January 16, 2012
Firstly will be the discussion of the trends in retailing of organic foods and the impact of these trends on Whole Foods Market. There are a lot of trends that are impacting whole foods. Some of the trends that are impacting Whole foods are the canning come back. The popularity of the canning come back, is the storage of foods for both economy and health. Also having more and more men in aprons is having an impact. More men are staying home and cooking instead of spending money at fast food restaurant. Another impact is local farming. People care about the hand tended farming. People also tired of what they can eat. On a more technological trend, more people are ...view middle of the document...
Organic foods are extremely popular so there is always a threat of new entrants into the market who want a piece of the profit pie involved in the organic food market. As noted in the text, competition in the organic food market is heavy and causes the profit margin to be low. In this case, stores have competitive prices and although organic foods are more expensive the mark up on these items is not very high at all (Thompson, 2010). The threat of substitute products is not very high as smaller scale supermarkets and even large retailers like Wal-Mart are not sole organic food retailers. However, if mass retailers started to brand their own organic foods and solely start to sell organics then prices would be lower in places like Wal-Mart where prices are generally low. This scenario is not very likely; therefore, Whole Foods Market doesn’t really have to worry about the threat of substitute products.
The threat of bargaining power of suppliers and the bargaining power of buyers are the last two forces in Porter’s Model. Once again, Whole Foods Market has nothing to worry about presently with these two forces. Suppliers really do not have many options of selling organic products on a large scale so national retailers who sell solely organic foods have the upper hand with bargaining power. Therefore, bargaining power of buyers is not a threat to Whole Foods Market either. However, if there was another national retailer that stepped into the market who was able to offer lower prices than this would be an existing threat to Whole Foods.
Discuss which environmental factor poses the most significant threat to Whole Food and what the company can do to combat it.
The current state of the economy is the most significant environmental factor that poses a significant threat to Whole Foods. The text notes that Whole Foods as a very high price point and is often called “Whole Paycheck” (Thompson, 2010). Because of this many consumers choose to purchase items that are more budget friendly for their household. There is no need to purchase pricey organic foods if you will not have a home to put it in because you have spent all of your funds on eating healthy.
To combat this issue Whole Foods could change its marketing approach. Presently, marketing consists of internal taste tests and things of that nature. However, Whole Foods could start to focus on educating prospective customers on the benefits of eating organic to include helping the environment, living longer and the threat of processed foods containing pesticides. They could also lower the price points so more consumers could afford their products but not so low as to deplete their profit margin. Even if a full organic diet is not affordable to those on a budget they would learn the importance of eating healthier and may purchase some products from Whole Foods Market.
Complete a SWOT analysis and identify significant opportunities and threats facing the...