to the production and sale of fair trade goods that collaborate with the Company on identifying responsibly produced products;
• Vendor Partners, comprising various suppliers of services and technologies that are utilised across the enterprise and support its core retail operations; and
• Strategic and Alliance Partners, comprising companies and organisations from a range of sectors, with which the Company collaborates on projects and shares certain resources. Whole Foods partners with a number of high-profile organisations, such as the Rainforest Alliance, Fairtrade International, and The Institute for Marketecology Social and Fair Trade Certification. The Company has also partnered with Infor to develop a new, cloud-based retail management solution, and with Baroo to offer pet concierge services.

Key Resources

Whole Foods’s key resources are its brands and intellectual properties, its products and supply chain, its online retail channel, its IT and communications infrastructure, its international network of physical retail outlets, its partnerships, and its personnel.

Whole Foods owns a number of intellectual properties, including trademarks, license agreement, brand names, and non-competition agreements, that are key to its activities. This includes its proprietary Whole Foods Market, Allegro Coffee, Engine 2 Plant-Strong, and Whole Paws brands.

Whole Foods owns and or leases a number of properties, notably network of more than 400 retail outlets across the US, Canada, and the UK, as well as its supporting infrastructure, such as regional offices, distribution centres, bakehouse facilities, commissary kitchens, specialist seafood-processing facilities, a produce procurement centre, and a specialty coffee and tea procurement and roasting operation.

Cost Structure

Whole Foods incurs costs in relation to the procurement of produce and supplies, the operation and development of its online sales channel, the maintenance of its IT and communications infrastructure, the operation of its physical chain of retail stores, the implementation of advertising and marketing campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Whole Foods recorded cost of goods sold and occupancy costs in the amount of $9.97 billion. The Company also recorded selling, general, and administrative expenses totalling $4.47 billion.

Revenue Streams

Whole Foods generates revenue through the sale of various goods and produce – including packaged goods, frozen food, dairy, meat, bakery products, prepared foods, beverages, body care, pet foods, and household goods.

In 2015 Whole Foods recorded total sales for the year of $15.39 billion, up on the $14.19 billion generated by the Company in 2014. The Company attributed this sales increase primarily to comparable store sales across its various outlets, as well as new stores opened. The Company generates the vast majority its revenue through its domestic operations.