Professional Documents
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365 EverydayValue Productscanfillyourpantrywithoutemptyingyourpocketbook Valuepriceseverydayoftheyear Meetall qualitystandards,comeinbothnaturalandorganicselections:wholegrainflours andshadegrowncoffeetoorganicmilkandfrozenveggies Makeiteasytostockuponthebestproductsforthebestprice WholeFoodsMarket NonperishablegoodsandbodycareproductsProductsarecarefullyselectedfor exceptionaltaste,authenticityandremarkablequality.Fromsmallbatch,artisanrecipesto exoticflavors,thevarietyofourproductswillexpandyourculinaryvocabulary.Withnatural andorganicchoices,wehavemoreuniqueandexquisiteproductsindevelopment. Regulations,Enforcement&Quality l i f & li As leadingretaileroforganicfoods,helpedformulatetheNationalOrganicasthesoleretail representativeontheNationalOrganicStandardsBoard. Thishandsonapproachallowsourvisionofasustainablefuturetoberepresentedinthe definition,construction,andenforcementofsustainablelegislationandregulation.Our g g y p y y desireforclearandstraightforwardanswersandregulatorytransparencydirectlyassists individualsandgroupsseekingaccountabilityfromtheirelectedandnonelectedofficialson issuesdirectlyrelatedtoorganicsandsustainability. Inconjunctiontoworkingwithfarmersonalternativesandeducatingourconsumersabout theharmfuleffectsofsomepesticides,wearetheonlyretailerthatparticipatedinthejoint EPA/USDAToleranceReassessmentAdvisoryCommittee.Thetaskofthismultistakeholder advisoryboardwastoadvisethoseagencieshowtheyshouldfairlyreassessallthepesticides
Individual Stores Fallunderbatchprocesswithmediumcustomizationandvolume 365EverydayValuebrand Offeredateverystorewith minimaltonocustomization Sourcedfromsmallersuppliersgloballyinsteadoflocallytomeetscale pp g y y Supply Chain shortcoming:Sourcing logisticsarevariableandregionally specificeven though365 EverydayValue productsaremadeinhighvolumewithlow customization.
1. Increasingcompetitionwithmainstreamgroceryretailers WholeFoodscompetitiveadvantageofqualitytrustandreliabilityatrisk
QualityStandards Carrynaturalandorganicproducts:unadulteratedbyartificialadditives, sweeteners,colorings,andpreservatives Evaluatequalityintermsofnutrition,freshness,appearance,andtaste Sellthehighestqualityfoodswecanfindatthemostcompetitivepricespossible. Neverendingprocessfor thecarefuljudgmentofbuyersthroughoutthecompany. Carefullyevaluateeachandeveryproductfor sale Fresh,wholesomeandsafetoeat Seekoutandpromoteorganicallygrownfoods
OrganicProduct O i P d
Mustbeatleast95%organicallyproducedingredients RemaindermustconsistofnonagriculturalsubstancesapprovedontheUSDA'sNationalList ofnonorganicallyproducedagriculturalproductsthatarenotcommerciallyavailablein organicform Nameofthecertifyingagentmustappearonpackages UseoftheUSDA"organic"sealisoptional
MadewithOrganicIngredients
Productmustcontainatleast70%organicingredients. Remaindercanconsistofconventionallygrownagriculturalingredients Productmaydisplaytheterm"MadeWithOrganic... Thenameofthecertifyingagentmustappearonpackages. UseoftheUSDA"organic"sealisprohibited.
CertifyingOrganic Whatisorganic
HistoryofU.S.OrganicStandards: y g OrganicFoodsProductionAct1990 Responsibilityfordevelopingnationalstandardsfor organicallyproducedagriculturalproducts ResultedinNationalOrganicProgram(NOP) MarketingprogramofUSDAsAgriculturalMarketing Service Standardssetby15memberNationalOrganic StandardsBoard g p p Organicstandardsandcertificationprocessimplemented in2002 Production Handling Labeling Certificationishandledbystate,nonprofitandprivateagenciesthathavebeenapproved
bythe USDepartmentofAgriculture (USDA). ConcernedCitizensSafeguardOrganic
Severalcitizengroupspredateorganicstandards, t hd
ExcerptfromOfficialWholeFoodsBlog OurstrategyisnottorunawayfromourChinesesuppliers,buttotakeastandand getclosertooursuppliers.Wewillcontinuetoimproveontheauditandtesting proceduresthatarealreadyinplace OrganicfarminghasalonghistoryinChina Astheworldpopulationgrows,wearegoingtobeforcedtolookatoursupply chainsanddevelopemergingorganicsuppliersallovertheworld Overall,WholeFoodshasdoneapoorjobofcommunicatingtheCOOtoitsshoppers. Consumersfeelmisledanddisliketheideaofpayingpremiumprices(althoughits thelowerendofthepricerange)fororganicfoodmadeinChina. Consumersolutionfromecomatters bloggerKevinMcCann
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Con:ManipulationofcertificationprocessinChina.
Chinasproductsecurityissuesmayunfavorablyaffect WholeFoodsbrandvalue.
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WholeFoodshastobalancethebenefitsofreducedcosts andaccessingthe Chinesemarketwiththepotentialpitfallsofinsufficientproductverificationand quality TheChinese marketisburgeoning:onboththesupplyanddemandsides The switchingcostsaregreat losewhathasalreadybeeninvestedinChina, andhavetobuildinfrastructureelsewhere(again). Knowingly selling or mislabeling as organic a product that was not produced Knowinglysellingormislabelingasorganicaproductthatwasnotproduced andhandledaccordingtotheorganic standardsregulationsfacea(civil) penaltyupto$10,000perviolationintheU.S.(OTA) TakeanactiveroletostayinChina *Build localentitypartnerships Fostergoodrelationswithprovincialgovernmentsandregulatory bodiessotheyenforceorganicregulationsforWF,vs.acceptingbribesorbeing otherwiseunsupportiveofthelocalfoodmarket Buildstrongtieswithgovernmentagriculturalextensionagentsso theyhavethecapacityandwillingnesstoprovidetechnicalassistanceto farmersinterestedinorganic *Partnerwithlocalfarmersgroups ScaleissmallerthanWalMart etc.,butpartnershipwithsmalland mediumsizedfarmscanstillbuildequitablepartnership,effectivescaleto enablesteadysupply,andmaintainWFlocalfocus d f b 12
Keytakeaways fromWholeFoodsdilemma regardingChinesestandardsverification impactingits365organicbrandedproducts Lessonsareapplicableparticularly toChina,alsotootheremerginganddeveloping markets,andeventoanynewsupplier: Complexity: lowcostlabororproductiondoesnotnecessarilymeanlowtotalcost, dependingoncomplicatingfactorssuchasstandardsviolations,branderosion, depending on complicating factors such as standards violations brand erosion coordinationcosts Understandingthelocalcontextiskey: howthemarketworks,whatmaterialsare easilyavailableinit,whoaretheactorsandwhydotheyactthewaytheydo,howto communicatewiththem Branding: ensurealignmentbetweencompanymissionandsupplychain andnot onlyreality,buthowthatisperceived(whichispotentiallyirrational);mitigatebrand l l b h h d( h h ll l) b d issuesproactivelyandhonestly,aspartialtruthswilllikelybeairedeventually Obstaclesmaybecommunicationorcapitalbased: foreither,investmentis required.Investmentinownedorpartnerfacilities/capabilitiesabroad,butalsoin homecapacitytointeractwithglobalaspectsofoperations
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Background
O OpenedinAustin,Texas:19employees di A i T 19 l LessthanhalfadozennaturalfoodsupermarketsintheUnitedStatesatpoint ofmerger Rapidgrowth&acquisitionsthroughoutthe90'sandforward Lastacquisitionin1997wasofWildOats,109storesin23statesandBritishColumbia,Canada Publiclytradedcompany,current MarketCAP:6.43B Everysinglestoreisunique Geographic Locations: 200,000peopleormoreina20minutedrivetime Largecollegeeducatedpopulation Abundantparkingavailableforexclusiveuse Motto:WholeFoods WholePeople WholePlanet
Mission
CalledtheirDeclarationofIndependence,createdin1985lastupdated1997: Qualityisastateofmind:highestquality,leastprocessed,mostflavorfulandnaturalfoodspossible l f d h h l l d fl f l d lf d bl Gotoextraordinarylengthstosatisfyanddelightourcustomers Togrow atapacethatqualityofworkenvironment,TeamMemberproductivityandexcellence,customer satisfaction,andfinancialhealthcontinuetoprosper Balancestore needswiththeneedsoftheplanetthrough: Supportingsustainableagriculture committedtogreaterproductionoforganicallyand biodynamically grownfoodsinordertoreducepesticideuseandpromotesoilconservation. Reducingwasteandconsumptionofnonrenewableresources.(promoteandparticipateinrecycling p g programs, reusablepackaging, , p g g, reducedpackaging,andwaterandenergyconservation) p g g, gy )
CoreValues
SellingtheHighestQualityNaturalandOrganicProductsAvailable SatisfyingandDelightingOurCustomers SupportingTeamMemberHappinessandExcellence CreatingWealthThroughProfits&Growth CaringaboutourCommunities&OurEnvironment h h l
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