Organic foods are those products or agricultural inputs produced under a set of rules called “organics.” These procedures are intended primarily to get food without chemical additives, avoiding or synthetic substances and achieving a greater protection of the environment with non-polluting techniques. What distinguishes the organic agriculture is that all synthetic inputs are not allowed. Also, the crop rotation is mandatory to strengthen the soil.
In that trend, food producers must make sure their organic products are chemical free, and they cannot use for transgenic seeds or plants for their production.
The organic crops are fertilized preferably by composting, to give back nutrients to the soil through of food. Among the traditional methods used is the terrace system or natural barriers to prevent erosion soils. In addition, organic products may have other qualities such as ecological packaging for their deliver to the final consumer.
Following that particular trend, Whole Foods Market is a supermarket chain specializing in organic and natural food more important to the United States. It has over 300 stores in the U.S. and England and is a benchmark for the industry as it serves as a promoter of the organic culture, integrating values such as chemical-free, livestock protection, access to truly healthy food, responsible consumption, support small producers and fair trade.
While many people think healthy food is insipid, boring, and organic food is for vegetarians or people in sickness, Whole Foods tries to prove the opposite, integrating two trends in cooking: healthy and delicious.
Evaluate the competitive environment of the firm: Apply Porter’s model and analyze each factor relative to the company.
Supplier Power: Most of suppliers have little to no influence. There has to be a large number of suppliers in the market. That means that organic food suppliers are not highly concentrated, so natural food retailers have some power over them. The fact that there are not any substitutes for organic and natural food greatly helps this industry.
Buyer Power: There still exists the chance that when stores like Target, and other mass merchandisers, start to carry organic food, there might be a decline in income for Whole Foods. As we expect, big firms are looking for making the most of the returns on their spent capital. Consumers in the organic industry are not really looking for the best price but instead the best quality.
Competitive Rivalry: Whole Foods has seen the increasing of the direct competition from supermarkets that to compete, are re-branding. In that way we have Wal-Mart, Trader’s Joe and Wegman’s. These stores are trying to copy the atmosphere and most of the food items sold by Whole Foods.
Threat of Substitution: The organic food sector has low propensity to substitution. Whole Foods has focused its service to the customer loyalty. The unique aspects of its particular service are the competitive advantage for Whole Foods. For some customers, no substitute product can be offered for anybody else. However, Trader’s Joe is achieving to appeal some of the organic food customers. But in the case of natural and organic food, the very nature of the company’s products reduces the threat of substitutes.
Threat of New Entry: As a consequence of the economic crisis, there are a decreasing number of independent retailers. If anyone walks through any mall, we will see that a majority of them are chain stores. The trouble to start-up a store is not impossible to overcome; however, the ability to set up supply contracts, rent facilities and be competitive is almost impossible. Whole Foods has achieved a competitive advantage over independent retailers.
Discuss which environmental factor poses the most significant threat to Whole Food and what the company can do to combat it.
The environmental factor that poses the most significant threat to Whole Foods could be the weather or climate. The climate change will impact agriculture and food production worldwide because of elevated CO2 in the atmosphere, higher temperatures, etc.
Besides that, altered rainfall and perspiration regimes, increased frequency of extreme events and modified weed, pests and pathogens pressure. In general, low-latitude areas are at greater risk of decreasing crop yields.
Let’s talk about the scientific explanation of this theory. Phenology is the study of natural phenomena which are repeated regularly, and how these phenomena are related to climate and seasonal changes. As of today, the effects of regional climate change on agriculture have been relatively limited.
The changes in the crop phenology provide important evidence of the response to the recent regional climate changes. A significant advance in the phenology has been observed for agriculture and forestry in large parts of the Northern Hemisphere.
Complete a SWOT analysis and identify significant opportunities and threats facing the organization.
– Whole Foods offers catering services, seasonal products and recipes, in the store events such as cooking classes, free tours around the store for customers with food allergies.
– Originally, health food stores were small, expensive, and do not have a large variety of products, whole foods change all of this and that became the foundation company in this industry.
– Whole Foods has a commitment for sale high-quality natural and organic products, offering satisfactory service and delighting their customers, also, Whole Foods care about their communities and the environment. That’s why customers feel attracted by the company.
– Whole Foods has a trendy image and attract more rich and young buyers.
– The company recorded revenues of $7,953.9 million during the financial year (FY) ended September 2008, an increase of 20.7 % in 2007.
– They have had 25 years of double-digit revenue growth.
– Whole Food is the undisputed leader of $ 4.7B organic supermarket industry leader.
– At the moment, the government of the United States subsidizes the corn growers industry but not organic farmers. Therefore, companies which not use organic ingredients can produce more food cheaper and faster.
– The number of organic farmers is growing, but at a slow pace and the supply chain of organic foods is underdeveloped and cannot meet the needs of our food system.
– Whole Foods has been dubbed as “whole paycheck”, because some food is more expensive than other grocery stores.
– Whole Foods might sponsor more city events to increase their brand recognition and make customers more aware of the products they offer.
– They have to promote and build a brand identity with organic foods and eventually lead to the idea that when people think “organic”, they will think “Whole Foods”.
– Now that our economy is emerging from the recession, Whole Foods has to find a cost-effective ways to give a little back to clients that make purchases and try to get new customers with the same approach. One strategy might be a rewards card, or points accumulation reward card that allows the customers to get a discount on their next purchase or get something free from the shop.
– As the world is increasingly aware of how important it is to eat healthy, Whole Foods’ commitment to high quality and organic food natural leads to higher prices than those who are not organic and natural food.
– Many consumers have the misconception that healthy food is more expensive than regular food, when in reality; Whole Foods provides a store brand that is comparable in price of other supermarket chains. Whole Foods needs to change the attitudes of consumers.
– A change in the government regulations for organic food would have an impact in the consumer spending.
– The economic situation is a threat due to Americans of desire to save money and that means saving on food. However, since food is expensive, Americans do not see the cost effectiveness relation for buying organic food.
– Whole Foods has increased competition from supermarkets that are re-branding to compete with them, such as Target, Wegman’s and Trader’s Joe. These stores are trying to copy the Whole Foods atmosphere and even some of the food products.
Discuss how Whole Foods can use it strengths and opportunities to achieve a sustained competitive advantage in the marketplace.
Whole Foods can get a great competitive advantage from the fact that now is the only major organic food provider in the United States. As food prices have raised in recent months, led by increases in corn and wheat, Whole Foods has not produced a significant decrease in sales. The old fashion, fatty, colored, preserved, and brand name food no longer have the same value that once did, and the wellbeing of the body and the environment are becoming more and more a part of the modern society. In fact, as conventional foods are becoming more expensive, the premium products offered by Whole Foods actually become a little more attractive from a customer point of view.
Other supermarkets are trying to enter the huge market that has become the industry of organic food, but the sale of “regular” food along with organic food does not have the same market penetration, and the variety is not near what Whole Foods offers.