Question

According to the case, factors contributing to earnings growth decline between 2012 and 2016 for Whole Foods include:

A. Unanticipated cannibalization of sales at existing Whole Foods stores when new Whole Foods stores were opened

B. The company absorbed supplier price increases to keep retail prices steady

C. Both

D. Neither

Whole Foods Responds In 2012, Whole Foods announced plans to grow from 317 to 1,000 stores over the better part of a decade, expanding outward from cities into suburbs and secondary markets at the rate of several dozen new stores each year.77 Initial results were positive. After one year of operations, the new and smaller stores had increased revenues per square foot by nearly 30%.78 However, unlike the customers of most other supermarkets, about 75% of existing Whole Foods customers were willing to drive beyond the grocer that was most convenient to them in order to shop at a Whole Foods store (see Exhibit 5). As a result, the new Whole Foods stores caused significant unanticipated cannibalization of sales at existing Whole Foods stores. Desperate to attract shoppers from lower-priced rivals, Whole Foods began offering price promotions and discounts in 2012. In some instances the company absorbed suppliers' price increases to keep retail prices steady.79

Would I just say A? or C? Please answer as soon as you reasonably can.

Answer 1

A&B both are right factors contributing to earnings growth decline between 2012 and 2016 for Whole Foods.