Whole Foods Market Strategic Analysis Essay

Total Length: 2280 words ( 8 double-spaced pages)

Total Sources: 7

Page 1 of 8

1. Introduction

Whole Food Market Inc. (WFM) is one of America’s largest food products supermarket chain. The company refers to itself as “America’s healthiest grocery store” and submits that its food products are “the finest natural and organic foods available” (WFM, 2017). The foods the company stocks are largely devoid of hydrogenated fats, artificial preservatives, sweeteners, and flavors.

2. Current Strategic Position

2.1 Mission, Vision, and Values

The company’s culture is founded on eight core values. These include:

a. Sale of high quality natural and organic products

b. Satisfaction, delightment, and nourishment of customers

c. Support for team member excellence and happiness

d. Creation of wealth through profits and growth

e. Service and support for the local and global communities

f. Practice and advancement of environmental stewardship

g. Creation of ongoing win-win partnerships with suppliers

h. Promotion of the health of stakeholders through healthy eating education

2.2 Performance

Over the last five years, the performance of WFM has largely been impressive, with its sales being on an upward trajectory. Figure 1.1 indicates the company’s net sales growth over a five year period.

Figure 1.1

(Sales figures in billions)

2.3 Growth Strategy

Some of the factors that have driven WFM’s sales in the past include, but they are not limited to, the opening of new stores, acquisitions, and enhanced store sales. Last year, the company registered total sales of 16.03 billion. This is a 24 % increase in sales over a five year period. In that regard, therefore, the company’s growth strategy seems to be working.

It is important to note that the company has traditionally utilized a differentiation generic strategy in a bid to both protect and increase its market share. According to Harrison and John (2009), “generic strategies are concerned with how the firm intends to position itself to create value for its customers in ways that are different from those of competitors” (p. 89). In WFM’s case, the company seeks to make use of the natural and organic nature of its products as its primary selling point. In so doing, the company offers for sale products devoid of hydrogenated fats, artificial preservatives, sweeteners, and flavors. Over time, new store establishments have also been set up in new or existing trade locations, with most of the said stores measuring an average of 45,000 sq. feet.

Recently, the company seems to have tweaked its growth strategy so as to remain relevant in an increasingly competitive marketplace. The company’s CEO, John Mackey, stated that WFM was refining its growth strategy by ensuring its efforts were focused on providing the best service to the company’s core customers, while at the same time swiftly moving to ensure that category management was implemented. In the words of the CEO, “evolving our purchasing operating model while developing data-rich, customer-centric category management capabilities is critical to our go-forward merchandising, pricing, marketing and affinity strategies” (Seeking Alpha, 2018). It is important to note that majority of WFM sales comes from loyal customers. In that regard, therefore, the emphasis on category management could be geared towards the need to better serve these constituents. In essence, category management has been successfully utilized before by retailers “as a key component for a disciplined growth and market expansion strategy” (The Partnering Group, 2017).

2.4 Marketing

On this front, WFM seeks to “allocate our paid media and marketing investments among strategic national and regional programs and our individual stores; and we benefit from valuable earned media, social media and word-of-mouth advocacy” (CSI Market, 2018).
Currently WFM has numerous social media channels from where a wide range of targeted messages are published on a daily basis. The retailer’s social media presence is spread across various social media platforms which include, but they are not limited to, Pinterest, Facebook, and Twitter. According to Andrews (2014), the relevance of social media marketing in the current day and age cannot be overstated. This, as the author further points out is more so the case given the broad audience social media channels offer to businesses and the cost-effective nature of the same. Further, WFM’s community ties, which happen to be quite deep have been deliberately set up over time so as to enable the company to have a more direct connection with not only the needs but also the tastes of consumers at the local level (WFM, 2018). The table below demonstrates WFM’s social media presence in two of its most popular platforms.

WFM Social Media Presence

Facebook followers

4.29 million

Fans on Twitter

4.85 million

3. Competitive Environment

It is important to note that in addition to being large, the food retailing industry also happens to be fiercely competitive. WFM’s competitors, according to Thompson (2017), include “grocery firms and health food stores.” Others include farmers’ markets and specialty supermarkets and restaurants. Some of the key competition areas in this market include, but they are not limited to, store ambiance, price, convenience, as well as quality and customer service. Below, I highlight some of WFM’s key competitors.

3.1 Wegmans

Wegmans remains one of the country’s most popular gourmet store chains. With its extensive branch network in a number of States – specifically Massachusetts, Maryland, New York, Virginia, and New Jersey, Wegmans comes across as a worthy competitor to WFM. The company registered 9 billion in sales in its most recent financial statement. It is, however, important to note that unlike WFM, the company does not specialize in niche or organic foods but instead stocks a wide range of food brands.

3.2 Kroger

Kroger’s portfolio is largely diversified, and the company operates in various formats such as supercenters and drug/food stores. In the year 2003, the company, perhaps motivated by the profit potential of the space, launched an organic and natural food products brand called Naturally Preferred. This particular company adopts a low-cost strategy and as Rittenhouse (2017) points out, “to be on equal footing with some of its competitors,” WFM may have to slash its prices going forward.

3.3 Trader Joe’s

Over time, the company has adopted a well-planned expansion mode, with its presence now being felt across 32+ states. With an annual sales figure of 1.37 billion, the company does not seem to be….....

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Andrews, A. (2014). Social Media Marketing. Belmont, CA: Cengage Learning

CSI Market. (2018). Whole Foods Market Inc. Retrieved from https://csimarket.com/stocks/markets_glance.php?code=WFM

Harrison, J.S. & John, C.H. (2009). Foundations in Strategic Management. Mason, OH: Cengage Learning

Kim, E. (2017). Whole Foods CEO Says Amazon Helped his Company Escape ‘Whole Paycheck’ Trap. Retrieved from https://www.cnbc.com/2017/09/28/whole-foods-ceo-says-amazon-helped-escape-whole-paycheck-trap.html

Rittenhouse, L. (2017). We Just Visited a Whole Foods and Were Shocked by How Much Amazon Will Have to Slash Prices. Retrieved from https://www.thestreet.com/slideshow/14185249/1/38-vs-20-groceries-comparison-shows-why-amazon-must-slash-whole-foods-prices-to-beat-walmart.html

Seeking Alpha. (2018). Whole Foods Market (WFM) Q1 2017 Results - Earnings Call Transcript. Retrieved from https://seekingalpha.com/article/4044095-whole-foods-market-wfm-q1-2017-results-earnings-call-transcript

The Partnering Group. (2017). Case Study: Adapting And Leveraging Category Management as a Core Enabler of a Retailer’s Growth and Market Expansion Strategy. Retrieved from http://www.thepartneringgroup.com/retail-consulting-services/retail-category-leadership/catman-for-chinese-market/

Thompson, A. (2017). Whole Foods Market’s Generic and Intensive Growth Strategies. Retrieved from http://panmore.com/whole-foods-market-generic-strategy-intensive-growth-strategies
Whole Food Market Inc. – WFM. (2018). Home: Company Info. Retrieved from http://www.wholefoodsmarket.com/company-info

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