Competitive Forces and Swot Analysis

Introduction

Whole Food Market began its operations in the year 1980 as a natural and organic foods grocer. It grew big and expanded gradually and it is now the world’s largest food and organic grocer. It started in Austin, Texas. It has acquired local natural grocers such as Wild Oats and Bread of Life.  It aims at opening many stores to promote community health through providing natural and organic product (Dam, 2003). It aims at giving the society the best. However, the whole food market has strengths, weaknesses, opportunities, and threats. This paper aims to discuss in detail all issues of the whole food market.

Whole Food Market focuses mainly on expansion. It operates several natural and organic foods supermarkets. It has several wholly owned subsidiaries and aims to expand its popularity even to the international market. It is not yet highly popular and, therefore, it aims to open many new branches all over the world to increase its popularity (Stahl, 2004). The Whole Food Market offers a wide portfolio of products. It deals with foods such as seafood, grocery, meat and poultry, bakery, prepared foods, specialties, whole body products, florals, pet products and household products. Specialties include beer, wine, and cheese. Whole body products include nutritional supplements, vitamins, body care products, and educational products such as books. Customers are, therefore, able to access a wide portfolio of products from which they can choose according to their tastes. This attracts many customers and increases the popularity of the whole foods market. It also enables the market to deal with multiple classes of consumers.

The Whole Food Market focuses on the health of children and has introduced products such as peanut butter.  Whole Food Market emphasizes fresh food. This attracts many consumers to buy products and gives it an advantage over its competitors.  The Whole Food Market offers a wide range of services such as catering, seasonal products, recipes, in store events, and free tours around the store for customers suffering from food allergies. Cooking classes are an example of the in-store events that the Whole Food Market offers.  It has a well-developed website where there is a lot of information concerning its products, services, and operations. This website has recipes, blogs, sale items, tips, and podcasts. Customers can access this at their own pleasure. This gives Whole Food Market an added advantage over its competitors.

Whole Food Market has an advantage in that it is supported by many complimentary industries such as health industry, health insurance company, health care specialists, and fitness centers. This increases customers’ trust in the products. The Whole Food Market has an advantage because it deals with unique products. Natural and organic products are hard to substitute, and this guarantees them protection.  This market has a strong revenue growth and thus, Whole Food Market expands its market share and gains an increased bargaining power.

However, the Whole Food Market has some shortcomings which hinder its efficiency. For instance, it is conservative and spends little on advertising. It relies on word of mouth advertising which is slow and has limited reach. Its competitors use print, television, and online media. This makes it less popular, and although its popularity is growing, it is at a remarkably low rate. 

It also faces a disadvantage in that it has limited diversification. It only deals with natural and organic products, and this gives its competitors an advantage over it. Some of the products offered by Whole Food Market are expensive and, therefore, some people cannot afford them. Moreover, during economic recession periods, many people are unable to afford most of the products. Whole Food Market products are not yet common and popular amongst people. It, therefore, has a lower market share compared to other market participants. However, it is gaining popularity, and the market share is expanding gradually.  The number of organic farmers is also small and, therefore, there is a struggle to supply the raw materials. The government also does not subsidize organic farming and this increases the hardships faced by the companies dealing with organic foods.

Whole Food Market has opportunities to improve its performance.  People have realized the importance of adopting healthy feeding programs and with this, most are shifting to organic foods. This has led to increased demand and consequently, larger volume of sales. The Whole Food Market is committed to providing high quality natural and organic foods which will enable it to attract many customers. This in turn will lead to increased revenues. Whole foods companies have a chance to widen their market share and make their products popular through advertising in the right media such as the Internet and television. Many people will know about the products and the volume of sales will increase.

The Whole Food Market also has threats to its success. Since it sells natural and organic foods, its stores and products are subject to laws and regulations relating to health, sanitation, and labeling. Agencies such as the Food and Drug Administration, Federal Trade Commission set standards for manufacturing, processing, packaging, labeling, and advertisement of these products. This is an added compliance cost.  Normal supermarkets are adopting the sale of organic foods and there are small food stores that are starting to sell organic foods. This poses a threat to Whole Food Market due to increased competition.

The Porter’s five forces model of competition analyses five sources of competition in the market. New entrants pose a serious threat to the market. The increasing popularity of the market is attracting many investors and this increases competition.  Supermarkets and regular stores are starting to sell organic products. However, Whole Food Market has an advantage since it offers a wide portfolio of products.  When there are many firms on board rivalry may develop amongst them. This may negatively affect the firms since they may work against each other.

Competition creates rivalry as every firm wants to get the greatest market share and plough large returns regardless of other competing firms. Since organic products are expensive, there is a possibility that customers may substitute them with other cheaper products. However, there are no food substitutes for organic products. Brand substitution is a potent threat since other brands may offer lower prices. Companies are fairly protected from this since consumers seek quality rather than quantity (Ahmed, 2004). As the products become popular, the number of consumers will increase.  As the consumers number increase, they are able to bargain for lower prices and this may impact the market negatively.  Organic farmers are not many, therefore, as the number of consumers increase; the demand for organic farmers also increases.  The organic farmers will also demand higher prices for their products and this will increase costs incurred.

Conclusion

In conclusion, Whole Food Market can use threats and weaknesses to its advantage. For instance, it can create policies to guide its manufacturing, processing, packaging, and advertising practices to avoid conflict with set standards.  It can also use the existing customers to attract others. Customers can earn premiums if they bring new customers and also reward cards especially during economic recession periods.