Value Chain Analysis Of Whole Foods

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Whole Foods is a supermarket chain that offers organic food products that are naturally grown and certified. The mission of Whole Foods is “Whole Foods, Whole People, Whole Planet” and the main goal is to set up high standards for food retailers. Whole Foods operates through supermarkets located in USA, Canada and UK and has headquarters in Austin, Texas with more than 64,000 employees. The first Whole Foods store was opened in 1980. Back then, the company had only 19 employees, while today Whole Foods has 340 stores with more than 73,000 employees.
Whole Foods’ mission is to provide high quality products that are organic at competitive prices. The company has a unique culture and management style that has many competitive advantages. Whole
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The main problem is this: organic food became mainstream because of the millennials, and now Whole Foods have to face some very important and mass-market competitors. These mass-market retailers sold more than 53.3% of organic food in 2015 (Organic trade association). Latest research conducted by Organic trade association in May this year showed that organic food sales takes up 5.3% of total food sales in USA. Comparing to the last year, organic food sales increased by 8.4% or $33 billion (Figure 1). Figure 1 USA Organic Sales Growth
Another reason is that, when Whole Foods was formed, there was no competition at all, and nowadays there is a lot of competition, because mass retailers had to adapt to new consumer trends as this one. Therefore, Whole Foods’ key competitors are Kroger, Costco, Walmart, Aldi.
The biggest problems the company is facing right now are market saturation and high competition. Large variety of retailers nowadays buy and sell natural and organic products. The other problem is market saturation. Whole Foods saturated the market which slows down the sales and creates pressures about prices. Table 1 shows the SWOT analysis, evaluating strengths, weaknesses, opportunities and threats Whole Foods is currently facing.
Table 1 SWOT analysis
Strengths Weaknesses
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Whole Foods sells products that promote health and overall good lifestyle, and to do that they have to work with different food vendors to create products that will have high quality and that will benefit the health of their customers. Whole Foods, therefore, carefully chooses products which are evaluated based on their nutritional value, taste, ingredients, as well as on product’s freshness and appearance. The company also implements different quality standards such as Animal Welfare Rating Standard or Seafood Quality Standard. However, selling fresh products may be very challenging due to the fact that these products spoil very fast. Therefore, local farmers help reducing cost of transporting products and at the same time ensure product freshness at the stores. Products should be offered at competitive prices that satisfy consumers’ demands.
Whole Foods uses a decentralized management system. This means they have teams that are self-directed, and therefore the employees are free to decide on their own ideas to manage the stores. This way, the company has motivated staff that are always trying to show their passion for the work they do and their product knowledge. Also, the staff is always very helpful and they try to educate customers about recent trends in organic nutrition and health. This is the exact strategy that makes Whole Food to have an extremely successful marketing
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