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Whole Foods Case Study

Essay by   •  May 9, 2012  •  Case Study  •  1,864 Words (8 Pages)  •  1,648 Views

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

Trends that impacted Whole Foods Market included the Organic Foods Production Act (OFPA) which mandated nationalized principles and standards for the production and handling of foods labeled as "organic" in 43 agencies. These standards overseen mandatory certification of organic production that were most wanted by manufacturers and consumers in the marketplace to protect against mislabeling or fraud. These new regulations labeled foods under four groupings, products that were 100% organic, food that is at least 95 percent organic, food that is at least 70 percent organic and product less than 70 percent organic. 31% of organic foods were sold by mainstream supermarkets and grocery stores including Tyson Foods , Kraft, General Mills Kellogg's, Heinz, Campbell South, Coca Cola, Groupe Danone, Dean Foods, Starbucks and others in the coffee industry. According to Thompson (2009), in the year of 2000, The U.S. organic food industry cross a threshold with more organic food being purchased in conventional supermarkets organic foods were purchased in conventional supermarkets. In addition , supermarkets expansions were set in motion for a variety of organic products including, pastas, wine, cheese yogurts, potato chips, beef, chicken, fruits, vegetables, and other popular hot selling products such as lettuce, apples, carrots, broccoli and celery. The sales of dairy products, beverages, meats, breads and grains grew the fastest in organic products categories. According to Thompson (2009), Consumer demand were primarily responsible for the dramatic

Marketplace, fueling a growth of 20% annually of organic products. Evidence of this growth points to a number of factors surrounded around healthier eating patterns, rising reservations from consumers over food safety, healthier lifestyles and environmental effects. Recent trends from farms to consumers had now allotted mainstream U.S supermarkets chains and local grocery stores to occupy prominent shelf space in the produce and dairy aisles for organic products.

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

The organic product industry was extremely competitive. Whole Foods Market is the world's leading natural and organic foods supermarket but the degree of competition was a continuously battle. According to Thompson, (2009), Wild Oats was the closest rival for Whole Foods in terms of product offerings, aggressive growth plans and target clientele. In 2007, Wild Oats was purchased by Whole Foods giving the word leading organic food chain entry into 15metropolitan markets and 5 new states. However, following the acquisition of Wild Oaks, The Federal Trade Commission initially raised antitrust concerns believing that the two organizations would compete directly against one another and that the combination would limit competition, and therefore increase prices in the marketplace for natural and organic foods. Whole Foods answer to these concerns were that the company had already faced plenty of competition from Kroger, Safeway and other big supermarket chains as well as local producers selling directly to customers in that segment. Competition ranged from local, regional and national supermarkets. Nevertheless, the organization were focused on strategies for battling its biggest competitors in the natural and organic foods industry including Fresh Market, Trader Joes, Sunflower Farmer's Markets, Fresh & Easy Neighborhood markets and Independent natural Health Food Grocer.

Fresh Market offers various fresh product categories, including meat, seafood, produce, deli, dairy, bakery, floral, prepared foods, coffee and candy, and beer and wine. The retailer sets itself apart from other grocery stores by creating an extraordinary food shopping experience for its customers through uncompromising commitment to customer service , eye catching store displays and by placing an emphasis on fresh, premium perishables. Trader Joe's represent the largest competition for Whole Foods. In 2008, they had 300 stores in 25 states and were growing. Trader Joe's stores are located throughout California and along the mid-to-upper East Coast, with some single stores spread throughout the U.S. Trader Joe's products are usually priced lower in comparison to Whole Foods. The company distinguish itself apart from its competitors through low cost, the sell of exotic items, and an exciting fun atmosphere that's wacky compared to those at Whole Foods, Fresh Market, and Wild Oats. Fresh & Easy Neighborhood markets emerged as a newly established competitor of Tesco with locations concentrated in low income and central city neighborhoods. Tesco's business strategy key features focused on low prices, simple store layouts, taste before your purchase policy, and packaging of products. According to Thompson (2009), Viewers stated that consumers could find a more appealing selection at Whole Foods with a greater shopping atmosphere. Sunflower Farmer's Market, with an eye-catching slogan "serious food, silly prices,'' is another competitor of the natural and organic foods retailing industry. Strategic approach is surrounded around best quality , low price products, low overhead expenses, purchasing big and keeping it simple, (Thompson, 2009). Sunflower Farmers Market represents the discounter of organic and natural foods. In 2009, they had 20 stores concentrated in the southwest (Sunflower, 2009). The list of competition in this organic food industry continue to be very aggressive and long-lasting. To outsmart the competition, Whole Foods maintains its rapid growth through a differentiated-focused strategy that is centered around core values, high quality standards and selective products

Discuss which environmental factor poses the most significant threat to Whole Food and what the company can do to combat it.

Following the purchase of Wild Oat, the company' sales dropped. In addition to this, the acquisition of Wild Oaks in 2007 case was sent the case back to the lower court. Whole Foods settled to dissociate from itself of 31 Wild Oats stores in 12 states. The

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