Whole Foods Case Study Michael Case Study

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Threat of New Entry:

Beginning a food business of any kind is difficult. This is one possible plus for Whole Foods. There is a great deal of red tape about sanitation and hygiene, when dealing with food preparation and sales. The requirements and regulations regarding organic products are even more onerous.

SWOT

Strengths

Whole Foods is a long-standing and trusted brand name in organic produce. Consumers who believe in the organic movement have long trusted Whole Foods to provide high-quality products. Additionally, Whole Foods is not simply a 'crunchy' health food store: it has highly exclusive lines of international products, wines, cheeses, and bath and body products. For customers who are vegan or vegetarian, have children with allergies or harbor other issues that require them to carefully watch their food ingredients and intake, Whole Foods is trusted for fair labeling.

Whole Foods also makes ethics a part of its brand image, something its competitors do not engage in: For example its 'starred' rating of animal husbandry, to ensure that animals raised for consumption are treated in an ethical fashion, is unique. And its stores are attractive places to eat in as well as shop. Even its employees are enthusiastic about the company's mission to make the world a better place through food.

Weaknesses

'Whole paycheck.' This sums up Whole Foods greatest perceived weakness in a nutshell -- the company is seen as expensive and catering to the affluent that have the luxury of putting their consciences before their wallets. Additionally, for customers who are organically-focused, there are many cheaper substitutes without the price sticker of Whole Foods. Because it is exclusively organic, customers cannot pick and choose what they want to buy. For many customers, going organic is not an all-or-nothing prospect -- instead they must prioritize.

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For example, a mother cannot buy organic baby food and non-organic Special K, spending her hard-earned pennies in a balanced fashion. While the popularity of the organic movement is growing, not all customers want to give up their Oreos and Frosted Lucky Charms, even if they eat grass-fed beef, and Whole Foods does not stock commercial, non-organic 'unhealthy' items.

Opportunities

Whole Foods provides an identity and experience for shoppers. Saying 'I shop at Whole Foods' means something: it says a consumer is environmentally conscientious and cares about the taste and preparation of good, wholesome food. A great deal of Whole Foods' advertising comes as a result of word of mouth, not by the company's design. This speaks well of the strength of the products Whole Foods offers. Its plans for expansion, geographically, through its business acquisitions, and in its innovative creation of eat-in facilities at many locations shows that it has a vision for growth as a company.

Threats

Whole Foods may have trouble retaining customers and effectively branding itself during an economic downturn, particularly if equally effective substitutes exist. For customers wishing to incorporate more organic foods into their diets (but not make radical changes) Wal-Mart offers organic foods. For customers wanting exclusive vegetarian, nut, and health foods, local health food stores and better-stocked supermarkets can provide such offerings. And Trader Joe's offers a similar image-conscious, down-market version of Whole Foods in many areas of the country.

Whole Foods also suffers some innate constraints in its business model: organic food is inevitably more expensive than commercially-prepared foods, and Whole Foods will have trouble offsetting its costs if it focuses only on high-end, organic products. Secondly, it has expanded very rapidly, perhaps too rapidly given the economic climate and the threat of competitors and substitutions......

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