Evergreen Natural Markets Case Study

Acquisitions are a challenging period for businesses to go through in and require careful management choices to make the process as smooth and profitable as possible. Kathleen Norton is right to carefully consider how best to transition Arugula Grocers into the Evergreen way.

Beginning as a humble seasonal produce stand in Colorado, Evergreen Natural Markets is well known for its gourmet, natural and organic products. In 2011, it had 23 stores in Colorado, Wyoming and New Mexico, earning a revenue of $175 million with a net income of $4.3 million. The founder, Donald Slater, began buying independent grocery stores while leaving their former owner to manage them which inspired his daughter Kathleen Norton to continue his legacy of acquisitions.

There are several factors behind this success. First, the company is careful to invest resources in order to make its business more effectively. This backward vertical integration was a wise move because the business is able to increase operating margins. Additionally, Evergreen can improve their contracts with suppliers in order to reduce delivery costs. Second, Evergreen focuses on service and providing a special shopping experience. The use of quirky, hand painted signs to attract customers shows Evergreen Natural Market’s commitment to a personalized experience. Hiring the right people and encouraging them to interact with their customers and share their knowledge about the source of their products. Employees will help customers choose the best products for their individual situation and provide a lot of attention for the customer. Improving New

Because this is a different type of acquisition, some aspects of the integration process will need to be rethought and she should certainly consider additional steps or a new system altogether for this challenging situation. She must work on reassuring Evergreen managers that she will stay true to the Evergreen Way by allowing them the autonomy they need to provide a unique experience. The issue here is the cultures are different, unlike previous acquisitions were the cultures have been aligned and the businesses have shared similar values. “The chances for success are further hampered if the corporate cultures of the companies are very different. When a company is acquired, the decision is typically based on product or market synergies, but cultural differences are often ignored. It 's a mistake to assume that personnel issues are easily overcome.” Usually, Evergreen’s careful research process ensures a smooth transition: likeminded managers from different stores learning about advanced systems but still able to control the day to day life in their store. However, acquiring Arugula and the use of slotting allowances which allow suppliers to pay to gain self space and make it difficult for local, smaller businesses, seem to be taking Evergreen away from its original vision. Norton must be sure to protect her managers and employees and continue providing them with the tools they