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Whole Food Markets Trends and Outlook analysis

Published 16 May 2017

Company Overview

Whole Foods Market is the world’s leading retailer of natural and organic foods. It has more than 270 stores across North America and the United Kingdom. It was founded in 1980 and since then has come a long way by providing food of high quality in its purest state unadulterated by artificial sweeteners, preservatives or any other additives. The company’s core values include

  • Selling the highest quality natural and organic food products.
  • Keeping and attaining high quality standards and ensuring that all items sold are fresh, safe, tasty and nutritious.
  • Serving customers competently, efficiently and knowledgeably.
  • Ensuring innovation at every step and creating store environments that are fun and inviting.
  • In the year 2008, Whole Foods made the Fortune 100 Best Companies to Work for list and as ranked number 16. Whole Foods has been making this list for the last 11 years and is among the 14 companies worldwide that have made such a ranking every year since the list started.

Industry Overview

Whole Foods is part of the retail food industry and specifically the organic food industry. The US Organic Industry grew by 17% in 2005 and reached consumer sales levels of $14.6 billion. Of this total revenue, organic foods grew by 16.2% and accounted for $13.8 billion in consumer sales. Data indicates that consumer sales of organic foods in 2005 represented 2.5% of total US food sales which is a good growth from 0.8% back in 1997. The growth rate since then has been fairly consistent. (OTA 2006 Manufacturer Survey)

The grocery store industry is quite competitive both in North America and the United Kingdom. However, since Whole foods has entered this industry, there has been a significant revolution in the operation of supermarkets. Whole Foods generated revenues of $3.9 billion in 2004 and is expected to attain revenues of $10 billion in 2010. The food retail business has not been known for innovation but with the entry of Whole Foods, the entire concept of shopping for grocery and food has changed. (Horowitz: 2005)

Market Trends

The organic food market is showing tremendous growth. The key market trends are:

  • Growing awareness of the benefits of organic food as well demand for pure food products.
  • Improved accessibility to organic foods through retail channels.
  • Improved government standards helping consumers find the best and high quality organic products.
  • Overall growth in the organic food market worldwide.
  • Recommendations

Whole Foods had initially started with tremendous results but its revenues have since then not showing as high a growth rate as in the initial stages. This is primarily due to the decline in consumer confidence in the US and the low economic growth. This has affected most stores in the retail food industry but has especially been bad for a store like Whole Foods which costs relatively more than traditional stores. In order to deal with this downside, it is recommended that Whole Foods not expand any further till the US economy has stabilized and the purchasing power of the consumer is restored. Consumers today are making fewer trips to supermarkets and making value decisions primarily because of low purchasing power. Another major recommendation for Whole Foods is to come up with a range of products which provide more value to consumers and try to convince purchasers that they can find cost-effective products at Whole Foods as well. The company should also cut back on its capital expenditures and should cut down short term expenditure in order to secure attain its long term vision and goals.

Bibliography

Information about Whole Foods Market from www.wholefoodsmarket.com
Industry Statistics. OTA 2006 Manufacturer Survey.
Horovitz, Bruce. (2005). A whole new ballgame in grocery shopping. USA TODAY. Retrieved August 23rd https://usatoday30.usatoday.com/money/industries/food/2005-03-08-wholefoods-cover-usat_x.htm

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