Safeway Financial Analysis

The range of competitors within the overall industry include chain and independent supermarkets (Krogers, Safeway, others); mass merchandisers and super centers (Wal-mart,Target); convenience stores; wholesale clubs (Sam’s); restaurants and fast food chains andnatural food stores (Whole Foods, Wild Oats

ACC 300 FSA Project Ratio Analysis of The Kroger Co. and Whole Foods Market, Inc. TEAM Jake Eriksen (002) Brycen Goldstein (002) 16 Ross Wright (001) Nicolas Kim Omar Harb (001) (002) Kroger The Kroger Co. (referred to as Kroger) is a large grocery chain audited by PricewaterhouseCoopers LLP.

The company keeps real estate costs low by staying away from desirable locations to accommodate its average smalls stores. Trader Joe’s takes prides in the way they cut costs and maintain its economical ways to benefit everyone. One of their slogans is “Every penny we save is a penny you save and our CEO doesn’t even have a secretary.” (Organizational Behavior 2014, p.499) There are many ways in which they fight to maintain keeping costs low. The company searches out delicious unusual foods from around the world and then directly deals with the manufacturers to make a contract. The company puts their own label and then makes it a house brand. Then they make each product a tester and if people like the product, it gets to stay on the shelf. This low overhead approach is what keeps the company going. What the company does not do is sacrifice quality, there house brands have been a success due to them taking risks. There are about fifteen new products put out on the shelves every week, but they make sure when one product goes out on the shelf, another product goes off the shelf. Therefore, the products that do not sell get taken off. They will even bring back discontinued products if customers request

The purpose of this paper is to compare the financial health of The Fresh Market and Kroger. The Fresh Market and Kroger focus on selling organic food. The Fresh Market is a 1.7 billion corporation compared to Kroger 108 billion. The information was obtained from the 2014 Balance Sheet and Income Statements for both grocery stores. . There are three different categories of ratios; liquidity, profitability and efficiency. Ratios enable one to not focus on the size of the company, but on the liquidity, profitably and efficiency and the overall financial health of the organization.

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.”

Grocery shopping is more diversified and evolved than ever before. Individuals across the nation have access to everything from exotic products to unique delivery services. Often, specialty stores have limited locations whereas specialty services have a limited reach. However, two retailers have expanded to hundreds of locations while adhering to unexpected market positioning for previously untargeted market segments. Whole Foods Market and Trader Joe’s have become household names while also innovating beyond regional and national traditional chains. Despite comparable size in

The mergers with great reputation brands not only elevated Whole Foods Market’s character, but also stabled its market position. In 1991, Wellspring Grocery joined Whole Foods Market. Similar to Whole Food, Wellspring Grocery started with a positive attitude toward changing the market. Unlike other grocery stores, it wanted to bring healthy diet on shelves, rather than pills and canned food. This idea brought attention to what people are consuming daily. Second merger happened one year after Wellspring Grocery’s success. Bread and Circus, a company that used to sell natural food and wooden toys, valued costumer’s opinion. Costumers were happy to shop in Bread and Circus. Its expeditiously expansion caught Whole Foods Market’s attention. In order to stable its market not only in Taxes, it decided to purchase Bread and Circus. Last, Mrs. Gooch’s, a grocery store that targeted on allergic

On averaged their stores are roughly 38,000 square feet and their locations typically carried 21,000 SKUs. They make two-thirds of its revenue by selling bakery, perishable items, and prepared foods. (Ager & Roberto, 2014). Peoples tend to shop at Whole Food Market because of their high-quality natural and organic food. In today’s world peoples are more concern about health concise and effect of pesticide products, more people choose to have organic fruits and vegetables. Whole Foods get most of their produces from local people which are natural and organic, which will help them gain more customer than other company because of increasing demand of organic food (Whole Foods Market History, n.d). They also have a strong brand image and they were the first supermarket who commit to completely eliminating disposable plastic grocery bags to help protect the environment. They also sell many USDA-certified organic

Superior Supermarkets is in need of a strategic program to help fuel continued growth, market share, and profitability. The current issue of a new pricing strategy is warranted, considering competitive forces, increasing consumer price consciousness, and recent sales being below budget. Table 3 illustrates how SS compares to its competition in terms of product distribution – a lower percentage of grocery and higher percentage of meats and produce. This table also depicts that lower percentage of sales exist for high profit margin items. This information can be supplemented by recent consumer research carried out through telephone surveys and two focus groups.

They only stock about 4,000 SKUs in their small locations; this is a business strategy resulting in the retailer selling an estimated $1,750 in merchandise per square foot, more than double Whole Foods’ (Kowitt). Additionally, produce is priced per unit at Trader Joe’s, while Whole Foods sells by the pound. Both Whole Foods and Trader Joe’s “organic” options generally run about $1-2 more expensive than their “regular,” non-organic products. Whole Foods also offers more national brands, which are pricier than private label brands.

Grocery industry is a highly competitive market with thin profit margins. Super markets are dominant players in the grocery industry. They use grocery offerings to drive traffic to their higher profit margin retail items. With its operations efficiency, Walmart, the largest grocery retailer has been able to offer significant price drops. This also forces other grocery stores to drop prices which keeps the profit margin thin. Even with all the advantages of operational efficiency and economies of scale, Walmart’s share in grocery sales was down at 51% in 2011.

With giants such as Walmart, and Kroger running the grocery store industry it’s difficult for companies such as Smuckers to bargain for shelf-space and prices. Brand name items drawn to the center of the store are what leverages these companies to succeed in the industry. After numerous acquisitions and strategic alliances, Smuckers developed a solid core of product lines which experienced success rapidly. Product lines that experienced the most success as a result of strong positioning in the industry included their Coffee labels, flour and baking products, Oils and food spreads. A 9-Cell Industry Attractiveness/Business Strength Matrix shows that the Industry attractiveness is relatively moderate. With many competitors and strong buyer power from large grocery chains such as Kroger, companies such as Smuckers have explored different strategies that have proved successful in what can be described as a saturated industry. The case insinuates that there may be opportunities in the industry in regards to special markets and perhaps Oils and Baking with sugar free products, but otherwise the recession, although it drove families to buy store bought as opposed to eating out, has had its effects on the food service industry as well.

The grocery industry is highly fragmented, with a multitude of strong regional players (Safeway, Publix, Kroeger, Wegmans, etc.). The largest grocery retailer in the United States is Wal-Mart, with an estimated 33% share. Other major retailers are targeting this segment of the industry, focused on a relatively narrow selection of key commodity foods at relatively low prices (Forbes, 2011). Whole Foods competes in a segment occupied by differentiated grocery players including Trader Joe's, Fresh Market and a highly fragmented selection of local and regional upscale and health-conscious grocery stores. The big players in the industry usually carry ranges of organic and natural products as well, siphoning off some business from Whole Foods. As Whole Foods grows, it comes into competition with mainstream grocery retailers more frequently (McLaughlin & Martin, 2009).

food store in the marketplace, which takes the respective customer base into consideration. That is why the store in Santa Rosa has been set up differently so as to match the more upscale clientele. Another important element of their strategy is the emphasis on delivering value to their customers amongst the perception of quality. In order to stay competitive, Oliver’s Market adopted a plan to beat local competitor Safeway’s prices by 8 to 10% on everyday goods. A similar strategy was used to compete with the prices on ‘natural foods’ found at Whole Foods Market. Although to stay in line with their overall strategy,

Marketed as ‘America’s healthiest grocery store’ the company has successfully grown to 408 stores across the world with sales of $14 billion in 2014 (Whole Foods Market, 2015). The firm is positioned as an upmarket grocery due to the emphasis on natural, organic origins, and as a result are able to charge a premium for their products. Through efficiently running its operations and stores, Whole Foods are able to maintain healthy 4.02% profit margins (Financial Times, 2015) and operating margins well above the American grocery store industry average at 6.58% (Bloomberg, 2015). Looking at 2015’s quarter 1 figures it is clear to see that Whole Foods have had a hugely successful year with sales of $4.7 billion, up 10% from the same period last year. Furthermore, they opened 9 new stores and have signed a further 11 new leases.