Whole Foods Market Case Analysis
Whole Foods Market has received recognition as recent as January 27th 2011 when CNBC aired Supermarkets Inc: Inside a 500 Billion Money Machine. “Whole Foods is arguably the most influential, and by some measures, the most successful supermarket chain in the world. The specialty gourmet store has grown into a Fortune-300 company offering specialty foods and locally grown organic produce.1” CNBC goes on to state that even “Established brands like Safeway, Giant Eagle and Kroger are cultural icons as familiar as our own street names, but they are under constant attack from brilliant upstarts like Whole Foods…1” From the general supermarket industry Whole Foods Market breaks down into even a smaller specific industry which is the natural and organic foods industry. This industry focused on proving customers with natural foods which is defined as “foods that are minimally processed, largely or complexly free of artificial ingredients, preservatives and other non natural occurring ingredients; and near to their whole, natural state as possible.7.” Also “organic foods were a special subset of the natural foods category; to be labeled as organic, foods had to be grown and processed without the use of pesticides, antibiotics, hormones, synthetic chemicals, artificial fertilizers, preservatives, dyes or additives or generic engenerring.7” Also from the text book CEO John Mackey believes Whole Foods Market has been highly selective for finding the highest quality, least processed, most favorable and naturally preserved foods available. Whole Foods Market is an industry leader in natural and organic food retailing. The five forces model of competition, in written form, is provided as a key analytical tool to better understand the overall attractiveness of the industry. Rivalry among competing sellers is certainly strong and is expected to become stronger as more grocery retailers compete for loyal customers who desire the healthiest foods. The threat of substitute’s products is very high from other grocery retailers. For example, Publix has branded its own natural/organics products line named Green Wise and even a few stores that have a majority of its products natural/ organic. The restaurant industry should be considered but it is a very low threat because there are very few restaurants that are only dedicated to natural/organic products. The threat of new entrants entering the industry is fairly low. This is simply because grocery retailers have already got into the market to insure they would get their share. The bargaining power of suppliers is a medium level threat to the industry because industry members are competing for products to put on their shelves from the same suppliers. The bargaining power of buyers is definitely low because conventional retailers set the price consumers must pay to obtain the goods they want. Because of these threat levels the overall attractiveness of the industry high. Consumers are becoming more conscious of the foods they are eating and will continue buying natural and organic foods. There have been many main events and performance indicators that have occurred with Whole Foods Market recently, as stated in the Epilogue to January 2009 “ Whole Foods Market planned on opening 15 stores , have annual sales of about 8.3 billion, have capital expenditures of $400 to $450 million, and incur annual interest costs of $35 to $40 million.8” The main elements of Whole Foods Market strategy are providing customers with the highest quality natural/organic products. Whole Foods Market has a strong growth strategy because they have 66 store in the stages of development and have future plan of acquiring more stores to expand their company further down the road. This growth strategy has helped them achieve their financial goals. Whole Foods Market can be assessed by using a simple SWOT analysis. This assessment will begin by examining the internal strengths and weaknesses....
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