Whole Foods Market, 2005: Will There Be Enough Organic Food to Satisfy the Growing Demand?

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Case 11
Whole Foods Market, 2005: Will there be enough organic food to satisfy the growing demand?

Whole food market is the world’s leading retailer of natural and organic food industry. A firm believer in the virtuous circle entwining food chain, human being and mother earth, they conduct their business true and consistent to their business mission and vision by producing the highest quality of products for its customers and high profits for its investors. Being a philanthropist and supporter of animal rights, Whole food market has established strong reputation with customers and suppliers. There are rivals in the industry and new entrants are seen penetrating the industry. At the time of the case (2005), Whole foods market is experiencing scarce resources in the organic produces and prime locations for their next business expansion.

1 What are the best strategies to tackle the growing demand for organic food? 2 How can Whole Foods Market expand their business further?
3 Will Whole Foods Market survive into the 10-15 years?

General Environment
Societies are more health conscious and better educated in many parts of the world. The major market for Whole Foods Market is United States, Canada and United Kingdom. Europe is a potential market growth.

A growing percentage of women working have led to an increase in singlehood and ready-to-eat meal. As more people becomes health conscious, demand for organic food increases as well.

Ageing baby boomer expands the senior population which in turn would increase consumption spending. In Europe, population is increasing and there are significant suppliers of organic foods with build in acceptance amongst the people there.

Europe is the next breakthrough market to capitalise with growing number of buyers and suppliers of organic products.

Industry analysis
The natural and organic food retail industry is a fast moving consumer goods industry which requires players to either be a price leader and providing extra conveniences to customers for their pleasant experiences. However, players should never sacrifice quality for quantity as more customers are health conscious and financially capable to switch retailers without hesitation.

Bargaining powers of suppliers
The limited farmlands of organic foods in United States may not meet with the increasing demand in the future which may lead to price war. However, natural food supplies pose no threat. A moderate threat.

Bargaining powers of buyers
Consumers have a strong buying power as they are the main buyers in this industry. With increasing ageing baby boomers, singlehood and health conscious adults, demands for better quality of natural and organic foods are likely to increase. A high threat.

Rivalry amongst existing competitors
Rivalry in the industry is intense as firms continuously try to promote their presence and products. A high threat.

Threat of substitute product
The only substitute for natural food is organic produce. There is also an increasing demand for ready-to-eat meals over prepared meals. A low threat.

Is this an attractive industry?
With the increasing population of ageing baby boomers, singlehood and health conscious adults, a growing demand for organic foods and ready-to-eat meals will increase over the years. While the competition is intense amongst firms coupled with high bargaining powers of buyers, the industry is deeming as attractive.

Competitor analysis
• Trader Joe’s adopts price leadership strategy without sacrificing its product quality. It has 215 stores located primarily in the west and east coast of the United States. They offer upscale grocery fare and employs low cost structures. The second biggest retailer in the industry. • Wild Oats Market has 100 stores located in 24 states and Canada. Relying on employees to learn the industry, Wild Oats is committed to strengthen...
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