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The Growing Demand Of Organic Food

Whole Foods Market (WFM) entered into the organic food market earlier than other grocery stores. Today, Whole Foods Market is the biggest retail chain of natural and organic foods market in the United States. There are 172 stores in North America and the United Kingdom. The mission is that “the company is highly selective about what they sell, dedicated to stringent quality standards and committed to sustainable agriculture.” That provides high-quality goods to customers and high profits to investors. Whole Foods Market targets US$10 billion in revenue with 300-plus stores by 2010 but it does not affect the products’ quality standard and its current reputation. The company offers high quality of all-natural foods, and then they engage in ethical business practices as well as provide a motivational, respectful workplace. The company’s store products are expanded from dry goods to fresh produce such as meats, fish and prepared foods. Furthermore, Whole Foods carries the best tasting and most nutritious food which are unmodified by artificial additions, colourings, sweeteners and preservatives. Whole Foods uses different business models unlikely traditional grocery stores. Now a days, people aware how organic food is healthy for them. As a result, many other grocery stores enter into the organic foods market and therefore, Whole Foods Market is suffering the shortage of organic foods to satisfy the growing demand.

Analysis

General environment

Economic

Whole Foods Market has been growing with the increasing trend of health and fitness consciousness. The company’s growing and continuing is depends on this trend.

Global

There are more than 270 stores in North America and the United Kingdom. Moreover, Whole Foods Market has expanded to European and Canada. Expansion makes huge potential growth as a consequence of the large population and it grasps a more sophisticated organic-foods market.

Political/legal

Standards of organic foods are qualified by legislation in the US Department of Agriculture and the European.

Socio-cultural

By growing percentage of women working outside, most of them do not want to cook at home. According to this, there is sales increasing in the prepared foods section which is one of the product sections of Whole Foods Market.

Demographic

The income distribution, age structure and population size will affect the demand for organic foods products. Whole Foods Market focuses the places where 40 percent or more of the people have a college degree because they are more likely to be conscious and helpful of nutritional issues. Moreover, the ageing of baby boomers will cause the growth of senior demographic. In general, Baby Boomer generations are growing demand for organic food as they are health-conscious and can afford to pay higher prices. Next decade, urban singles are another group with extra disposable income because of their lack of dependants. These two groups will help an opportunity for growth for Whole Foods as they are willing to spend money on buying of healthier food choices.

Technological

In current, online ordering and self-checkouts are growing extremely. However Whole Food has not yet advance in one of these because their slogan is to have friendly helpful service.

Conclusion

To conclude, this general environment analysis is directly impact on the sustainability, profitability and survivability of Whole Foods Market industry.

Industry analysis

Overview

Whole Foods Market is selling the organic products in the best quality naturally and the company purpose is not only for customer satisfying and delighting but also for team member happiness and excellence. The industry creates wealth all the way through profits and growth. Moreover the company is caring about their environment and communities.

Threat of new entrants – Low

There are many entrants such as independents; conventional retailers already exist in the market. The only issue is how they will be concentrated in pursuing whatever profits can be appreciated from the natural, organic category. This is what Whole Foods Market should be going through their business strategy around.

Bargaining power of suppliers - High

There is a limitation in output of organic foods as only 3percent of US farmlands are produced the natural and organically grown foods. Moreover, continuous growing of demand for natural and organic food, suppliers are getting pressures on shortage of products. Therefore, Whole Foods Market faces not only with competition of the conventional retailers but also purchasing goods from suppliers.

Bargaining power of buyers - Low

Because of buyers do not care about the price of organic products in the market; they are able to pay premium prices for healthier and organically grown foods. In addition, there is very less brands for comparing the prices in organic products.

Threat of substitute product - High

There is a high threat of substitute product in the Whole Foods Market. Consumers can easily switch to the conventional retailers who offering the lower priced goods.

Rivalry amongst existing competitors - High

Today, the organic foods industry is growing up and many conventional retailers enter into the organic market. Therefore Whole Foods Market will challenge competition and it is really tough to keep its reputation. Besides consumers are getting concerns their eating habits, natural foods stores like Whole Foods. Hence, competition has increased among grocery stores such as Stop’N Shop and Shaw’s which are now selling natural foods.

Is this an attractive industry?

Now a day, organic foods industry is popular among buyers and it is continuing to grow attractively. Whole Foods Market stands very powerful in the market and makes more profit than other food industries.

Competitor analysis

● Trader Joe’s selling high quality of products at low prices. The company has been expanded 215 stores in the United States and it offers upscale grocery fare such as health foods, prepared meals, organic produce and nutritional supplements.

● Wild Oats is a retail grocery store and the company selling products range from organic foods to traditional grocery merchandise. Oats is the third largest natural foods supermarket chain in the United States in terms of sales. There are 100 full-service stores in 24 states and Canada.

● Stop ‘N Shop Supermarket Company which is based in New England provides the best quality of natural foods in its conventional store. The company promotes products through sales to attract the buyers.

Internal analysis

Tangible resources

There are 172 stores in the United States, Canada and the United Kingdom. Moreover, the company has eight distribution centres, seven regional bake houses and four commissaries. Whole Foods focuses on team-based environment and the company has well trained employees.

Intangible resources

John Mackey, the founder of Whole Foods Market has experience in the grocery business. The company focuses on not only quality standards foods that are free of preservatives and organically grown but also best services to customers. Besides it has good reputation and well-known brand name. The company established the knowledgeable and creative workforce. Moreover, Whole Foods Market gets the customers’ loyalty and satisfaction.

Capabilities

Outstanding customer service R, V, I, N

Boost the efficiency and effectiveness of product lines R, V, N

Innovation capacity in Whole Foods Market V, I, N

Production of high quality of organic goods V, I, N

Best training of employees V

The ability to maintain good relationships with suppliers R, V, I, N

Core competencies

The best quality natural and organic products are available in Whole Foods Market Industry. Whole Foods Market can serve customers to satisfy and delight. Moreover, the company provides their employees well performance and happiness. In addition, Whole Foods Market creates growth equity and profits. Whole Foods Market also cares about environment and community. The company is using effectiveness of management systems in relationship between customers and employees. According to above statements, there is a competitive advantage in Whole Foods Market.

SWOT analysis

Strengths

One of the strength for Whole Foods Market is selling the high quality standards of products. Moreover, Whole Foods Market owns customers’ loyalty and also the company is recognised as a strong brand name because of the result in growing demands for fresh foods and people’s healthiness. The stores locations are primarily in cities and therefore, it is meeting the demands of the local community.

Weaknesses

Whole Foods Market offers the organic foods in high prices. Besides, there is no other ways to promote its brand. The company depends on word-of-mouth advertising from its buyers to help market itself in the local community. In addition, Whole Foods Market is facing the scarcity of natural organic foods.

Opportunities

Today, people are more conscious about how important of consuming natural and healthy foods, Whole Foods Market therefore need to attempt on those customers to enter into its organic stores. Generally, ageing of the Baby Boomers is one of the opportunities for Whole Foods Market because this segment of population becomes health awareness and willing to pay premium prices for healthy goods.

Threats

Inefficiency of Organic foods supply is the threat for Whole Foods Market due to the increased offering of organic foods by other competitors like supermarkets or chain stores. Furthermore, many of stores such as Wal-Mart, Wegman’s and Publix have started to sell organic foods.

Recommendations

Due to a lack of available nutritional brands, Whole Foods Market entered into the private label product business. There are three private label products which are recognised as organic foods such as 365 Everyday Value, Whole Kids Organic and 365 Organic Everyday Value. The company should operate its private label products to tap the demanding of organic products from the customers who have already health awareness.

Whole Foods Market only relies on Word-of-mouth recommendation. Therefore, Whole Foods Market should promote their products in various forms of advertising and public relations to increase their brand image, brand loyalty and profits. Advertising will help the Whole Foods Market not only increasing sales of current customers but also bringing in new customers.

Whole Foods Market has customized its locations to worldwide like international expansion. Expansion is really a good plan as people all over the world will get information about the advantages of organic foods. However, Whole Foods Market should be aware the country’s economic conditions before the company decided to expand there.

Whole Foods should develop low priced goods under its name for less disposable income consumers. Besides, the company should often make seminars for consumers those who are not well-educated and then share the knowledge that how organic products are important in every day of their life.

Whole Foods should use backward integration strategy to stabilize its supply line. This means that the company should buy farmlands to produce the quality standard of organic foods itself. It will keep more saving and reduce cost than buying goods from suppliers. Moreover, the company no need to worry about the shortage of organic foods supply.

Referencing

Dowling, PJ., Hanson, D., Hitt, MA., Hoskisson, R E. & Ireland, R.D.,(2008), Strategic Management, 3rd Ed. Australia : Cengage Learning Australia Pty Limited

Whole Foods Market. Available from http://www.wholefoodsmarket.com (Accessed 19 September 2010)

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