In 1978, two entrepreneurs, John Mackey and Renee Lawson Hardy, began a challeng- ing venture to create a company that incor- ported the values of healthy living and con- scious capitalism, all with a $45,000 loan. Their efforts led them to open a small natur- al foods store named Safer Way Natural Foods, founded in Austin, Texas in 1980. The two founders had a difficult time beginning the company and later merged with Clarksville Natural Grocery, which culminat- ed in the two companies becoming the world's largest retailer of organic and natur- al food and personal care products. The company was called Whole Foods. Whole Foods has grown, not only domestically but also internationally, since its initial expan- sion in 1984. Starting the business was no easy feat; the company has faced many challenges along the way. Less than a year after opening, a devastating flood hit central Austin, which wiped out the store's entire inventory. The company faced more than $400,000 worth of damages. After weighing options, the em- ployees banded together to work as a team. With the help of the community, they were able to reopen their store in four weeks. From the beginning, Mackey instilled com- pany core values in all aspects of the organi- zation. A Commitment to Quality Whole Foods' mission and goals resulted in core values to turn its mission into a reali- ty. The company's values involve meeting customer needs and describe the company's commitment toward selling the highest qual ity natural and organic products. Whole Foods also aims to create positive and ethi- cal ongoing partnerships with suppliers, while simultaneously creating wealth through profits and growth as well as caring about the community and environment. The company also aims to delight customers by promoting the health of all stakeholders through healthy eating education. Along with management striving to implement these core values, employees help to create this environment through daily interactions with customers. Employees are highly val- ed at Whole Foods and are labeled team members to empower them through their everyday contributions. Whole Foods' marketing strategy is fo- cused on being a specialty grocery store. The core competencies address a market oppor- tunity to develop high-quality products and experiences of both suppliers and con- sumers. A competitive advantage comes from providing local brands from smaller suppliers. Often, these smaller suppliers do not have the resources to reach national markets. Whole Foods has provided an op- portunity for some of these local brands to reach national markets. Competing on Premium Whole Foods' target market is people who purchase organic brands and health-con- scious consumers. This market includes those that care about sustainability and pre- fer all-natural products. Therefore, most of their customers have a college degree and are in the middle class. Because organic foods and a focus on sustainability come at a higher price, Whole Foods is a premium- price grocer and this has resulted in being called "whole paycheck" by some con- sumers. Therefore, a competitive advantage comes from providing unique, expensive gourmet foods that are considered beneficial to their target market. This includes a fast- growing health and wellness market that is willing to pay for high-quality organic and natural foods. Focusing on Team Members Team members of Whole Foods are highly regarded and are given personal stakes in the company through stock options. Compa- ny leaders realize that the success of the company depends on Whole Foods Market team members and believe in motivating and rewarding them for quality perfor- mance. At each Whole Foods store, individu- als are divided into eight to ten teams and are the backbone of the store. Initially, when an individual is hired, he or she is hired on a provisional basis. Before candidates are hired on a provisional basis, they undergo a 60-day process of interviews on the phone, with team members, and with leaders. If two-thirds of the team members vote in fa- vor of the candidate at the end of the provi- sional period, the candidate becomes part of the team. Those who do not receive two- thirds of the votes can redo the provisional period with another team or choose to leave the company. This element is an important part of the Whole Foods culture because the company believes that working together is the most important thing that occurs during business hours. This team approach has been adopted throughout the entire chain of command Regional leaders are arranged into teams, and even founder John Mackey shared his CEO title with former co-CEO Walter Robb for a number of years. Hard work and posi- tive attitudes are essential among team members because additional pay and profit sharing is based on team performance. Each individual relies on the productivity of the members in their team to receive these ben- efits. They cannot reach them alone. Whole Foods also uses the talents of em- ployees to improve company operations. It implements an open-door policy that allows employees to provide feedback to managers and other team members, which ensures that clear and concise communication is constantly occurring in the store. In addition to this, Whole Foods strives to enrich the lives of Whole Foods employees and incen- tivizes employees to participate in a team member healthy discount incentive pro- gram. The company rewards employees for living healthy lifestyles when employees and team members reach certain benchmarks. To reach the goals of the program, team members are prompted to work together while simultaneously encouraging one an- other through positive reinforcement. Self-directed work teams consisting of employees make many of the decisions in the day-to-day operations of the different stores. For instance, teams have control over their scheduling and aim to work with each other to provide an optimal schedule for everyone. The company provides its team members with extensive training and re- sources of educational information, includ- ing information on the company's gain shar- ing program and the company's quality stan- dards. By empowering its employees through teams, perks, and education, Whole Foods has been able to turn its workers into significant contributors of value for the com- pany. The Age of Amazon Despite Whole Foods' success, the compa- ny has struggled to get rid of its "whole pay- check" reputation in recent years. Many con- sumers viewed Whole Foods products as un- affordable. Even its 365 Everyday Value brand failed to shake off this image. Due in part to financial struggles, Whole Foods agreed to be acquired by Amazon.com in 2017 for $13.7 billion. How Amazon's man- agement of Whole Foods will influence team decision making is unclear, but there are signs that Whole Foods is becoming a more centralized company. For instance, rather than allowing local stores to decide whether to carry regional items, these decisions will now be made by Whole Foods executives at headquarters. These changes might take away some of the team autonomy that has been practiced at individual stores. Amazon and Whole Foods will need to find a balance between a more centralized approach- which might lead to decreased costs, greater control, as well as faster and more consis- tent decision making-and the team ap- proach practiced at individual stores that has provided Whole Foods with its own dis- tinctive flair and made it a great place for employees to work. Changes since Amazon acquired Whole Foods include Prime Now Whole Foods de- livery in select markets and the addition of Amazon Locker. Prime Now is a grocery de- livery service simi seat that uses contractors to shop and deliver groceries. Amazon has installed its lockers in all Whole Foods stores giving its customers a secure place to pick up and return items ordered on Amazon. Another major change is more emphasis on efficiency with consistent and high-quali- ty experiences for both suppliers and cus- tomers. This includes more centralized pur- chasing operations to save on costs. In an attempt to reduce inefficiency, Amazon is requiring Whole Foods to provide more na- tional brands and cut back on local suppli- ers. This results in more shelf space for na- tonal brands that are focused on maximiz- ing revenue and lowering operating costs. One reason for this is some consumer-voiced frustration in finding no national brands for products like paper towels and shaving cream. The goal for Amazon is to leverage their low prices on national brands with the core competency of fresh organic products such as produce and meat. Amazon also in- troduced some everyday low prices on ba- nanas and yogurt to help change the high- price images. The important question for the future is whether changes in merchandising will change the identity of Whole Foods.* Questions for Discussion 1. How has Amazon changed the Whole Foods marketing strategy? 2. What is the role of teamwork in implementing the Whole Foods marketing strategy? 3. Will national brands and a centralized approach to product decisions help or harm the future success of Whole Foods?