Case Study

Whole Foods Market in London

Case Study
Whole Foods Market in London
On June 4, 2007, John Mackey, founder and CEO of Whole Foods Market, looked out the
airplane window headed towards London with a mixture of eagerness and anxiety. Reviewing his
notes, he pondered this critical moment: 48 hours until the debut of the first Whole Foods Market
in London.
Over the past few decades, Mackey saw his unique concept of an organic supermarket chain
transform the food retail industry in North America. Whole Foods Market led the organic craze
sweeping the continent and reaped high profits as a result. By 2007, Whole Foods was the leader
of the industry and a symbol of high quality and healthy living.
Mackey aspired to expand the chain beyond its continental borders. Mackey looked towards
global expansion and identified London as an attractive market opportunity. Now headed for the
opening of the 80,000 square foot outlet in Kensington neighborhood, Mackeys mind was filled
with doubts. Would British consumers accept or reject the Whole Foods Market experience in
comparison to established UK competitors? Would a successful opening bring opportunities for
more stores and supplier relationships? Would the UK be the end of European expansion? These
questions remained unclear as Mackey sat patiently, debating the future of his beloved company.

Whole Foods Market History

From its humble beginnings to its status as market leader, Whole Foods Market had taken an
unconventional path in food retailing. Texans John Mackey and girlfriend Renee Lawson opened
the small natural foods store SaferWay in 1978 as a part of a hippie college dream, later merging
with Clarkson Natural Grocery. The first official Whole Foods Market opened in September
1980 in Austin, Texas. At the time, the natural foods industry in the United States was virtually
none existent with less than a half dozen competitors. With 19 employees and 12,500 square feet
of store space, Whole Foods Market was larger than industry standards from the beginning.

This case was written for ESADE Business School by exchange student Elizabeth Yurkevicz under the supervision
of Associate Professor Josep Franch and it is entirely based on published sources. The authors developed this case
for class discussion rather than to illustrate either effective or ineffective handling of the situation.
2007 ESADE Business School. Last revision 2012.

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Whole Foods Market in London

Whole Foods Market grew via mergers and acquisitions of local natural food stores around the
country (see Exhibit 1 for full history of acquisitions). The companys expansion plans were
focused on strategic regional locations around major metropolitan and urban areas. Whole Foods
Market expanded internationally in 2002 with the opening of a store in Toronto (Canada). In
2003, Whole Foods Market became North Americas first certified organic grocer.

Whole Foods Market in 2007

Whole Foods Market had grown to become the worlds leader in natural and organic food
retailing. In 2006, Whole Foods Market earned $203.8 million in profits on sales of $5.6 billion
(see Exhibits 2 and 3), becoming the 4th largest US supermarket chain and the 5th most valued
US public retailer. With 196 stores across North America (see Exhibits 4 and 5 for detail of store
locations), each store averaged 34,000 square feet in size and $31 million in annual sales. For the
past ten years, Whole Foods Market had also placed in the top 50 of Fortunes 100 Best
Companies to Work For, most notably ranking #5 in 2007. Mackey expected to reach $12
billion in sales by 2010, by adding 25-30 new locations each year.

The Whole Vision

From the start, Whole Foods Market had been driven by one mission, defined by its slogan:
Whole Foods, Whole People, Whole Planet. The company was committed to selling the
highest quality products from local and international suppliers. Whole Foods Market believed
food in its purest state was the most nutritious and most flavorful. Whole Foods Market
maintained strict standards which certified organic quality, defined as:

Carefully evaluating each and every product.

Featuring foods that were free of artificial preservatives, colors, flavors, sweeteners, and
hydrogenated fats.
Being passionate about great tasting food and the pleasure of sharing it with others.
Being committed to foods that are fresh, wholesome and safe to eat.
Seeking out and promoting organically grown foods.
Providing food and nutritional products that supported health and well-being.

Whole Foods Market offered a wide variety of natural products and services to fulfill this
philosophy. Their product categories encompassed grocery, bakery, body care, floral, household
items, meat and poultry, nutritional supplements, pet products, prepared foods, produce, seafood,
specialty (beer, wine, and cheese), coffee, textiles, and services such as catering and cooking
instructions. They featured private-label brand lines such as 365 Everyday Value, 365 Organic,
and Whole Foods Premium (see Exhibit 6). Private labels made up 1,900 SKUs at Whole Foods

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Whole Foods Market in London

Market stores and accounted for 17% of grocery and whole body sales. Each store focused on
perishable foods, which accounted for two thirds of annual sales.
Whole Foods Market was dedicated to forming lasting relationships with their 42,000 employees
or team members. The company recognized team members were key to success and thus,
promoted mostly from within the company. No executive could earn more than 14 times the
employee average. Recently, Mackey cut his annual salary to $1, claiming that he earned enough
money. In addition to fair wage practices, employees were offered stock options, purchase plans,
and educational seminars on nutrition and health. Employees were encouraged to meet regularly
in self-directed teams and were paid to volunteer in their free time.
Finally, Whole Foods Market was committed to making the world a better place by supporting
sustainable agriculture and local communities. They strove to eliminate the use of pesticides,
maintained fair treatment of wildlife, and practiced recycling. Not only a third of Whole Foods
Markets stores composted their waste, but many used solar power and recycled materials for
store layouts. The company had created charities such as the Animal Compassion Foundation
and the Whole Planet Foundation, for providing funding to impoverished countries and animal
welfare. Whole Foods Market supported the local communities around each store by getting
involved in food banks, volunteer organizations, and neighborhood events. Whole Foods Market
contributed 5% of their total profits to non-profit organizations each year.

Purchasing and Distribution

Whole Foods Market bought products from a combination of local, regional, and international
wholesale vendors, specializing in reputable small-scale suppliers. All suppliers were subject to
quality-driven, organic standards. Whole Foods Markets own distribution empire in North
America included 9 regional distribution centers, 11 bake house facilities, commissary kitchens,
3 seafood processing facilities, produce procurement centers, a national meat purchasing office,
and a specialty coffee procurement and roasting facility.

Positioning and Marketing

Whole Foods Market had been one of the first niche players in the organic foods industry. A
focus on perishable, local foods had allowed Whole Foods Market to differentiate stores from
conventional supermarkets and to attract a broader customer base, according to the corporate
annual report. Whole Foods Market justified quality with a premium pricing strategy, selling
their products at prices 35% higher than conventional supermarkets. The company supported
higher prices with aspirational positioning, as consumers were willing to pay a premium for
healthful, organic products and unparalleled customer service. Premium pricing combined with

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Whole Foods Market in London

massive corporate expansion led to negative nicknames such as Whole Checkbook and the
Wal-Mart of wheat-germ, according to an article published at The Observer.
On the positive side, Whole Foods Market positioned itself as a lifestyle brand and as more than
just food. Along with the companys mission-driven values, each Whole Foods Market store
had a neighborhood feel that aimed to create a third place between home and office, where
consumers could feel comfortable shopping and sharing food. North American stores were
located in major shopping centers in upscale suburban and urban locations, where consumers
could afford to pay for quality luxury goods. Going to a Whole Foods Market store was an
experience in itself with soft lighting and an attentive staff (see Exhibit 7). Upon entering,
consumers were astounded by the colorful array of fresh produce, informative displays, free
samples of new products, and delicious smells wafting from a live kitchen. Whole Foods Market
went beyond the limits of a normal supermarket by offering a talking store in which consumers
could learn about organic foods and environmental issues through interactive brochures, weekly
cooking classes, and themed food festivals.
Because the appeal of Whole Foods Market came from the in-store experience, Whole Foods
Market spent less on traditional advertising than other chains. They allocated 0.4% of total
revenues to the annual marketing budget. To generate buzz and excitement in communities
where new stores opened, Whole Foods Market focused its marketing budget on local
advertising and publicity for store openings. Whole Foods Market also spent on nation-wide
public relations campaigns to maintain a socially responsible image. In-store marketing included
signage and special events such as fairs, product samples, classes, and tours. To raise brand
awareness outside of stores, Whole Foods relied on word-of-mouth recommendations and
customer testimonials from in-store experiences.
Whole Foods Market aspired to continue high growth in spite of market leadership. Their
ultimate goal was to become an international brand synonymous with not just natural and
organic foods, but also with being the best food retailer in every community in which we are
located, as stated in the annual report.

An Eye for Britain

As the company grew larger in North America, executives searched for opportunities in new
markets. Whole Foods Market expressed interest in the British market with their purchase of the
UK natural food chain Fresh & Wild in January 2004, comprised of 7 stores, a central kitchen,
and warehouses. The chain was popular in London due to its friendly and informative style of
retailing. Critics believed Whole Foods Market acquired this company to obtain a firsthand
glimpse into the British market and test the water before opening a main outlet. The chain had
succeeded due to a large base of loyal customers and a reputable brand image in the UK.

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Whole Foods Market in London

The British market for organic foods had become more attractive in the past decade. Similar to
the US, organic food was the fastest growing sector in food retailing. The UK market for natural
foods had grown by 50% in the past 4 years as consumers became more health conscious and
globally aware. Recent food scares, such as mad cow, salmonella, and bird flu, had led to higher
concern with food safety ethics (see Exhibit 8). The organic craze was spearheaded by Prince
Charles, who advocated natural farming methods and a ban on genetically modified foods.
Mintel estimated that by 2011, the UKs organic and natural food market would be worth more
than $3.8 billion. The British government supported the organic movement by aspiring for 70%
of domestically sold organic food to be produced within the UK by 2010, as published in the
New Statesman.

Competitive Landscape in the United Kingdom

The European food retail market was dominated by European players (see Exhibit 9) and some
of its trends were somewhat different from the trends observed in the United States (see Exhibit
10). The UKs food retail industry was the second largest market in Europe after France (see
Exhibit 11), claiming 19.4% of the total European industry value and a growth above 3% (see
Exhibit 12). Supermarkets accounted for two thirds of the UK food retail market, making this the
preferred retail channel for selling food (see Exhibit 13). However, other retail forms, such as
convenience stores, had gained popularity due to governmental restrictions on land use by major
chains.
Another important aspect of the UK food retail industry was the proliferation of private label
products by food chains. The penetration of store brand products in the UK was the highest in
Europe, according to Datamonitor. All the major supermarket chains offered their own premium,
health, and childrens line of private products (see Exhibit 14) to adapt to increased consumer
interest in cooking and food preparation. Despite attempts, major chains had struggled with
organic lines due to fragmented suppliers and difficulties in maintaining organic standards.
Instead of starting from scratch, stores had acquired niche brands that served the organic market.
Other trends included an increase in fair trade offerings and expansion into non-food concept
stores.
The UK supermarket industry was extremely competitive and concentrated, with the four major
grocery chains Tesco, ASDA, Sainsburys, and Morrison. In 2007, these four major players
controlled 75% of the domestic market worth 125 billion pounds, equivalent to $246 billion.
Reports noted that 90% of the urban population in Britain had access to three or more large
supermarkets within 20 minutes of driving. Even the UK was not the most concentrated market
in Europe (see Exhibit 15), the dominance of such major players had come under the question of
governmental authorities. All four chains were being investigated for the third time in six years

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Whole Foods Market in London

by a Competition Commission after complaints from local farmers and independent grocers of
monopolistic practices, such as predatory pricing and eliminating smaller competitors (see
Exhibits 16 to 18). According to an article published in The Glasgow Herald, consumers
have to start talking about a moratorium on changing laws so that local communities can stop
supermarkets. As it is, if we keep going in the direction we are headed in, we're going to end up
with the retail equivalent of a one-party state
Tesco
As Europes second largest food retailer (see Exhibit 19), Tesco led the UK market with a
30% share of the UK grocery market and $83 billion (43 billion GBP) in worldwide profits.
The companys 2,318 locations dominated in two-thirds of UKs postal code areas and had a
higher market share than ASDA and Sainsburys combined. Founded in 1919 by Jack Cohen
in East London, Tesco remained consumers preferred brand due to quality, convenience, and
good service. Tesco had adapted to the competitive market by expanding into non-food areas,
such as clothing, electronics, and financial services. The company operated in 13 countries
outside of the UK and offered multiple trading formats, including Tesco supermarkets
(averaging 31,000 square feet and located in suburbs or large towns), Tesco Express
(neighborhood convenience stores), Tesco Extra (103,000 square foot hypermarkets), Tesco
Metro (central convenience stores), and online grocery delivery (tescodirect.com and
tesco.net) (see Exhibit 20).
Tescos positioning revolved around the slogan Pile it high, sell it cheap, emphasizing a
lower pricing strategy than competitors. However, the company strived for an all inclusive
offer where upper, middle and lower income consumers could shop in one store. Since 1995,
Tesco had operated a loyalty program called Tesco Clubcard that had gained over 11 million
members. Cardholders could earn points for coupons, discounts, and free gas.
Tesco pioneered the phenomenon of private label products in the UK, with three ranges called
economy/value, mid and finest, according to Datamonitor. Tescos own products
accounted for 50% of total product sales. Tescos other lines included Healthy Living (lower
fat and lower sugar diet products), Organic (range of organic foods, including non-food
items), Wholefoods (natural and unprocessed products), and Best of British (local specialties).
Another project for Tesco had been their expansion into locally produced products such as
LocalChoice milk and contributing 1.9% of pre-tax profits to local organizations.
Tesco was aware of Whole Foods Markets entry into the British market and planned to
respond with an aggressive entrance into the US by the end of 2007, starting in western states
such as California under the brand name Fresh and Easy Neighborhood Market. Their pilot
store in Phoenix (Arizona) would be about 10,000 square feet, smaller than an average
American supermarket. The company said they aimed to give Americans a faster, easier
shopping experience, as reported by Agence French Presse.

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Whole Foods Market in London

ASDA
In 2007, the supermarket chain ASDA had a 15% market share of the UK retail grocery
market, being number 2 behind Tesco. Owned by the American company Wal-Mart, ASDA
operated only in the UK with 243 super centers, 37 supermarkets, an online retail store and
financial services. The chain offered food, clothing, and general merchandise at Wal-Marts
famously low prices. Private brand accounted for 40 to 50% of total chain sales, according
to Mintel.
ASDA recently opened ASDA Essentials, a discount store offering 95% of its products as
private labels. The company also launched ASDA Living, a non-food lifestyle store selling
general merchandise such as clothing, electronics, health and beauty items. ASDA Living
featured caffe Ritazza coffee shops in some locations. ASDAs marketing was done through
advertising campaigns which emphasized their position as the lowest priced British
supermarket. Each store was encouraged to support one local charity chosen by store
employees.
Sainsburys
Sainsburys controlled a 15% market share of the UK retail grocery market. The company
was comprised of Sainsburys Supermarkets, and Sainsbury Bank (financial services sector).
Retail formats included 455 regular supermarkets with an average size of 35,000 square feet
and 297 Sainsburys Local (convenience stores) (see Exhibit 21). About 50% of the 50,000 of
products offered in Sainsburys were store brand. Product lines included Basics (economy
range of 500 products), Taste the Difference (premium food), Be Good to Yourself (reduced
calorie and fat diet products), Sainsburys Organic (500 lines produced without pesticides or
fertilizer), and Fair Trade. Sainsburys spent on advertising campaigns which revolved around
a slogan such as Try something new today. Sainsburys had used local chefs such as Jamie
Oliver as spokespersons in their radio and television advertisements and in-store promotions.
To facilitate buying local and regional products, Sainsburys arranged competitions in
communities to identify the best suppliers. In addition, Sainsburys led retail chains in terms
of corporate generosity by contributing about 7% of pre-tax profits to local charities,
according to company sources.
Marks & Spencer
Marks & Spencer was one of the most widely recognized chains in the UK with 450 locations
and 12.5 million square feet of selling space. In addition to being the largest clothing retailer,
the companys food retail segment had become a multi-billion pound business. The retail
chain sold food in their flagship stores as well as in 187 concept stores called Simply Food
located in railway and gas stations such as BP. Founded in 1884, Marks & Spencer had made

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Whole Foods Market in London

its reputation by selling premium products made locally, dubbed British Quality Goods.
Unlike close competitors, Marks & Spencer carried 100% of its products as private store
brands. Products were also available on the companys online retail store through an
agreement with Amazon. The companys food business focused on four areas: fresh, natural
and healthy food, special celebration products, ready made meals and everyday food. Marks
& Spencer sub-brands included Eat Well (healthy foods with no artificial flavors, colors or
sweeteners) and Marks & Spencer Cook! (additive-free raw foods for consumers to
prepare). The company had removed hydrogenated fats from 90% of their products and was
looking to do the same with salt in the future.
The company did not engage in traditional advertising expenditures. Rather, they built brand
awareness through reputation and word-of-mouth. The company focused on corporate
responsibility by promoting a link between its sourcing policies and sustainability. Their
recent marketing campaign entitled Look Behind the Label was introduced in 2006 to raise
awareness of their fair-trade and environmentally friendly procedures. Marks & Spencer
recently underwent a campaign for a balanced lifestyle for its consumers by hiring in-store
nutritionists. The company contributed 1.5% of pre-tax profits to local charities.

Decision to Enter London

In November 2006, Whole Foods Market decided to open their first brand name outlet in
Londons neighborhood of Kensington. The location on High Street in an old department store
building was chosen based on the neighborhoods reputation for upscale shopping and hightraffic visibility. The 3 story, 80,000-square foot store would be the largest food store in
Londons center, according to an article published at The Guardian. The retail outlet would
feature an in-house bakery, chocolate shop, and restaurants in addition to the high level of
services offered by any Whole Foods Market in North America.
Whole Foods Market planned to establish relationships with British suppliers in order to
successfully blend in with the local market. Rick Bonin, regional vice-president for Whole Foods
Market in Britain, said: "Whole Foods Market will feature the freshest and finest natural and
organic offerings, with a focus on procuring foods from local growers, food artisans and
manufacturers". Whole Foods Market in London planned also contribute heavily to the local
community by "sponsoring local events, donating food and money to local causes, and
providing volunteer opportunities for team members".
The Whole Foods Markets store concept should be adapted to fit local British tastes and habits.
Billboards around the construction site had gained publicity and public interest (see Exhibits 22
and 23), especially with their slogan Its Not Something We Do, Its Everything We Do. One
of Whole Foods Markets vice presidents on the London branch, David Doctorow, summarized

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Whole Foods Market in London

the companys marketing techniques for the opening when he commented: We want everyone
to be wowed at the start. It will be unlike any food shopping experience the UK has seen to
date.

Signs of Trouble
Despite an attractive market opportunity and the expertise and managerial competencies, Whole
Foods Market would have to account for the reactions of all involved parties. Competitors were
estimated to have a five year head start on developing natural products and finding organic
suppliers over Whole Foods Market. Local supplies of milk and organic produce had become
hard to secure, even for the countrys recognized chains. Suppliers might be unwilling to
establish relationships with the company due to their limited purchasing power in Britain in
comparison to giants such as Tesco. In combination with Whole Foods Markets unknown brand
name, a lack of strategic suppliers could be detrimental to the companys market entry.
Competitors had not ignored the threat of Whole Foods Market. Tesco had taken pre-emptive
actions by copyrighting the Whole Foods brand name in Britain for one of their private brands.
Whole Foods Market could not legally use this name on any store-branded products. Tescos
legal action could harm Whole Food Markets ability to gain brand awareness. In addition to
that, Tescos tendency to engage in price wars could be extended to their organic lines in the
immediate future.
All of these problems and concerns occupied Mackeys thoughts as the plane touched down at
London Heathrow International and started taxing towards the terminal. How would UK
consumers perceive Whole Foods Market retail concept? Would Whole Foods survive in the
ferociously competitive UK market? Would this be the end or the beginning of Whole Foods
international expansion in Europe?

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Whole Foods Market in London

Exhibit 1: Whole Foods Market History of Acquisitions

Year Natural Food Chain Acquired

Location

1986 Bluebonnet Natural Foods Grocery

Dallas, Texas

1988 Whole Foods Company

New Orleans, Louisiana

1991 Wellspring Grocery

Chapel Hill and Durham,

North Carolina

1992 Bread & Circus

Massachusetts and Rhode

Island

1993 Mrs. Goochs Natural Food Markets

Los Angeles, California

Bread of Life

San Francisco, California

1995 Unicorn Village

South Florida

Oak Street Market

Evanston, Illinois
Major Cities East Coast and
Midwest

1996 Fresh Fields Market

Bread of Life

Florida

Amrion, Inc.

Boulder, Colorado

1997 The Granary Market

Pacific Cove, California

Allegro Coffee Company

Colorado

The Merchant of Vino

Detroit, Michigan

1999 Natures Heartland

Boston, Massachusetts

2000 Food 4 Thought Natural Market

Sonoma County, California

2001 Harrys Farmers Market

Atlanta, Georgia

2004 Fresh & Wild

United Kingdom

Source: WholeFoodsMarket.com

10

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Whole Foods Market in London

Exhibit 2: Whole Foods Market Summary of Financial Information

Source: Whole Foods Market 10-K 2006

Exhibit 3: Whole Foods Market Store Growth (2002-2006)

Source: Whole Foods Market 10-K 2006

11

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Whole Foods Market in London

Exhibit 4: Map of Whole Foods Stores

Source: Whole Foods Market 10-K 2006

Exhibit 5: Locations of Whole Foods Market Stores as of September 2006

Source: Whole Foods Market 10-K 2006

12

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Whole Foods Market in London

Exhibit 6: Various Logos and Brands Used by Whole Foods Market in North America

Whole Foods 365 Organic Store Brand

Other Whole Foods Private-Brands and Logos

Source: WholeFoodsMarket.com

13

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Whole Foods Market in London

Exhibit 7: Photos of Typical Whole Foods Market in US

Source: WholeFoodsMarket.com

14

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Whole Foods Market in London

Exhibit 8: Changing UK Consumer Attitudes to Food (2001-2005)

2001
2003
2005
2001-2005
(%)
(%)
(%)
(% change)
Any Agree:
It's worth paying more for organic food
I buy fair trade products when available
I don't have time to spend preparing and cooking food

25.0
25.5
21.3

26.1
28.2
18.8

33.2
34.4
15.2

+8.2
+8.9
-6.1

Base: Adults aged 15+

Source: Mintel US vs. European Retailers

Exhibit 9: Europe vs. USA, Top Ten Retailers by Sales (2002), in millions.
Europe

USA

Retailer
Carrefour (France)
Tesco (UK)
Intermarch (France)
Rewe (Germany)
Edeka Group (Germany)
Aldi (Germany)
Metro Group (Germany)
Auchan (France)
Schwarz (Germany)
J Sainsbury (UK)

Net sales
58,709
38,623
38,400
29,970
29,545
27,125
27,100
27,036
23,200
22,658

Retailer
Wal-Mart USA
The Home Depot
The Kroger Co
Target Corporation
Albertsons Inc
Sears Roebuck and Co
JC Penney
Costco USA
Kmart
Safeway (USA)

Net sales
199,623
61,578
54,720
46,429
37,664
34,461
34,197
34,159
32,521
30,576

Total of above

322,366

Total of above

565,928

As % of all European retail sales

16.8%

As % of all US retail sales

Source: Mintel US vs. European Retailers

15

22.4%

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Whole Foods Market in London

Exhibit 10: Summary of Recent Trends in European and US Retailers

EUROPE

USA

High level of international development, particularly in

grocery, clothing and electrical sectors.

Limited international development

Continued decline of independent stores.

Continued decline of the mom and pop stores

Ongoing march of the multiples has led to a sense of sameness Ongoing march of the multiples has led to a sense of
in many but not yet all countries.
sameness in many retail centres.
Popularity of hypermarkets spread from France into other
Rapid growth in popularity of supercenters and warehouse
parts of Western Europe and to Eastern Europe. Superstore the clubs.
favoured format in the UK.
Grocery operators generally among the strongest performing
retailers in Europe.

Grocery operators continue to fare poorly against the

supercenters and warehouse clubs.

DIY and health and beauty sectors strong performers across

much of Europe.

DIY and health and beauty sectors strong performers.

Large number of privately run companies, as well as voluntary Leading retailers are mostly publicly quoted companies.
groups, buying groups, and co-operatives in continental
Europe.
Continued supremacy of discount store chains in Germany but Supremacy of the discount store chains.
less pronounced in other parts of Europe
Developing convenience store sector

Developed convenience store sector.

Renaissance of traditional department stores in parts of

Europe, most notably the UK.

Struggling traditional department stores looking to

reposition/reinvent themselves.

Mainstream clothing specialists arguably struggling more than Problems for traditional, full-price clothing chain stores.
electrical and DIY specialists in face of growing competition
from hypermarkets/superstores.
Clothing market leader (Marks &Spences) recovering after
three years of falling profits.

Clothing market leader (GAP) recovering after two years

of falling profits.

Some weakening of category-killer superstores.

Some weakening of category-killer superstores.

Growth of B2B and B2C e-commerce sales

Growth of B-2-B and B-2-C e-commerce sales.

Growth of bricks and clicks

Growth of bricks and clicks.

The customer is king, staying in tune is vital

The customer is king, staying in tune is vital.

Consumers have become increasingly demanding.

Consumers have become increasingly demanding.

Relevant fast fashion is a key feature of the clothing market.

Relevant fast fashion is a key feature of the clothing

market.

Big advances in logistics and management information as

technology costs have fallen

Big advances in logistics and management information as

technology costs have fallen

Entertainment an increasingly important part of the retail

environment

Entertainment an increasingly important part of the retail

environment

Major shopping centres still draw big crowds

Dwindling appeal of the major mall

Growing factory outlet mall sector

Mature factory outlet mall sector

Source: Mintel US vs. European Retailers

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Whole Foods Market in London

Exhibit 11: European Sales by Food Retailers (1998-2002), in billion

Latvia
Lithuania
Hungary
Estonia
Czech Republic
Bulgaria
Ireland
Norway
Slovak Republic
Poland
UK
Spain
France
Greece
Portugal
Netherlands
Switzerland
Italy
Luxembourg
Romania
Denmark
Finland
Sweden
Austria
Belgium
Slovenia
Germany
Total

1998

1999

2000

2001

2002

0.5
1.1
4.5
0.5
4.4
1.4
9.6
11.0
3.6
29.7
118.7
55.6
149.1
11.3
10.0
23.5
21.7
77.7
1.2
3.5
10.6
7.7
16.9
11.7
22.7
2.2
113.7
724.1

0.7
1.1
4.9
0.5
4.4
1.4
10.3
11.7
3.8
33.3
127.1
58.4
158.6
11.7
10.7
24.2
22.6
81.8
1.2
3.0
10.8
7.8
17.5
12.0
23.1
2.2
116.1
761.0

0.8
1.5
4.9
0.6
4.9
1.7
11.2
12.3
4.2
35.4
141.6
62.4
166.9
12.2
11.3
25.3
23.5
84.9
1.3
3.5
10.9
8.2
18.8
12.5
23.4
2.2
118.3
804.6

0.9
1.7
5.8
0.7
5.6
1.8
12.2
12.9
4.2
39.7
148.4
66.6
173.7
13.1
11.9
27.0
24.4
87.7
1.4
3.8
11.4
8.4
18.0
12.2
24.0
2.4
121.2
840.7

1.0
1.9
7.1
0.8
6.3
2.0
13.0
14.5
4.8
38.8
153.5
70.5
184.3
14.0
12.1
28.1
25.5
91.2
1.4
4.0
11.8
8.5
18.7
12.9
24.9
2.4
121.7
875.6

Source: Mintel US vs. European Retailers

17

% growth
(1998-2002)
104.1%
73.1%
57.0%
56.3%
45.0%
43.2%
34.8%
32.1%
30.7%
30.6%
29.3%
26.8%
23.6%
23.4%
21.0%
19.6%
17.6%
17.4%
15.2%
12.7%
11.8%
10.9%
10.7%
10.5%
9.7%
7.1%
7.1%
20.9%

Case Study
Whole Foods Market in London

Exhibit 12: United Kingdom Retail Food Industry Value (2001-2005), in $ billion

Source: Datamonitor

Exhibit 13: UK Food Retail Market by Segmentation

Source: Datamonitor

18

Case Study
Whole Foods Market in London

Exhibit 14: UK Supermarket Chains Private Label Brands (2007)

Economy
Value

Children
Kids

Sainsbury Taste the Difference Be Good to

Yourself
Extra Special
Good for You!
ASDA
Eat Smart
Morrison The Best
Perfectly Balanced
Waitrose
Count on Us
Marks & Speciality
Spencer

Basics

Kids

Smartprice
Bettabuy

Great Stuff

Somerfield So Good

Makes Sense

Tesco

Premium
Finest

Health
Healthy Living

Good Intentions

Others
Organic
Wholefoods
Naturally Good
Free From
Fair Trade
So Organic

Eat Well for Kids

GoCook
Organic
Cook
Limited Edition
Cook!
Simple Origin
Nutritionally
Balanced

Source: Mintel US vs. European Retailers

Exhibit 15: Share of Top 5 Food Retailers by Country (2002)

Top 5 food retailers share of all food retailers sales
Sweden
Norway
Denmark
Austria
Finland
Germany
Switzerland
Hungary
UK

98.0%
90.8%
87.7%
85.8%
84.2%
77.9%
64.5%
64.4%
61.6%

France
Netherlands
Belgium
Ireland
Czech Republic
Portugal
Spain
Italy
Greece

Source: Mintel US vs. European Retailers

19

61.1%
55.0%
51.2%
49.4%
49.4%
47.4%
38.1%
30.4%
30.1%

Case Study
Whole Foods Market in London

Exhibit 16: UK Food Suppliers Main Customers

Source: GFK Report for Competition Commission

20

Case Study
Whole Foods Market in London

Exhibit 17: Summary of Advantages of Smaller Customers for Grocery Suppliers

Source: GFK Report for Competition Commission

Exhibit 18: Summary of Disadvantages of Smaller Customers for Grocery Suppliers

Source: GFK Report for Competition Commission

21

Case Study
Whole Foods Market in London

Exhibit 19: Top European Food Retailers by Sales and Market Share

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Company
Carrefour
Tesco
Intermarch
Rewe
Edeka Group
Aldi
Auchan
Schwarz Group
J Sainsbury
E Leclerc
Wal-Mart Stores, Inc
Casino
Safeway Stores
Ahold Group
Systme U
Metro Group
Tengelmann
Migros
Coop Norden
Cora/Louis Delhaize Group
Coop Italia
Somerfield
Wm Morrison Supermarkets
Coop Schweiz
Dansk Supermarked
Laurus
Conad Group
Mercadona
Grupo Eroski
Marks & Spencer

Source: Mintel US vs. European Retailers

22

Sales
Market share
(in billion)
(in %)
58.7
6.7%
38.6
4.4%
38.4
4.4%
30.0
3.1%
29.5
3.4%
29.5
3.4%
27.0
3.2%
24.8
2.8%
22.7
2.6%
22.4
2.6%
21.4
2.4%
18.4
2.1%
13.7
1.6%
12.8
1.5%
11.6
1.3%
11.0
1.3%
9.3
1.1%
9.3
1.1%
9.2
1.0%
9.0
1.0%
8.7
1.0%
7.4
0.9%
6.8
0.8%
6.2
0.7%
5.5
0.6%
5.5
0.6%
5.3
0.6%
5.3
0.6%
5.1
0.6%
4.8
0.6%

Case Study
Whole Foods Market in London

Exhibit 20: Tesco Store Data (2007)

Source: Tesco.com

Exhibit 21: Sainsburys Store Data (2007)

000 square feet
Convenience

+40

25-40

15-25

-15
290

Total
290

Supermarkets

169

166

93

51

479

Total stores

169

166

93

341

769

Source: Sainsbury.co.uk

23

Case Study
Whole Foods Market in London

Exhibit 22: Advertisement for Whole Foods Market Opening in London

Source: WholeFoodsMarket.com

Exhibit 23: Photo of New Location in London

Source: WholeFoodsMarket.com

24

Case Study
Whole Foods Market in London

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