Whole Foods Market: 2010 How to Grow in An Increasingly Competitive Market?
Patricia Harasta and Alan N. Hoffman
A Case Study Analysis
Antonia Jackson
MBA
Dr. Pamela Barnes
13 October 2013
I. Introduction
Whole Foods Market is one of the biggest organic and natural whole food suppliers in the world. They provide a wide variety of select foods that are without hormones or antibiotics and are stamped with the U.S. Department of Agriculture’s stamp of approval. They value the fact that they can provide people with access to healthy food and be identified with being socially and environmentally responsible.
II. History
Whole Foods Market started off as being Safer Way natural grocery store in 1978. However they were not
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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.”
a.ii) External Environment
One of the biggest external environmental threats against Whole Foods is increases in domestic competition. At its inception Whole Foods was one of the only providers of organic foods. However now there are many rivals who have taken apart of this ever going interest in our society for better living. Stores such as Wal-Mart and Target have joined the bandwagon of providing their customers with organic foods. With many stores now offering organic foods this has put a dent in the availability of organic foods in other words has shorten the supply of organic foods to Whole Foods. Another external environmental threat was the economy. When the economy went down during the recession many people had to make tough choices when it came to their finances and one of the biggest things that were changed was the amount that they spent on groceries. Many people just simply deemed natural organic foods as being expensive and not a necessity. A major opportunity that Whole Foods have embraced was that during the recession Whole Foods recognized that they need to make adjustments decrease the overall prices. Another major opportunity that they need to embrace is marketing the necessity of whole organic foods. Letting people know that eating right is vital to
John Mackey and Renee Lawson Hardy, the co-founders of the current Whole Foods Market, simply wanted to provide quality healthy food to the American consumer. This was about three decades ago when the first store opened. According to Mackey, making money was not the first priory, but helping people to eat better was. Happily for Mackey and Lawson, the residents of Austin Texas were hungry, no pun intended, for just this type of product. At the time, though there were several small independent healthy food stores, there was not a full sized grocery store. This is what set Mackey and Lawson apart from their competitors, their enormous sized health food grocery store was a huge success and now Whole Foods Market (WFM) is not only a
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 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
Whole Foods will need to research and figure out marketing strategies to keep the customers loyal to Whole Foods. One of the main reasons customers will go to different supermarkets that have organic foods is because of the different department stores inside the grocery market. For instance, some grocery stores sell organic vegetables, but also have regular vegetables. Some of the larger grocery stores have banks, photo stores, insurance companies that make your stop at the larger grocery store
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
Whole Foods Market Inc. is a popular retail destination for natural and organic foods and byproducts, since its establishment in 1980 by four local businesspeople in Austin, Texas. It is notable for supporting sustainable agriculture, promoting the reduction of waste and consumption of nonrenewable resources and encouraging environmentally safe cleaning and store-maintenance programs. The company showcases its ethics and social responsibility through its green mission, foundations, and Whole Trade Guarantee.
Whole Foods, just like any other retailer right now, has been struggling with the economy. The external environment has been changing in uphill and downhill motions daily, something that Whole Foods has never experienced before. Not only is there pressure on the financials of the corporation, but also there is the pressure to go green.
It rebranded to “whole foods” in 1979 after four local businessmen decided to merge “Safeway's” and “Clarksville Natural Grocery”, to form what is now the most successful natural foods store in the
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
Whole Foods is known for its quality: Quality ingredients and a unique shopping experience is its foundation. Whole Foods shoppers expect ingredients that adhere to their moral values and that are in line with their social status.
Whole Foods has been adaptive in fitting its competitive strategy to its situation. The store first grew to prominence by being a stylish antithesis to the crunchy mom-and-pop organic grocery stores, providing a relatively normal but
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.
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
Whole Foods Market began in 1970 as a local supermarket. Over the past 31 years, Whole Foods Market has grown from a single store in Austin, Texas, to becoming one of the worldwide leaders in providing consumers with natural and organic foods. They have grown to over 300 stores in both North America and the United Kingdom. (Whole Foods Market, Inc., 2011) This report examines the chief elements of the strategy that Whole Foods Market has put into place. Also, it uses past financial data to provide an assessment of the condition of the company going forward. Those assessments include recommendations of future actions, along with concerns I have about the way the company is currently operating and some difficulties that may be on the way.
For three decades it has dominated the organic foods market, becoming known for its high quality foods. The market dominance and strategic store locations made it possible for WFM to charge more than other food stores and still make huge profits. The company had its first true test though when the global financial crisis hit in 2007-08. Many people began to abandon Whole Foods for cheaper chain stores and their stocks took a big hit. They rebounded with the economy but it was the first time expansion had stalled. Another more gradual threat emerged and that was other grocery stores venturing into the organic foods market. These companies saw the success WFM was having with its organic products and began incorporating more and more organic/responsibly made foods at lower prices.