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Discuss the Trends in Retailing of Organic Foods and the Impact of These Trends on Whole Foods Market.

Essay by   •  February 2, 2012  •  Case Study  •  2,036 Words (9 Pages)  •  1,516 Views

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1. Discuss the trends in retailing of organic foods and the impact of these trends on Whole Foods Market.

Growing at more than twenty percent per year and backed by popular demand and social awareness, organic food is no longer sold solely in specialized natural food markets. Variety of organic products such as wines, nuts, fresh vegetables, cereals, pastas, cheeses, yogurts, meats and myriad of other products are gradually squeezing and imposing their space in conventional supermarkets and local neighborhood markets. Mainstream supermarkets such as Giant and Safeway started to offer special "Organic and Natural Food" sections to meet the growing demand for healthful food products to satisfy their cliental and most importantly to hold ground within the growing lucrative market share. According to the 2005 survey commissioned by Whole Foods, "25 percent of U.S consumers had tried organic foods and beverages, up from 54 percent in 2003 and 2004. And another 27 percent of the respondents had consumed more organic foods than they did the year before and 10 percent consumed organic foods several times per week, an increase of 3 percent over 2004". According to The Organic Consumers Association (OCS) in 2006 sales of organic foods in the United States increased more than 22 percent summing more than $13 billion from the previous year, hence at this past we can safely project over $40 billion in sales by 2010, noting that Whole Foods, Wild Oats and Trader Joes lead the majority of sales in comparison to specialized sections in mainstream conventional markets. OCS also project that by 2008 organic foods and beverages will be available in nearly 75 percent of food retail which clearly shall cement the trend of "the organic and natural food" making it part of our daily life style of "well being". For example the first things people think of when considering Whole Foods is natural healthier food or eco-friendly company because it uses only 14 %of raw materials when building its stores. Such perspectives clearly reflect the promoted mission statement that Whole Foods continuously tries to sustain - its success justifies the means of "healthful organic and natural food" trend.

2. Evaluate the competitive environment of the firm: Apply Porter's model and analyze each factor relative to the company.

Rival Sellers

Innovative imitation strategy has proven its effectiveness in every successful business domain - it's rivals 'weapon of choice and no one shall be spared, in particular Whole Foods whom is leading the "In Trend" of Organic and Natural healthful food, hence the " Well being " life style. Whole Foods rivals come in different shapes and colors that vary from one location to another, from specialty grocery stores to conventional stores that offer specialized sections, leave alone hipsters' favorite new trend to shop at "Farmers Market". In simple words, Whole Foods faces rivalry in every direction and competition is shifting from products to concept, where some companies such as Giant and Safeway started to offer special "Organic and Natural Food" sections on one hand and on the other companies such as Trader Joes whom are competing on the customer service along on their eco-friendly materials and extremely friendly customer service along every day low prices of natural and exotic products. However, Whole Foods continuance success demonstrates the sound proactive and active strategy of its management at all levels. Whole Foods' dedication to maximize the number of organic and natural product a wide scale offers a competitive edge because it's banking on the free promotion and social awareness that other conventional stores are doing when offering a limited items in the specialized sections. It is also proactive in improving every little detail that differentiates it from its rivals such as, stylish music and fixtures, 100 % customer satisfaction by offering replacement and free delivery for all damaged products, or energy efficient construction of its stores by optimizing natural daily through high ceiling wide windows to reduce electricity consumption. Whole Foods 'strategic acquisition of Wild Oats was well sought because it allowed it to increase it points of sales geographically and eliminated its closes competitor in terms of wide selection of products- which is something that its rivals have yet to catch up.

Buyers

Whole Foods buying strategy flows with its mission of the life style of "well being" for us and for the environment. It's approach to buy locally when products are available permits it to negotiate better pricing since the cost of delivery is lower, volume of purchase from the producer is greater, since they're not competing with other nationwide companies. Buying locally also boosts the local economy, hence, attraction and admiration from local resident.

Suppliers

Maintaining an excellent relationship with suppliers is one of the fundamental keys of successful businesses. Whole Foods ' largest supplier of frozen food and dry grocery whenever local producers are not available was United Natural Foods whom helped promoting the trend of organic and natural food products and supported organic farming methods.

New Entrants

Again, innovative imitation strategy has proven its effectiveness in every successful business domain, therefore seeing new entrants in the growing lucrative market of organic and natural food is no surprise by all means. New entrants such as Sunflower Farmers Markets and Fresh and Easy will eventually expand their stores and try reach greater number of annual sales as long as their business strategy and mission prove be successful. In addition many upcoming concepts of healthful products and accessories will eventually see the light and will most likely increase competition, hence, will lower prices of goods which in return will attract buyers from lower income class

Substitute Products

In this particular case substitute products is the reverse scenario. Whole Foods organic and natural products are the substitutes for to the general conventional food products found in mainstream markets such as Giant and Safeway. However, prices and lack of awareness remain some of the main factors that limit the substitution from conventional to organic and natural, because organic food costs more than the conventional products due the higher labor required and bigger share of consumer aren't aware of the healthful benefits of natural and organic products. other substitutes such

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