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153 buying assets could provide flexibility to the company’s cash on hand, which may be preferred given the comparatively small amount of total resources. Operations Opportunity: Long-term sustainability; Threat: One-stop retailers; Weakness: Leasing of property In terms of achieving long-term sustainability, the company must continually focus on the efficiency of its operations and development of new locations. The estimate cost per store is US$8 million. Location is one of the most critical factors attributing to new store success. As seen in the below picture of current store locations, most of WFM’s stores are located on the Eastern and Western coasts. Source: Whole Foods Market Website314The economic conditions in both US and Canada are optimal for expansionary and development initiatives. The GDP growth, per capita disposable income, and Consumer Confidence Index will increase in the future for both countries and have stabilized relative 314Whole Foods Market. Store Locations. 2014. (accessed January 31, 2014).
154 to the recent economic crises. Places such as South Dakota, North Dakota, and New Mexico are good choices of new store opening within America; Ottawa, Vancouver, Toronto, and Montreal are good choices for Canada. The average pre-opening expense per store plus the rent expense is US$3 million. Distribution Opportunity: Long-term sustainability; Threat: Local-source products; Weakness: Leasing of property As stated, developing and acquiring more distribution centers is critical for the long-term growth of WFM. Acquisition of distribution centers are crucial to because grocers need them be able to engage in operations. The estimated cost per distribution center is about US$4 to US$5 million, based on size and needed equipment. Moreover, the location of the distribution center is of great concern, since it has a direct impact on the speed of delivering products to its stores. Positioning distribution centers is critical when establishing efficient networks, especially when concerning expansion into Canada.Implementation The implementation for the long-term strategy does not have actionable per se, as implementation involves making acquisition decisions on a per-case scenario regarding renting and leasing. The overall strategy pressures the decision to purchase as there is current flexibility in resources and acquiring property will provide risk reduction in the future. Financials The total gross square foot and the number of stores at the end of fiscal year 2013 was 13,779,000 and 362 respectively. Therefore the average square foot per store is 38,064, and the estimated cost to purchase a store is US$8 million. Rental expense charged to
155 operations under operating leases for fiscal years 2013 totaled approximately $374 million, which included contingent rentals totaling approximately $13 million. The WFM also has sublease rental income totaling approximately $8 million. Thus the net rental