Micro Environment
Customer Analysis
- More recently they have been targeting the younger generation who seem more interested in the organic lifestyle (Gaille, 2015)
- People who are interested in how their live food was treated before it reached them (Lutz, 2015).
- Households with children, up to 40% say they are buying more organic this year than last year (Gaille, 2015)
- No longer just the upper class people who could afford to spend outrageous amounts of money on their food alone (Lutz, 2015).
Competitive Analysis
1) Trader Joes:
a) Currently sells twice as much per square foot (Lutz, 2015)
b) Offer the same or similar products for much cheaper, due to their private in house label that people have grown extremely fond of (Lutz, 2015)
c) Have developed a sort
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d) Foods without chemicals and pesticides are increasing in popularity (Whole Foods Market).
e) 18-30 year olds are the most likely to shop at Whole Foods (Gaille, 2014).
SWOT Analysis of Internal Strengths and Weaknesses
Strengths
a) Whole foods has 431 stores in 42 states, wide range of customers have access (Whole Foods Market).
b) Name is well known and they have the resources needed to invest in their private brand (Whole Foods Market).
Weaknesses
a) They may be starting to make their food more affordable but they still have this image of expensive foods associated with them, they need to get people into the store so they will realize that they are actually affordable (Lutz, 2015).
b) Same-store sales are down
c) Losing grasp of the industry they popularized (Lutz, 2015).
Opportunities
a) Competitors are able to offer cheaper items by selling private brands. Whole foods can focus on their private brand
Whole Foods was established in 1980 with one store in Austin, Texas. Today, Whole Foods is the world’s largest leader in natural and organic foods. There are over 310 stores in North America and the United Kingdom. Whole Foods is committed to the finest natural and organic foods available, sustainable agriculture and have one of the strictest of quality standards. Whole Foods offers customers a wide variety of products. “Natural” refers to food that is free of growth hormones or antibiotics, where “certificated
Whole Foods is a retailer that specializes in organic foods and it has done an excellent job of determining its target market and how to position itself. Instead of going head to head with large food retailers such as Wal-Mart, Whole Foods has found a niche market that works perfectly for itself. This niche market is one that prides itself on being health conscious and environmentally responsible and Whole Foods has done a great job of positioning itself in the same way through its environmentally safe actions and its use of the local community to stock its stores. However, as Whole Foods grows and expands, a person has to wonder if the company will be able to maintain this same position or will have to make
1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive
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
Today’s society where people are more informed and health conscientious; the sales of organic and natural foods has shown an
In the United States, the food retail industry is absolutely massive. According to Statista, this industry brings in nearly 5.27 trillion dollars annually and 594.4 billion of that is from grocery store sales. In this market, the 20-ton gorilla in the room is Walmart, racking in nearly 20% of the entire market at around 118 billion dollars in 2013 according to the Harvard Business School case study. Following Walmart, Kroger and Costco own the biggest next largest slices bringing in 76 billion and 71 billion respectively. In this highly competitive market that has some of the smallest margins of any industry it can be tough to get ahead and even tougher to grow. However, Trader Joe’s has managed to pierce what was once a very small world
Additionally, it sought to offer the highest quality, least processed, most flavourful and naturally preserved food available. It has thus marketed them in appealing store environments that have made shopping at Whole Foods an interesting and enjoyable experience. The company uses strategies with respect to their growth, store location, product line, pricing, merchandising and even it’s social responsibility and community citizenship initiatives that have helped tremendously in its success.
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
Whole Foods continues to grow as the leader in organic and natural grocery supplier in the United States, Canada, and England. The company has continued to open new stores in new markets, as well as, opening two 365 by Whole Foods Market stores. Whole Foods became the industry leader by providing high quality natural and organic food products for consumers, which is a better and healthier product for consumers to consume. This is a big part of their competitive advantage. Other grocery stores are limited in their organic supplies, where as at Whole Foods, it is the primary focus. Another comparison is that with the help of Instacart, Whole foods is now the leader when it comes to delivery of fresh groceries then any other grocery in the industry. (Quarterly Results)
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.
While the foods retail industry is highly competitive, Whole Foods has established a reputation and maintains a brand loyalty with its customers. Increased rivalry will occur in the larger grocery chains like Wal-Mart and Kroger, because of their flexibility in the products they can offer, and the pressures they can put on the sales growth and overall profits of Whole Foods. They have a larger cash and customer base, and the ability to better advertise their products, while Whole Foods still generates most of their
The documentary Food Inc. revolves around the manufacturing of products for our later on consumption. The inhuman ways in which we obtain these products and the economic down fall in which we base our normal everyday lives off of. The American population undertakes a huge risk when consuming these products due to the health hazards that Ignored and not shown to the consumer by the companies. The documentary is separated into segments that are taking a specific step to take the problem by hand, whether it is the production of meat, grain or vegetables.
Organic consumers are not going to feel comfortable buying their premium organic foods from the same place they could buy cheap home appliances, children’s toys, or unfashionable clothing.
Stiff competition within the industry would be one of the key threats that Whole Foods will face. Strong competitors, coupled with grocery stores that have incorporated natural food sections into the stores, have made it more challenging for Whole Foods to maintain its pole position in the market. As the market for organic foods expands rapidly, mainstream supermarkets are also competing for a slice of the pie. Strict government regulations and the lack of prime locations have made it more
Whole Foods Market has expanded by a mixture of opening its own new stores and acquiring already existing stores. Today WFM does not follow this strategy, instead their motivation is to open its own large stores. This is due to noticeable sales differences in larger stores as opposed to smaller stores. WFM locates these newer stores in upscale areas of urban metropolitan centers and high-traffic shopping locations. Not all WFMs are isolated structures; some are located in strip malls. WFM offers a larger selection of natural and organic foods than any other grocery store. WFMs marketing expenditure is extremely small. They spend a measly 0.5% of their revenues on advertising. Their chief marketing strategy relies on word-of-mouth. WFM strives to meet or exceed customer expectations. This is so customers receive competent, knowledgeable, and friendly service and become advocates of WFM. The employees here have a decentralized team approach for store operations. This is so some personnel, merchandising, and operating