Whole Food marketExternal analysis question3 4

Topics: Organic food, Whole foods, Farmers' market Pages: 5 (962 words) Published: March 31, 2014
Strategic management
BIG CASE DISCUSSION 4
(Question 3&4 of the external analysis)

I. What factors are driving industry changes, and what impacts will these changes have on competitive intensity and industry profitability? Driving forces
1) Increasing globalization:
New markets in Canada and UK: WF has acquired Wild Oats Market in the US and Canada. - New competitors from neighbor countries like Fresh & Easy from British supermarket giant Tesco. Products from other countries, for example: Lebanese fig jam, preserved lemons from Morocco, Indian curies, Thai rice, stuffed grape leaves from Greece, and goulash from Hungary.

2) Changes in the long-term industry growth rate:
- Natural food generated $22.3 billion in sales in US in 2008, up 10% from 2007, and up 37% from 2004. - UPC-coded organic foods accounted for 49 billion in sale, 16% higher than the previous year, and up 132% since 2004. - Global sales of organic products were estimated to be $52 billion in 2008 and to have grown at the compound rate of 13% since 2004.

3) Changing societal concerns, attitudes, and lifestyles
- People are more concern about health and food safety -> Consumer demand for organic products growing at double-digit rates – much larger than that of the traditional grocery products (2-3%) - Demand for value-priced: The United States now spends more than $1 billion a year to import organic food, according to the USDA, and the ratio of imported to exported products is now about 8-to-1.

4) Regulatory influences and government policy changes
- US Department of Agriculture’s (USDA) officially established labeling standards for organic products, four categories of food with organic ingredients, with varying levels of organic purity (100% organic products, organic products, made with organic ingredients & all other products with organic ingredients). - USDA issued regulations requiring documentation on the part of growers, processors, exporters, importers, shippers and merchants to verify that they were certificated to grow, process, or handle organic products carrying the USDA’s organic seal. The impacts of these driving forces:

+ Leading to higher productivity.
+ Increasing the demand for organic products.

II. What market positions do the industry rivals occupy – who is strongly positioned and who is not?

Geographic coverage
Price/quality range
Product-line breadth
Number of stores
1) Whole Food
In March 2010, WF had 290 stores in 38 states.
The majority of the company’s private-label products and some of its other offerings were value-priced. WF’s Prices > price at conventional supermarkets Shopping at WF was attractive to food-lovers who were willing to pay a premium for what they saw as a high-quality gourmet experience. Varied from 20,000 items in small stores to 50,000 items in the largest stores (natural + organic + gourmet food + nonfood items)

290 stores
2) Trader Joe’s
A specialty supermarket chain with more than 339 stores in 25 states as well as Washington, D.C.; half of the stores were in California. The company was able to keep the prices of its unique products attractively low 2000 unique grocery items.

339 stores.
3) Fresh Market
Fresh Market was a family-owned 94-store chain operating in 18 states. Fresh Market stores were typically located in neighborhood shopping areas near educated, high-income residents. The market offers a refreshing change vs. "Whole Paychecks" higher-priced cheese, meat, seafood, etc. Example: Eggs (a dozen):

Fresh Market ($4.19) < Whole Foods ($4.99)
Meats, seafood, 400 fresh produce items, fresh-baked goods, prepared foods and meals to-go, 30 varieties of coffees, a small selection of grocery and dairy items, bulk products, 200 varieties of domestics and imported cheeses, deli items…. 94 stores

4) Fresh & Easy
In March 2010, Fresh & Easy had 146 stores in 3 states (California, Arizona, Nevada). Low prices (20-25% below traditional supermarkets and on a...
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