Whole Foods Market

Topics: Organic food, Organic certification, Supermarket Pages: 17 (4019 words) Published: May 13, 2015


Table of Contents
1. Overview……………………………………………………………………………………………….1 2. Industry Analysis……………………………………………………………………………………...1 3. Key Macro External Factor………………………………………………………...………………...3 4. Porter Five Force Model……………………………………………………………………………...4 5. Industry Driving Force……………………………………………………………...………………...5 6. Opportunities and Threats…………………………..……………………………...………………...6 7. Industry’s Key Success Factor……………………………………..……………….………………...9

1. WHOLE FOODS MARKET, INC. OVERVIEW
Whole foods Market is one of the leading grocery stores in natural and organic food industry. It is the first national “Certified Organic” grocer and has specifically positioned itself in the natural and organic foods supermarkets segment. John Mackey, founder of the company, started SaferWay Natural Foods in Austin, Texas. The company operated in 1978 and opened the first Whole foods market after merging SaferWay with Clarksville Natural Grocery in 1980. The company’s mission is to promote the vitality and well-being of all individuals by supplying the highest quality, most wholesome foods available (Whole foods market, Inc, 2014b). The company’s product selection ranges are grocery, meat, seafood, prepared foods and catering, bakery, coffee, tea, wine, beer, cheese, vitamins, nutritional supplements, body care, and lifestyle products including pet products, books, and household products (Whole foods market, Inc, 2014a). As of September 28, 2014, the company operated 399 stores in the United States, Canada, and the United Kingdom. The average customer visits per week is over 7.7 millions (Whole foods market, Inc, 2014b). The company’s growth strategy is to expand mainly through new store openings, meanwhile the company may use acquisitions of smaller chains that provide access to targeted geographic areas. In 1996, its biggest acquisition was Fresh Fields, the second-largest US natural foods chain (22 stores on the East Coast and in Chicago) (Elstrott, 2015). As of September 28, 2014, Whole foods market employs 58,100 employees, with 20.3 Billion USD in market capitalization, 14.6 Billion USD in Revenue, and 588 Million USD in Net Income (Whole foods market, Inc, 2014a)

2. INDUSTRY ANALYSIS: THE SUPERMARKETS AND GROCERY
Market Size, Growth Rate and Industry Profit: Global market size of grocery store and supermarket industry total sales is about $2 trillion annually. In the US, the supermarkets and grocery stores industry is very fragmented, with over one-third of businesses employing less than five employees. The top four players account for 30.8% of industry revenue in 2015 (McKitterick, 2015). The US supermarkets and grocery store industry annual revenue is about $550 billion. The industry revenue is anticipated to grow annually by 1.3%  to $584.3 billion over a period of five years upto 2015, including a 0.5% increase in 2015. _The  industry revenue is estimated to increase at slow pace at an average annual rate of 0.8% to $606.8 billion in the next five years, upto 2020 (First Research, 2015).With that, the profit margin is estimated to grow. In 2015, industry profitability is forecasted to account for 1.5% of revenue, showing a slim increase from 1.4% in 2010. The margin is low due to the fragmented nature of the industry. The main competitive advantage in this industry relies on price, as the products sold by retailers are homogeneous. Many companies also offer discounts and promotions to drive foot traffic to stores and increase customers loyalty and retention rates. (McKitterick, 2015) (See Appendix B2 for major companies in the industry and B3 for Sector vs Industry costs). Scope of Competitive Rivalry, competitors and sizes: This industry has strong internal and external competitions because most products are homogeneous, resulting in many small players that focusing on price competitive and convenient locations to target price-conscious customers. Because the profit margins are low, the companies depend to get the...

References: 1. Arun Gupta. (2014, June 23). How Walmart Threatens Organic Food. In These Times, Retrieved from http://inthesetimes.com/article/16785/how_walmart_threatens_organic_food //not using anymore
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3. First research. (February 2, 2015). Grocery Stores & Supermarket Industry Profile.
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5. Hellman, J. (2014). Whole Foods Market- A short SWOT Analysis.
6. MarketLine, (2014). Whole Foods Market, Inc., Swot Analysis, 4-8, Retrieved from http://web.b.ebscohost.com.mcc1.library.csulb.edu/ehost/pdfviewer/pdfviewer?sid=111b0671-0fe3-4db7-8433-d9e3b15aba07%40sessionmgr111&vid=4&hid=105
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8. Whole Foods Market, Inc. (2014a). Retrieved April 12, 2015, from http://www.mergentonline.com.mcc1.library.csulb.edu/companydetail.php?compnumber=71872&pagetype=synopsis //site article name not website // apa mergent online nodate
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10. (Mazzone & Associates, 2014).  http://www.globalmna.com/announcements/2014RetailIndustryReport.pdf
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12. Shelly Banjo. (2014, April 10). Expensive Organic Food Beware: Wal-Mart Declares a Price War. Wall Street Journal, Retrieved from http://blogs.wsj.com/corporate-intelligence/2014/04/10/expensive-organic-food-beware-wal-mart-declares-a-price-war/
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14. Whole foods market, Inc. (2014b) . 2014 annual report of Whole foods market, Inc. Retrieved April 12,20 15, from http://assets.wholefoodsmarket.com/www/company-info/investor-relations/annual-reports/2014-WFM-10K.pdf
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