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Strategic Analysis of Whole Foods Market

Current Strategic Position

Whole Foods Market is the major retailer of organic and natural foods in the United States and abroad. The Company was founded in 1978 and opened its first store in 1980 (Whole Foods Market, 2013). Its headquarters are located in Austin, Texas. The company promotes organic foods and sustainability of the whole ecosystem. By encouraging growth, the company also strives to promote the environmental ideologies and develop an organic movement in which the members of the community can contribute to organizational success (Whole Foods Market, 2013). The company also introduces a differentiated choice of high-quality organic and natural products with the emphasis placed on perishable products. In order to sustain a competitive advantage over other companies, the company is committed to the highest quality standard in order to provide a variety of choices for employees. Furthermore, the organization has introduced the guide called The Whole Deal that features Whole Foods Market store coupons, money-saving shopping, recipes, and cooking tips (Whole Foods Market, 2013). Whole Foods Market should be more concerned with adhering to the current quality standards that are accepted internationally to sustain a competitive advantage over other companies.

 

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Mission, Vision, and Values

The company’s major values are created through growth and profits. The company serves and supports many international communities. Therefore, sustaining the highest quality of organic and natural products is the major goal of the company. Environmental stewardship is another important value that is sustained with the company because it ensures the establishment of ongoing partnership with the suppliers all over the world. Finally, supporting team members and promoting welfare and health for the stakeholders along with the new educational opportunities for health, eating, and training are among the basic values.

The company’s vision is to promote sustainability of an environment and provide customers with organic products, which can help them to change their outlook on their lifestyles (Whole Foods Market, 2015b).

The company’s mission is confined to the development of culture that would reflect and reinforce the company’s belief about the necessity to operate with emphasis on corporate social responsibility rather than on the net profit (Whole Foods Market, 2015b). Additionally, the company also defines the customers its serves, as well as the environments in which it operates.

Strategic Goals

The company’s major goal is to strike a balance between needs and concerns of customer, shareholders, team members, communities, suppliers and communities while adding and creating values (Whole Foods Market, 2015b). By developing the company’s community, Whole Foods Market also creates new values and opportunities for all the stakeholders. The major values reflect the feeling of collective spirit.

Threats and Opportunities

The major opportunities for the company include the possibility to increase attractiveness for developing organic food industry. Whole Foods can also ensure growth by means of acquisition, as well as enhance customer loyalty through brand development. By promoting organic foods and products, the company can also advance their sales and attract new consumers by presenting the Whole Foods Experience (Shoes, Meador, Britton, Phillips, & Howery, n. d.). Whole Foods can take advantage of this issue by promoting both activities and industry. Additionally, the company could inspire their customer loyalty by improving their community service activities. In case the industry continues to grow and enhance brand awareness, the company can also increase its market profitability and share.

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Apart from opportunities, Whole Foods also faces some threats, such as local grocers increase in organic food options, the decline in the size of Whole Foods stores, and the pricing strategy. To begin with, local grocers can prevent the increase in Whole Foods sales by retaining the customers who are interested in the products. Second, the size of Whole Foods stores is impressive, and there is a threat that customer would prefer to buy products at smaller stores because it would take much less time for them to go around and choose fruit and vegetables (Shoes et al., n. d.). Finally, the company’s pricing strategy is not competitive with the groceries that provide cheap products but of doubtful quality. Therefore, Whole Foods must promote their products and persuade the customers that their products are of premium quality and that the price is a perfect match for it.

Strengths and Weaknesses

Due to the fact that the demand for natural and organic food is increasing because of the customer’s greater awareness, Whole Foods can expand its production and go public to increase the customer base. Further strengths refer to the company’s strong free cash flow, which creates liquidity to shareholders. When it comes to weaknesses, the attention should be paid to pricing because not all clients are ready to pay premium prices for exceptional quality.

Competition (Three Top Competitive Companies)

Whole Foods’ largest competitor, Wild Oats, was bought by the company. With products and foods that are free of sweeteners, pesticides and other chemical substances, Whole Foods Market has a number of competitors all over the world. The most threatening ones include Vitamin Cottage, The French Market, and Sprouts Farmers Market (Kretzmann, 2014). The National Grocers by Vitamin Cottage, which was created in 1955 by Margaret and Phillip Isely, currently possesses 72stores in 13 states. The French Market was created in 1982 in North California and has 151 shops in 26 states. The largest one is located in Florida, and it had 33 stores in 2013 (Kretzmann, 2014). The average size of the French Market is about 21 000 square feet. Finally, there is Sprouts Farmers Market, which expended to up to 170 stores in 9 states in 2002. Although all the competitors have many stores in the Unites States, their influence does not reach other countries. Therefore, Whole Foods Market has a competitive advantage in other countries and much larger customer base.

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It should be stressed, however, that grocers should pay specific attention to free cash flow. Regulating cash flow costs is particularly important because it introduces the cash that is controlled by a business after creating capital investments to sustain current stores and create new locations. In the course of 2013 Whole Foods produced $472 million of free cash, which is $1.3 million per store (Kretzmann, 2014). In contrast, Sprouts Farmers Markets created $73.13 million, which is $430000 for one store. Finally, Fresh Market created $18 million in free cash flow, which is $119000 for one store. Judging from the numerical data, Whole Foods Market is still a pioneer in terms of sales and free cash flow.

While analyzing the strategic position of the company, it is essential to pay attention to the consumers, ideology and mission created regarding this issue. In particular, Johnston and Szabo (2011) have focused on the reflexivity as the major concept in understanding the experience of the clients in food shopping. Further, the authors seek to explore the range of reflexivity detected in shopping trends. In order to accomplish these objectives, the researchers have conducted in-depth interviews with the company’s shoppers. The focus group has been chosen on the basis of the interest in investigating the range of reflexivity of client consumption – a sphere of concern for food scholars who have alternative initiatives that have been absorbed into corporate institutions. The analysis of the researchers states that shopping at venues is based on traditional consumer pleasures of politicized consumers. Additionally, the concept of ethical consumption should refer to Whole Food Market and explain the major aspects of sustainability. According to Johnston and Szabo (2011), “WFM is an ideal site for studying reflexivity in practice because it re-frames food shopping at a grocery chain as ethical, sustainable, and pleasurable” (p. 304). The store, therefore, provides a great number of buyers with small-scale ethical values. At the same time, it should be admitted that WFM is a chain of stores that create a place for customers who are informed about many themes and ideas of food movement and healthy eating. Some scholars argue that the emphasis placed on individual consumption and unique choices introduces neoliberal perspectives on responsibility of the company regarding consumer’s personal choices. Therefore, there is a significant debate regarding the priorities given. On the one hand, food shopping is associated with the measures imposed on the analysis of such issues as reflexivity and personal choices. Certainly, the company itself has a great responsibility for the choices faced by the consumers. However, since the company is oriented on promoting healthy eating and organic food, there is not serious underpinning of criticism of the company’s consumer policy because it promotes environmentally friendly ideology that can lead to significant improvements in the sphere of strategic management.

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Ethical consumer discourse is also based on the ideas that food shopping is a tool for creating a social change. The main element of the discourse focuses on the synthesis of citizens and consumers, which undermines social practice. In this context, the proposed hybrid can meet the competing mission of consumerism and citizenship, where the former is premised on individual self-interest and the latter focuses on the collective responsibility to ecological and social foundations. In spite of showing a hopeful sign, this hybrid concept should be theoretically justified and empirically discussed. In this respect, Johnston (2008) assumes that “the case of WFM suggests that the citizen-consumer hybrid provides superficial attention to citizenship goals in order to serve three consumerist interests better: consumer choice, status, distinction, and ecological cornucopianism” (p. 230). Therefore, a genuine hybrid of consumers and citizens is difficult to achieve, and it is internally inconsistent with the corporate policies of business companies. The above-presented statement is bold enough because it denies the corporate social responsibility issues that are practiced by almost every global company oriented on global consumers. In case a company pursues financial purposes only, it will fail to achieve customer loyalty because their demands and needs are the leading drivers of profit. At the same time, all international companies build their business activities around consumers’ needs to gain more profit. They also form customers’ tastes and persuade them to buy their products. Nonetheless, even though WFM is oriented on increasing sales and revenues, its values and mission are consistent with those dictated in the social environment. Specifically, the development of organic and healthy products is the key to raising a healthy society with a new outlook on environmental concerns, such as water contamination and pollution. All the problems are on the current global agenda and, therefore, production of natural products is the key to reducing the use of pesticides and other chemical substances exploited in agriculture. The whole network of the WFM is based on the development and cultivation of natural foods, which encourages the entire community to change their eating habits and raise their environmental awareness.

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Final Recommendation

The strategic position and values dictated by the WFM executives are justified both in business and social terms. Their conception of changing the whole world is well-accomplished because healthy eating implies the development of healthy lifestyles and ecologically-friendly community which can fight against gas emissions and contamination. Therefore, the company’s mission is well-justified. Rendering the good message can also challenge other organizations to shift to a new style of production. Taking active measures on reducing the environmental production and promoting a new way of making food is a novel word in agriculture. At the same time, most of fast food networks can also be attracted by the idea of introducing healthy foods. Such an approach can also help solve many problems, such as reducing obesity rates in the United States.

Overall, the strategic framework of the company is worth considering, but there still can be certain improvement. For instance, the company should create special programs for their consumers who want to take an active part in growing foods and understanding how they are grown. The company could also organize tours for regular buyers in order to persuade them that their products are grown in natural conditions. More importantly, although the concept of consumerism is still in an active vocabulary among the managers of Whole Foods Market, the market opportunities of the company could be declined because of the rapidly growing competition and constantly emerging industries. The fact is that the production of naturally grown foods is not a unique activity. It is practiced by other retailers who can find suppliers and offer similar products, but at a more moderate price. In order to eliminate the competition, the company should search for suppliers in the location of the retailer store to reduce costs on delivery and improve the quality of cross-cultural partnership.

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In order to persuade the consumers of the quality of products, the attention should be paid to the standards and licenses that should be introduced to the conscious clients who fail to rely on advertisements. Therefore, the company should constantly cooperate with the corresponding organizations and sanitation services that provide standards of quality. The environmental concerns should also be presented in reality. For instance, WFM can offer their services and donations to the voluntary organizations that fight with green house effect and global warming. In such a way, they can contribute to their reputable image, as well as provide a new space for development. Employees and consumers should establish trustful relations to be able to communicate and understand their concerns and goals. Finally, the company should consider consumers as citizens and inform them about the company’s new products. They should constantly participate in surveys and research studies that focus on customers’ choices and provide them with valuable information about new market segment that are ready to buy their products. Finally, their concept of food shopping should be associated with social and environmental goals. In other words, by making buyers consume their goods, the company should make them aware of the quality of those goods. Such an approach can allow the company to win customer loyalty to the brand.

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In conclusion, Whole Foods Market has managed to take the right position in the global marketplace by promoting environmental ideology and developing organic food for environmentally conscious clients. However, there are certain gaps and pitfalls that should be corrected, such as increased prices for foods and accent on brand development. While acting internationally, more attention should be paid to corporate responsibility, which relates to voluntary activities and community welfare.

 

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