Kroger Competitive Analysis

A weakness that Whole Foods have is their reputation. A reputation for a grocer is key to its survival and they have the reputation of being very expensive or some call it “whole paycheck.”

Whole Foods Market was initiated its business in Austin, Texas, Their initial creators were John Mackey and Renee Lawson Hardy, owners of different places where you got natural foods. The original Whole Foods Marketplace started in 1980 with only 19 people in the company. Now Whole Food Market is the best seller in natural and organic foods. At this moment they had more than 310 stores in the North America and Europe. The company keeps the excellent quality in the industry all the time.

Although Whole Foods Market not only survived the recession but also has seen steady growth since 2009, its’ business model is not sustainable in the longer term. Compared with its competitors’ prices (Whole Foods being pricier), and receiving the nickname “whole paycheck,” Whole Foods has serious competition, especially with its competitor Kroger. Kroger’s net income was approximately $1.5 billion the past year, while Whole Food’s had a net income around $500 million. Also, having a pure grocery market company puts limitation on its growth in the future makes Whole Foods not sustainable. Companies selling only groceries have to compete with maintaining lower prices, which takes away from its profit margin, compared to companies like Wal-Mart

Furthermore, something that Whole Foods Market is already doing very well is sustainability. Their efforts thus far have proven quite worthy for business and their consumers however, there is always room for improvement in areas of the business, this being one of them. Those smaller competitors know that to compete against a massive giant, they must come up with the best and greatest ideas and stay ahead of the curve. Some ideas that Whole Foods Market could use would be to add simple things like skylights in their building offering more natural sunlight to shine in reducing the need for electricity, solar and wind power, all of which Whole Foods Market is using. Also, packaging their products in biodegradable containers would be a fantastic

Whole Foods Market Inc. is an American supermarket chain specializing in organic food that opened on Sept. 20, 1980, in Austin, Texas, its current headquarters. Whole Foods Market Inc. has 431 supermarkets among the United States, Canada, District of Columbia, and the United Kingdom. Whole Foods Market has sales revenue of 15.39 billion, total assets of 5.74 billion, and a net income of 536 million in the annual report of September 2015. Whole Foods Market’s common stock is traded on the NASDAQ Global Select Market under ticker symbol “WFM”. Whole Foods Market’s primary products are organic and natural food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables and various dairy products. Whole Foods Market Inc. is in the retail supermarket and grocery store industry, in which makes up the largest food retail channel in the United States. The Supermarkets and Grocery Stores industry faces a high amount of internal and external competition, particularly from large retailers like massive warehouse stores and supercenters. The barriers to entry in this industry are the medium range, but are increasing.

Sprouts Farmers Market has based much of their business strategies around the organic, healthy lifestyle. The company issued coupons to gather more customers and increase sales. With these coupons, SFM’s organic goods are 13% cheaper than their rival, Whole Foods.

Whole Foods' utilizes a differentiated strategy, focused on organic and natural foods. This distinguishes them from mainstream grocery competitors, and puts them into competition with other specialized grocery outlets (Urani, 2008). This differentiation, combined with more traditional grocery industry size and operations, gives the company an advantage over most of its competitors.

that made the first Kroger store successful in 1883 – service, selection and value – continue to

Whole Foods’ competitors include natural foods supermarkets, specialty supermarkets, warehouse membership stores, small specialty stores and restaurants. In addition, some traditional and specialty supermarkets are also expanding more aggressively in marketing a range of organic foods, thereby competing directly with Whole Foods for products, customers and locations. For example, Wal-Mart announced that it will focus on the organic segment. They aim to become the low-price leader in organics, not just in food but clothing, electronics and other household products. Wal-Mart has already doubled its organic range in fresh produce, dairy and dry food items during 2006.

I chose Sprouts and Trader Joe’s as Whole Foods Market’s competitor due to all of them sell organic and natural products. To compare each brand’s communication vehicle (website), the first step is to rank their traffic trends. According to the chart below, in the past 6 months, wholefoodsmarket.com had a significantly higher traffic rank than the other two.

Sustain a competitive advantage as the largest organic supermarket corporation through continuing growth in the number of partnerships Whole Foods has with producers, buyers, and retailers to create shared value.

The supermarket industry is seeing a shift with more customers opting for “organic” and “fresh” foods over “processed” and “packaged” foods. The grocery stores are now focused on the health of the customers and the environment than pursuing mass-market sales volume and narrow margins. The grocer that is doing an exceptional job is the Whole Foods Market.

Whole Foods is ranked the 8th largest public food and drug retailer in the United States with a current ranking of #218 on Fortune 500. Whole Foods continues to perform at its very best with reported sales growth in the year 2013 of 7%, Net sales of $12.9 billion, Operating income of $883 million and an Operating Margin of 6.8% they continue to produce gains year after year. During the year 2013 the company returned $633 million to shareholders through share buybacks and dividends.

Whole Foods was the first large grocery chain to market healthy and organic as the stores main selling strategy. Whole Foods being the first to do this, has lead in many ways to them being the strongest in the market. The more established offer some of this but at Whole Foods it’s the main selling point.

If in 2014, Kroger, Costco and Walmart have done a great work pressured Whole Foods Market out of their number one seat in organic food, then in 2015 and 2016 may be the years in which Whole Foods trying to fight and gain back its position.