Porter’s Five Forces Model of Competition As explained below, Whole Foods Market faces intense pressure in four of the five elements of competition. For WFM to remain competitive and continue its dominance within the industry, they must thoroughly address each of these forces. To continue their profitable ways, WFM must identify strategies to reduce cost, enabling them with the ability to shake the “Whole Paycheck” stigma. Intensity of Rivalry: With a highly saturated retail industry, it’s no surprise Whole Foods Market practices under strong external forces that contribute to highly competitive rivalries. Companies within this sector compete in many different aspects including price, service, and quality.
Porter’s Five Forces Analysis for Whole Food Whole Foods Market is in the organic and natural food industry, which is part of the retail industry. Through Michael Porter’s Five Force analysis, we identified the most significant external forces that Whole Foods Market experiences in the competitive environment and highlighted issues and concerns that shape the company’s strategic direction. Strong Force of Competitive Rivalry According to research, Whole foods Market experiences extremely strong competitive rivalry. The company’s business environment, which is the organic and natural food industry, has a high number of existing competitors, who aggressively compete based on service, quality and price; the fact that switching costs for consumers to shift to other retailers are significantly low contributes to the strong force of competitive rivalry. (Strategic direction: differentiates products based on high quality) Strong Force of Bargaining Power of Customers Consumers of Whole Foods Market have strong bargaining power regardless the weak force of small volume purchases compared to the total revenues of the company.
Whole Foods Market uses a broad differentiation generic strategy (based on Porter’s model). It was demonstrated more clearly by production line strategy, growth strategy, merchandising strategy and store location strategy 1) [GROWTH STRATEGY]The Whole Foods Market’s growth strategy was to expand via a combination of opening new stores and acquiring small owner-managed chains located in desirable markets. It led to an easier way to access wider market segments which is the objective of company’s broad differentiation strategy. a) Entered Atlanta Market and Great Britain by acquiring Harry’s Market and purchasing Fresh and Wild b) 2007: Whole Foods was proved to be largely successful after purchasing struggling Wild Oats Markets – its biggest competitor in natural and organic food .This acquisition gave Whole Foods entry to 5 new states and 14 new metropolitan markets c) Renovated and rebranded Wild Oats’ stores as WF stores i) Sold 35 Henry’s and Sun Harvest stores which had been previously acquired by Wild Oats gain from sales and reduced net purchase price for Wild Oats market. ii) Closed 9 stores that did not fit with brand/ real estate strategy iii) Planned to relocate 7 smaller stores of Wild Oats to existing or soon-to-be-open WF location.
The incident escalated on Twitter when a consumer tweeted a picture of pre-peeled oranges wrapped in plastic sold at Whole Foods, sarcastically criticizing the supermarket for wasting the plastic on the oranges that mother nature couldn’t “find a way to cover” otherwise, highlighting and condemning how a business can negatively influence society by deteriorating the environment. Although Whole Foods Market pulled the product down after apologizing and explaining that it was just an experiment with a seasonal product as “customers love the convenience that their cut product offers”, it didn’t stop a Twitter debate from happening, showcasing how society can positively influence a businesses’ behavior. Some people condemned it was unethical of
With more 360 stores in multiple geographical locations and approximately $12 billion in annual sales, Whole Foods has proven that they know what it takes to be successful. Due to the business that Whole Foods are in, specializing in natural and organic food products among other products, it is crucial that their associates possess significant knowledge about the products within their area of responsibility. As a result, training and associate learning is more important for Whole Foods in comparison to other grocery stores. In other grocery stores clerks are required to be friendly and courteous and basically know where specific products are located within the store. However, at Whole Foods, in addition to their associates being friendly and
ft. space, this firm is outshines in the supermarket business. It has more than 45,000 employees in the 6 states of the US and average annual sales range in billion figure. For the general public, it is having enough products and amenities to wow the crowd
According to Wal-Mart Stores, Inc. SWOT Analysis. (2016) “Wal-Mart is the largest retailer in the world. The company was featured among the top three largest corporations in the US, as well as among the top three world 's largest corporations in the rankings released by a business magazine in 2015”. The growth rate, poverty rate and employment rate, inflation rate and income distribution also affect the growth strategy of Wal-Mart in a significant way. Wal-Mart and other retail chains are also affected by these changes of economic recession External
The weaknesses demonstrated by Amazon to acquire Whole Foods for 13.7 Billion are disadvantages where Amazon can improve. Firstly, Amazon has made a considerable financial investment to acquire Whole Foods and will limit their ability to purchase more assets in the future. Second, the acquisition will hurt the corporation’s ability for quality and quantity control. Lastly, since Whole Foods is solely an Organic Food store, there are limited suppliers in the industry and can become a problem if proper precautions are not taken. Overall, with purchasing Whole Foods, the organization will experience a hit financially, quality and quantity control for satisfying their consumers and the limited suppliers of Organic products in the grocery industry.
The growing affluence of the halal market is something that cannot be ignored by supermarket retailers like Cold Storage. According to Power & Abdullah (2009), the market represents 16% of the global food industry. This is expected to increase due to the growing Muslim population with rising incomes (Endang, 2011). However, this demand is characterised by increasing food expectations as Muslims are becoming better educated and therefore demanding food that are not only halal but also healthy and of high quality (Power & Abdullah, 2009). Despite the challenges, the halal food market is worth exploring due to the overlapping consumer demands.