{"id":6235,"date":"2015-12-09T22:13:25","date_gmt":"2015-12-10T03:13:25","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/whole-foods-a-whole-package-from-austin-texas\/"},"modified":"2015-12-09T22:21:55","modified_gmt":"2015-12-10T03:21:55","slug":"whole-foods-a-whole-package-from-austin-texas","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/whole-foods-a-whole-package-from-austin-texas\/","title":{"rendered":"Whole Foods: A Whole Package from Austin, Texas"},"content":{"rendered":"

Origins:<\/strong><\/p>\n

Whole Foods Market was founded in 1980, as the merger between two small independent organic food stores–SaferWay and Clarksville Natural Grocery. \u00a0The original store was larger in size than a typical natural food chain, moving towards a supermarket format, and quickly developed a following as a one-stop-shop for natural food products. \u00a0Due to the success of the store, Whole Foods Market expanded rapidly into Texas, California, and other parts of the country through a combination of acquisitions and organic growth.<\/p>\n

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Today:<\/strong><\/p>\n

Whole foods market is the leading retailer of natural and organic foods, and has 431 locations, 91,000 employees, making it\u00a0the 30th largest retailer in the US based on revenue. \u00a0Whole Foods also maintains a significantly higher operating margin than competing supermarkets.<\/p>\n

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The Business Model:<\/strong><\/p>\n

Whole Foods initial value proposition was to bring a larger, supermarket format to the natural foods industry. \u00a0Since then, the business model has evolved to sell premium grocery products that reflect high quality, high price, responsible agricultural practices, organic\/natural\/non-GMO\u00a0products, and environmental stewardship in one large and convenient place. \u00a0Whole Foods has also grown into offering its high-quality products in stores that are better designed and more tastefully decorated than competitors, while also providing a higher level of service and driving innovation from the ground up.<\/p>\n

Below:\u00a0<\/strong>a representation of Whole Foods’ business model.<\/em><\/p>\n

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Key Operating Model\u00a0Differentiation:<\/strong><\/p>\n

Employee Engagement\/Ownership<\/i><\/p>\n

Stores in Whole Foods generally comprise of 10 self-managed teams, each led by a team leader, rather than a traditional hierarchical structure. \u00a0Management within a store is decentralized and emphasizes decisions being made by individuals all across the organizational chart. \u00a0The teams within the stores are assigned a focus area–either on different a product line\u00a0or aspects\u00a0of store operations. \u00a0Teams are assigned a target of expenses and are allowed to share in the extra profits if they come in under that level of expenses (Gainsharing program). \u00a0This ability to be more productive than expected, and share in the rewards of your labor, empowers employees to do their best. \u00a0In addition, team members have access to the books of the stores so they can see how the store is faring financially, and how other departments are doing.<\/p>\n

At a corporate level, Whole Foods messages that employees have a ‘shared fate’ by calling everyone team members and provides\u00a0team members that have worked 6,000 hours with a stock option plan. \u00a094% of equity awards granted under the Company’s stock plan have been from non-executive officers. \u00a0Whole Foods also provides extremely low-cost health insurance to any workers working over 30 hours a week–something typically unheard of for hourly employees. \u00a0In addition, Whole Foods offers numerous other health and wellness programs that are best-in-class in the grocery industry. \u00a0These actions serve to build employee loyalty, reduce turnover, increase service quality, \u00a0align even low-level employees with shareholders, and encourages all employees to ‘think like an owner’.<\/p>\n

Below<\/strong>: a self-managed team inspects and distributes fresh bread.<\/em><\/p>\n

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Quality\/Sourcing Standards<\/em><\/p>\n

Whole Foods spends a substantial expense carefully evaluating every product that they sell and ensuring they comply with the strictest quality standards in the industry–standards that ban hundreds of ingredients found in many agricultural products as well as inhumane farming practices. \u00a0Whole Foods further differentiates itself by being very transparent about their quality standards, posting them on the website, and labeling them on the products that they sell. \u00a0This extra step in the packaging process appeals to consumers who are more conscious of what they are buying and want to know how the products got to the store.<\/p>\n

Below:\u00a0<\/strong>an example of Whole Foods quality\/sourcing labeling.<\/em><\/p>\n

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Store Layout & In-Store Food Preparation Stations<\/em><\/p>\n

Whole Foods differs from most grocery store competitors in its ‘action stations’–areas of the store where food is being prepared. \u00a0Whole Foods not only produces much higher quality products from these stations, which include bakeries, pizzerias, bbq stations, sushi bars, gelaterias,\u00a0sandwich\u00a0shops, coffee shops, juice bars, and liquor bars, but they also place\u00a0a heavy emphasis on freshness and service. \u00a0At most of these stations you can get products made from scratch from a friendly employee to your specifications. \u00a0In many other grocery stores, these stations mostly exist to place ‘relatively fresh’ product in an area for sale without much interaction with the employee. \u00a0These stations further contribute to Whole Foods value proposition as a higher quality and higher service supermarket.<\/p>\n

Below:\u00a0<\/strong>an example ‘action station’ that feels more like a restaurant than a supermarket.<\/em><\/p>\n

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Charitable Donations<\/em><\/p>\n

In keeping true with its mission of promoting healthier\u00a0products and responsible agricultural practices, Whole Foods seeks to donate at least 5% of after-tax profits to nonprofit organizations. \u00a0Whole Foods also operates or supports many various charitable programs, including the Whole Planet Foundation, Whole Kids Foundation, Whole Cities Foundation, Healthy Eating Education, Green Mission, and others.<\/p>\n

Below:<\/strong>\u00a0an example of a Whole Foods charitable organization.<\/em><\/p>\n

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References:<\/p>\n

http:\/\/www.wholefoodsmarket.com\/company-info\/whole-foods-market-history<\/p>\n

http:\/\/assets.wholefoodsmarket.com\/www\/company-info\/investor-relations\/annual-reports\/2014-WFM_Annual_Report.pdf<\/p>\n

http:\/\/www.wholefoodsmarket.com\/mission-values\/core-values\/declaration-interdependence<\/p>\n

https:\/\/en.wikipedia.org\/wiki\/Whole_Foods_Market<\/p>\n

http:\/\/www.forbes.com\/sites\/kathleenkusek\/2015\/02\/17\/five-lessons-retailers-can-learn-from-whole-foods-markets-q1-performance\/2\/<\/p>\n

Whole Foods Market: Operations Management, 10 Decisions, Productivity<\/a><\/p><\/blockquote>\n