Whole Foods Swot Analysis Paper

Whole Foods Market has prided itself in the selection of the products it sells and uses by quality, taste, value, and production processes strengthening their business further. They have carried out this key strategy by tasting every product before they purchased them, sourcing from local, organic farmers, requiring livestock and seafood items from farmers to be raised humanely and raised on pasturelands, well water, wholesome grains, and not use steroids, hormones or byproducts. Keeping products at high quality, great taste, comparable prices, and environmentally friendly will allow repeat customers and word-of-mouth advertising to increase the value of Whole Foods Market. (Thompson, 2012)

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 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

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

Walgreens prides itself on its diversity in the workplace. This is one of their core competencies. Since 2013 Walgreens has created an annual diversity and inclusion report that shows what they did that specific year that helped diversify their company. According to the report, in 2014 33% of the United States labor force was people of color while during that same time people of color made up 42.8% of Walgreens employees (“2014 Diversity,” n.d.). Walgreens also offers a disability inclusion report each year. At one of Walgreens distribution centers more than half of the employees have disabilities. With this center they have seen 120% increases in productivity so now they are expanding this model into retail locations (“2014 Diversity,” n.d.).

Trader Joe stands by their mission statement as being a neighborhood store and a private label brand. The firm offers organic, locally sourced produce and ingredients, offering a wide variety of fresh items that are hard to find enabling the business to enjoy a distinctive competitive advantage. Additionally, through local sourcing Trader Joe’s continued involvement in local events through food donations, gift baskets and providing in store and online recipes and health guides. Apart from the many strengths of Trader Joe, the most significant is their commitment to quality at lower prices. Trader Joe has worked hard to manage the balance by sourcing directly from their suppliers. The firm states that “every penny we save is every penny our customer saves.” Similarly to WFM, their employees are its most valuable resource they possess, and as such they are treated fairly and trained to provide the first class service to Trader Joe’s customers. Each customer is given

As with other superstores, Whole Foods offers a variety of products to their customers. These products include organic and natural foods of all sorts, body care items, and household care items (“Grocery”, n.d.). As with other grocery stores, these products are organized based on the category they fall into, as well as if they fit a certain dietary requirement (e.g. dairy, meat, cleaning products, vegan, gluten-free, etc.). The output efficiency is measured as with most companies by the profit brought in by each division. This past year (2013), sales improved to $1.29B from $1.17B in 2012, net profit improved from $466K to $551K with the net profit ratio improving from 3.98% to 4.26% (Yahoo! Finance, 2014). Additionally, Whole Foods’ return on assets improved to 4.26% from 3.98% in 2012 (Yahoo! Finance, 2014). All of these numbers show that Whole Foods is capitalizing on its momentum and continuing the success they’ve had in previous years. Another performance

Whole Foods Market is considered the most “green” of companies in supermarket retail by consumers. The supermarket mostly attracts a young, trendy demographic and has started to move into smaller suburban cities. Whole Foods has worked hard to get rid of its nickname “Whole Paycheck” that branded the store as out of price range for most consumers. To oppose claims of being too expensive, Whole Foods Market began offering promotions, discounts, and has a flat prices on groceries despite it costing them more. The idea is for customers to find plenty of deals to make up for certain products price inflation. Expanding the stores appeal to new customers has brought a few setbacks. Loyal customers spend almost three times more than what new customers do. (Gasparro, 2012)

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

The reason that management needs to keep a close eye on these companies is because many of these chains have started to create special organic and health food sections in an attempt to tap into the organic market. The reason that this could cause serious issues for Whole Foods is because “the higher prices that we charge for many of our products has prompted some media critics to dub Whole Foods as “Whole Paycheck,” a term that resonated with price-sensitive grocery shoppers who had visited a Whole Foods store”. This could drive them to enter competitors’ stores that are viewed as “discounters” to get the better deal in their mind. Some consumers however are able to overlook the exaggerated pricing of Whole Foods due to being “enchanted with the company’s product offerings and shopping experience”. This has been shown as many new customers that enter Whole Foods are often “awed by their perishables as we devote more space to fresh fruits and vegetables, including an extensive selection of organics, than most of our competitors”.

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.

The reasons why the Whole Foods Market has grown over the years is that it has a very ambidextrous organizational structure, wherein it imbibes both mechanistic and organic structures. As the CEO of the company points out that, the store workers do not have to wait for their managers to make the decisions

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.