The Core Difference of SmartMart Grocery Store is Proving Organic Food

Every retail location carries a variety of products that distinguishes it from other stores in the same chain. Not surprisingly, it is difficult to achieve economies of scale. Supply Chain Mackey describes his consumers as being “part of a cult”. Whole Foods believes that the company’s emphasis on perishables and locally-sourced produce differentiates their stores from run-of-the-mill supermarkets and attracts loyal and devoted customers. However, “fresh produce” is one of the most challenging product categories to operate due to limited product shelf life and high cost of spoilage. Whole Foods has tried to circumvent most of the problems inherent in supplying fresh produce to its stores by sourcing locally and having short and flexible supply chains. In the case of fruits and vegetables, Whole Foods has buying relationships with local farmers who supply the store with seasonal produce. Thus, if one farmer is unable to produce a sufficient amount of yellow corn or heirloom tomatoes, the shortfall can be made up by another farmer. Although challenging to perfect, these short supply chains are agile and difficult for other big retailers to duplicate.

Whole Foods Market is a superstore chain in Austin Texas that deals in natural and organic food products exclusively. The organization ranks among the most socially responsible organizations in the world, and the fourth placed in the US Environmental Protection Agency list. The trading organization exists within a market crowded with competitors from its area of operations, and those who offer contrary products to what it proposes. Therefore, answer to the question of how it manages to survive within such a competitive environment is only understandable if we evaluate the different types of market structures. The markets have different characteristics, which determine the strategies applied by the various organizations in the continuum (Etro, 2009).

Trader Joe’s operates over 340 stores in 9 states were they “buy direct from suppliers whenever possible, bargain hard to get the best prices and then pass the savings on to the customer” (Trader Joe’s, 2013, para. 4). Whole Food’s Market is the “world’s leader in natural and organic foods, with more than 360 stores in North America and the United Kingdom” (Whole Food, 2013, para 2). Trader Joe’s and Whole Food’s Market have managed to take original ideas and spread them throughout the nation to many different customers. Although they differ not only in the technique in which they decide to bring products to their customers but also in term of inventory management and supply chain organization. These two companies have become so successful in my opinion, not by what they differ in but what they have most in common, which is their commitment to their loyal customers, employees and undeniable quality in their products they sell. Through their loyalty to their customers and employees in addition to their irreplaceable value

In the long run, grocery shopping at other natural grocery stores such as: La Montnita Coop or Walmart, is a better option for those looking to buy “organic” at affordable prices. La Montanita offers half- off organic produce prices with an EBT (Electronic Benefit Transfer) card, to the financially struggling. The small natural grocery store feels welcoming, with a friendly and helpful staff, located in Nob Hill (easy student access) and on Rio Grande and Matthew street in the Valley. What makes La Montanita unique, is its “cooperative” status that exists to “erve its member and is member owned”. So, in addition to customers receiving the products they need, they also have a say in the business decisions the store makes. This means rather than “rewarding outside investors with its profits, a co-op returns surplus revenue to its members in proportion to how much they use the co-op”. In addition, Walmart is now the number one grocery store selling “organic” foods and produce, and with its promise of “Everyday Low Prices” it is a top contender in the organic foods movement. Since, Walmart is located in several areas throughout the city, everyone (despite race, income, culture) is able to shop at the store.

There are issues again not explored, such as how the transportation infrastructure contributes to pollution, and whether or not the new Walmart organics actually take space away from their mass-produced product, or if they are new additions. One could come away with the feeling that by adding the organics, Walmart is putting the “pastoral fantasy” on their brand to make the consumer feel better about the experience of buying from them. The most successful parts of Food, Inc. are visuals that can’t be argued against. We see the scary results of over farming animals.

Today, consumer can easily find free-cage chicken or organic baby potatoes at Walmart. All kind of non-GMO products in all kind of grocery store. And there is a new competition from fast-growing natural grocery which is Sprouts coming straight to Whole Foods’ market segment. Sprouts targets customers that will respond to a lower-pricing strategy for organic food and they went head to head with Whole Foods. These players have put extremely heavy weight

Although organic products represent just about 2% of the total food and beverage sales in the US, the market is growing approximately 20% annually. More consumers are preferring natural, fat-free and healthy food products. Food items containing trans-fat are losing market share to low calorie, low fat, natural and organic products. Increasing customer preference for organic foods is likely to impact the company’s sales, given its leading market position in the organic grocery segment.

Whole Foods Market, Inc. is the "world's leader in natural and organic foods, with more than 310 stores in North America and the United Kingdom" (Whole Foods Market.com. About. 2012. PP. 1). From its roots as a one store operation based in Austin, Texas the company under the direction of its founder and CEO John Mackey has "unquestionably transformed the way Americans produce, buy, and eat food" (Paumgarten, N. January 4, 2010. PP. 1).

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.

In 2015 the company’s share price fell by 40% due to the strong competition it faced by Kroger,17% rise, Costco more then 10% rise (Bells, 2015). Walmart still holds the biggest market share in the retail field but also entered the organic food market pretty easily by offering natural and organic products at its lowest price guarantee and “price match” techniques. The four-firm concentration ratio for the market is at high 87.7% making its bold statement about the big players in the market and the oligopoly industry (Statista, n.d.). It is a difficult task for stores like Albertsons to enter the organic food market due to the influence and unbeatable prices majority of the competitors offer. Since the organic products sales are in no way a new innovation or something we have not seen before a fair opportunity is given to anyone guaranteeing good quality and prices. However, a big brand like Whole Foods controls a big portion of the organic food market and therefor its is unlikely for a new developing store to survive on it

It provides a strength in the area of the quality of products they are providing to their customers. On the other hand, this could prevent the company from quickly expanding their operations. Whole Foods Market also faces the threat of the rise of genetically modified organisms (GMO) products in the market. This threat could reduce the ability of Whole Foods Market to satisfy their own quality standards in providing organic products that have minimal or no GMO ingredients. Another issue that the Company has to deal with is the presence of global warming. Climate change has the potential to considerably alter or reduce the production of food and this threat is difficult to address or overcome. The core value of safe farming will need to expand internationally to establish the idea of safe eco-friendly hydroponic farms. With land resources limited, gaining complete support for hydroponic farms that may be smaller and able to grow a larger assortment of organic products would help the situation. Getting government support for low pollution farming and being able to show economic growth and employment opportunities for local

Wal-Mart’s job is to manage these tensions, weighing the demands of customers against the concerns of network partners. To offer a profitable mix that includes more green products, Wal- Mart can retire conventional products in favor

According to an article that was published by the University of Kentucky College of Agriculture, many grocers are finding that customers are changing their preferences about their food, and are now wanting fresh foods and organic foods in their local supermarkets. This paired with increasing transportation costs are causing grocers to rethink the ideas and processes of large centralized distribution centers (Ernst & Woods, 2012).

Above strategy would develop trust in shareholders as it will generate long term profit for the company by aligning company’s mission of healthier and sustainable organic product to the consumers. Also, this strategy will eliminate any competition from CSA’s and increase its market share in the organic food domain. The consumers or the customers will continue to be loyal towards SmartMart as they will get quality product with proper attention from SmartMart employees. Customers will get variety of organic food at one stop shop. This will increase customer satisfaction and build brand loyalty for SmartMart. The global suppliers for SmartMart might be unhappy as they might loose supply for the company but tying up with local suppliers such as CSA’s will add to variety of the organic products. The long term

After analyzing real and projected data and environmental factors (competition, technology, economics) we found that moving into Supermarkets could have both positive and negative repercussions. Refraining to expand into supermarkets could put Natureview at a competitive disadvantage, considering there have been rumors of Natureview’s competitors expanding from Natural Food Stores to supermarkets.