Whole Foods Market is known as the nation’s leader in organic and natural foods. Established in the early 1980s out of Austin Texas, Whole Food is a billion dollar industry. Forbes.com reported that in 2011 Whole Foods Market earned more than $10 billion in sales revenue. With markets across the world including 7 stores in Canada and 6 stores in the U.K, Whole Foods remains is a strong competitor in the market of food and grocery.
A retailer of natural and organic foods gives Whole Foods a quality brand and the capability to price products higher than competitors. Operating in this limited industry is a strength because they offer the most variety of healthy foods. As a result, all products sold in store must meet quality standards. Whole Foods “guarantee 100% satisfaction on all items”, (Meador, Britton, Phillips, & Howery, 2006). Quality and high standards has allowed Whole Foods to gain a “15% same store sales growth”, (“businessweek.com”, 2005). This number is unprecedented for the grocery industry, where most outcomes are zero.
A weakness displayed by Whole Foods is its management strategy. Whole Foods Market operates “11 geographic divisions, each boasting its own president and handling its own store network”, (“businessweek.com”, 2005). As a result, each store is given the ability to manage its self. Stores are differentiated due to their location, distribution, and product. Whole Foods values this as a strategy to accommodate seasonal produce and local farmers. This is problematic as stores do not carry the same products. “Whole Foods allow each store to make independent decisions regarding its operations”, (Harata & Hoffman, 2007). This leaves the power in the hands of store management instead of corporate management. Decisions are made at the local division without the supervision or approval from the corporate sector.
Whole Foods Market has the opportunity to expand through acquisition and commercialization. “Enhancing their brand image … Whole Foods can increase sales and attract new customers by introducing them to the Whole Food experience”, (Meador, Britton, Phillips, & Howery, 2006). Some are aware of organic, natural, and healthy foods, while others are left out the loop. They may not understand the terms and overall benefits. Whole Foods can use scare tactics by educating others about the danger of pesticides, hormones, processed, and chemically treated foods. This will encourage others to by organic and increase sales. Also, Whole Foods has a chance to acquire and absorb other companies. Taking out the competition, Whole Foods can have additional stores in various areas and take their customer base.
Whole Foods greatest threat is competition. Trader Joe’s is another store dedicated to organic, natural, and healthy food. Other stores such as Kroger and Safeway are additional competitors. Even though Kroger and Safeway are traditional grocery stores, each sale products and produce that meet similar health standards. Because these stores offer the same products, the consumer may opt to maintain their loyalty to other stores. As a result, “local grocers increasing their organic food options and the price of organic foods” is an immediate threat for the company, (Meador, Britton, Phillips, Howery, 2006).
Key Factors for Success
Marketing and advertising are key factors for success. “Sought to be different from conventional grocery stores”, marketing and advertising to families with small children can boost sales, (Harata & Hoffman, 2007). Making the public aware of harmful foods and the chemicals used, mothers and health advocates will choose to shop at Whole Foods. Mothers especially do not want their children exposed to harm or danger. Chemical free cleaning products, organic produce, and dairy free from hormones are items parents want. Consequently, marketing and advertising is essential to strategize towards new target markets.
“Offering the highest quality, least processed, most flavorful, natural, and naturally preserved foods available” and the variety of these items is key to sustain growth, (Meador, Britton, Phillips, & Howery, 2006). This will allow Whole Foods to continue to rise above the competitor. Other stores only provide small health food sections. Whole Foods, however, has an entire store stocked with these items. Product variety will discourage the consumer from shopping in a store with limited items. In addition, “engaging in ethical business practice and proving a motivational, respectful, work environment” are other ways that Whole Foods will sustain its growth, as employees are motivated through stock options, incentives, and bonuses, (Harata & Hoffman, 2007).
Whole Foods is a supermarket that offers a large variety of healthy food options for consumers. These items are in limited supply and in high demand. However, this does not guarantee success. A lot was learned studying this case. A business must be willing to go above and beyond. Through business expansion, word of mouth, and quality food and services, Whole Foods has made a name for its self. A business that is a cut above the rest, they pride themselves in quality service, quality food, and quality ethics. The company only conducts business with industries that supply these foods. They encourage team members through motivation and incentives. Lastly, they operate and manage stores differently, allowing each location to make the best judgment according to the consumer, season, and farmer.
Eating too fast at whole foods: The higher-end grocer has the big mo, but its growth strategy may prove perishable. (2005, October 25). Business Week, Retrieved from http://www.businessweek.com/magazine/content/05_43/b3956106.htm
Harata, P., & Hoffman, A. (2007). Whole foods 2007: Will there be enough organic food to supply the growing demand. In J. Pearce & R. Robinson (Eds.), Strategic Management (pp. 28-1-28-12). New York, NY: McGraw-HIll/Irwin.
Marial, A. (2011, July 25). Whole foods market: is it one of the best inflation plays in supermarkets?. Forbes Magazine, Retrieved from http://www.forbes.com/sites/genemarcial/2011/07/25/whole-foods-market-it-is-one-of-the-best-inflation-plays-in-supermarkets/3/
Meador, D., Britton, M., Phillip, P., & Mowery, A. (206). Case analysis: Whole foods market. Radford, Retrieved from http://pnphillip.asp.radford.edu/Whole Foods