Whole Foods-Opportunities, Threats, Key Success Factors
Autor: pm1991 • March 14, 2015 • Case Study • 2,147 Words (9 Pages) • 1,893 Views
Opportunities | Threats |
Increasing demand for organic foods. | Intense competition. |
Increasing popularity of private labels. | Stringent regulations/laws. |
Providing higher quality product standards than industry. | Pressure to controlling price for fresh foods. |
Emphasis on organic farming and collaboration with local farmers. | Cannibalization. |
Expand market by taking traffic-boosting measures | Higher percentage of perishable products compared to other companies in industry. |
Opportunistic strategy to Real Estate | |
Growth in pet spending in the US | |
Global Exposure |
Opportunities
Increasing demand for organic products.
The demand for organic and natural foods rose over the years due to increased awareness about the importance of such foods in diets. According to industry reports, the US organic industry registered a 12% rise in 2013, fetching sales of nearly $35 billion, out of which organic food sales alone crossed $30 billion mark and accounted for about 90% of organic sales in the US. This trend is expected to grow even further. A recent study by industry sources show that nearly 80% US families reported the purchase of organic products every once in a while, especially with parents opting to provide healthier foods to their children. This led to increase in the frequency of organic foods purchases in the country. Moreover, the rise in organic sales and trust in organic products can also be accredited to awareness of the USDA Organic seal. This seal convinces consumers to trust and buy the product while shopping something organic.
Increasing popularity of private labels.
Recent increase in popularity for generic and private label products in US has led to the growth in their demand since they provide attractive alternative to expensive national brands. This appealed not only to limited-income people but also to upper-income people with high disposable budget. According to industry sources, private label sales inclined by approx. 3% to $109 billion in 2012, including all major US retails. Since 2009, average annual growth of store brands sales reached approximately 5% as compared to that of national brands sales by approximately 2%. Whole Foods alone offers more than 2,600 products under its store brands which includes specialty and organic coffee, tea and chocolate drinks via its subsidiary, Allegro Coffee Company. During 2013, approximately 16% of Whole Food’s non-perishable sales and approximately 12% of its retail sales came from exclusive brands. Thus, increasing popularity of private label products is expected to favor the company's sales and profit margins.
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