Whole Foods Retail Marketing Assignment Case Study Solution
Technological:
The replacement of system of core legacy with accessible solutions and advancements in the technology of leverage are the key factors for providing the customers with a better-quality end-to-end experience of shopping. The substantial achievements of the organization for previous year include workday implementation and an online system of HR management. The WFM has launched a mobile application that focuses on the utility of shopping, the information of store, and events as well as recipes, Apple Pay partnership and the customer platform initial rolling out was centered on a system of unified point of sale. WFM has implemented online delivery services in over 60 stores and more than 15 cities. (Martrous, 2016)
Due to the increasing number of competitors or retailers entering into the food retailing industry; the company has experienced a stark reduction in same-store sales and store traffic. Comparing the sales of the company from 2016 to 2017, the company reported reduction in revenues in 2017, amounted to $245 million. Also, the revenues of the company had reduced from 536 million in 2015 to 507 million in 2016. In 2017 the revenue generation by the company were reported $16 billion. Whereas, the American supermarket chain Albertson reported $59.9 billion revenues in 2018 and Natural Grocers by Vitamin Cottage reported $849 million revenues in 2018.(WHOLE FOODS MARKET, INC., 2017).
Competitive Analysis
Competitive Structure
Food retaining is one of the intensely competitive and large industries. The competition is not just dependent to national, legal, regional & international specialty and conventional supermarkets, but also on warehouse membership clubs, natural food stores, farmers markets and restaurants, smaller specialty stores, online retailers, warehouse membership clubs, each of which compete on the basis of the store experience and ambiance, customer service, convenience product quality & selection, price, or a combination of these elements.
WFM has more than 300 stores in the UK and North America. It sales a large number of organic dairy and bakery food items which are certified and are not sold by other competitive grocery stores. But due to the limited number of grocery stores in comparison to its customers, it is less available to its customers, resulting in the recall of products. The top competitors of WFM are Kroger and Trader Joe’s. The portfolio of Kroger has diversification in the effective formats, which include stores of food and drug combination, discounters of food stuff, up-scale format of perishable-oriented neighbors and splendid centers. However, the actual product line of Kroger includes baby food, cereal, milk, pasta and snacks. On the contrary, Trader Joe has expanded its business in about 25 different states. The estimated sale of Trader Joe in a year is about $8 billion. The growth strategy of Trader Joe is to mainly focus on the stores that are not well-planned, which might pose a threat with respect to culture, affiliation of brand, and the proposition of value. Particularly for this reason, the opening of only five stores took place in 2010 by Trader Joe. (Martrous, 2016)
Porter Five Forces Model
Threat of New Entrant:
The new entrants in the industry would have to face the issue of high cost. For the initiation of business in the food and beverage industry, the rules and policies which are certified by USDA are not easy to be followed, and are costly as well. So, for the new entrant it might not be easy to compete against a renowned brand like WFM, which is trending very well in the market. However, there is a continuous competition between the competitors and the new entrants in the industry. The threat of new entrants is relatively lower. If the strong competitors in market start selling organic food items, then it might pose a threat to the organizations.
Bargaining Power of suppliers:
The bargaining power of suppliers ranges from low to medium, and medium to high. The organization is focused on the provision of standard high quality, which cannot be met by every supplier. The organization deals with those agriculturalists or manufacturers who have a strong hold over the business organizations in local areas. The suppliers of WFM pose a challenge to the organization to inhibit the superior suppliers from buying small and price control. It is the fact that is leading to the high prices of WFM’s products because of the increase in the price of suppliers. Thus, the bargaining power of suppliers ranges from medium to high.
Bargaining power of buyers:
The bargaining power of buyer is considered as low. The customer wants organic and healthy food items, which are not cheaper in comparison to the regular food items. Thus, the bargaining power of buyer is determined by the food quality instead of the price of food products. The switching of customers to another brand’s products is not easy, no matter how much cheaper prices they offer the products at. The price does not affect the customers’ preferences for the products.
Threat of Substitute:
The threat of substitute is relatively lower due to the fact that there are limited number of companies in the industry of organic grocery stores that are trusted by their customers. The only reason behind the switching of customers to another brand would be less interest of customers in the organic food. The strongest barrier in contradiction of substitute products is loyalty. However, there is a chance that few customers might directly contact the small manufacturers of the products.
Rivalry Competitiveness:
The competition among the organizations competing in the food and beverage industry is high. To increase the market share; the competitors can offer organic foods to their potential customers. The introduction of organic food in the market has been trending, which attracts a number of organizations for the better expansion of their business. Thus, WFM is acquiring different stores to slow down the level of competition.
Market Strategy
Target Market
The primary target customers of the company are middle to high income generating customers due to the high price of the products offered in the market. The company targets both males and females, mainly educated females who prefer to cook their food with healthy and organic items particularly for their families.
WFM’s target population includes the X-ers, Millennials and the boomers, out of whom millennial are considered as the potential customers. The main motive of WFM is to sell the products that are free from non-beneficial and saturated fats. There is no mystery as it is much clear that WFM products are the most expensive ones than other organizations’ products being offered in the market. This is due to reason that the company’s motive is the production of food items that are free of chemicals and harmful preservatives...............
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