WholeFoods Strategic Analysis
To:
John Mackey, CEO – Whole Foods Market, Inc.
From:
Re:
Whole Foods Competitive Position and Analysis
Date: January 26, 2011
Introduction
Whole Foods Market is a multi-national retailer of organic and natural foods. According to the Organic Trade Association (OTA) and Nutrition Business Journal, the organic and natural foods industry’s revenue is currently approximately $26 billion in the U.S.1 and $71 billion worldwide2.
The OTA says that the organic and natural food category grew between 15% and 20% each year through 2008 before being stifled by the economic downturn in 2009 with only 5.1% growth3.
Similar growth trends are expected for the next few years. With increased competition from more traditional grocers like Kroger and Safeway, as well as supercenters like Wal-Mart and Super
Target, is Whole Foods’s fate in jeopardy?
Competitive Position
Whole Foods’s position in the organic and natural foods sector is dominant. With approximately 33.6% market share in the U.S. in 2010, no other single competitor comes close to the organic food volume of Whole Foods4. Exhibit 1 shows Whole Foods’s revenue and market share from 2003 to 2009. Since 1980, Whole Foods has concentrated on offering the highest variety of organic and natural food products5. With exception of Whole Foods, the organic and natural food market is fragmented with many customer buying channels. Competition exists from direct competitors like The Fresh Market, extended product offerings from traditional grocers and supercenters like Kroger and Wal-Mart, and local farmers’ markets and coops such as those found around Charlottesville, VA. The threat of new entrants is high as more existing food retailers chase the product differentiation and variety of organic foods. Exhibits 2 and 3 show a list of competitors, key figures, and strategies of those competitors.
Whole Foods has the advantage of being the first large mover in the organic retail industry.
Substitutes in the
John Mackey, CEO – Whole Foods Market, Inc.
From:
Re:
Whole Foods Competitive Position and Analysis
Date: January 26, 2011
Introduction
Whole Foods Market is a multi-national retailer of organic and natural foods. According to the Organic Trade Association (OTA) and Nutrition Business Journal, the organic and natural foods industry’s revenue is currently approximately $26 billion in the U.S.1 and $71 billion worldwide2.
The OTA says that the organic and natural food category grew between 15% and 20% each year through 2008 before being stifled by the economic downturn in 2009 with only 5.1% growth3.
Similar growth trends are expected for the next few years. With increased competition from more traditional grocers like Kroger and Safeway, as well as supercenters like Wal-Mart and Super
Target, is Whole Foods’s fate in jeopardy?
Competitive Position
Whole Foods’s position in the organic and natural foods sector is dominant. With approximately 33.6% market share in the U.S. in 2010, no other single competitor comes close to the organic food volume of Whole Foods4. Exhibit 1 shows Whole Foods’s revenue and market share from 2003 to 2009. Since 1980, Whole Foods has concentrated on offering the highest variety of organic and natural food products5. With exception of Whole Foods, the organic and natural food market is fragmented with many customer buying channels. Competition exists from direct competitors like The Fresh Market, extended product offerings from traditional grocers and supercenters like Kroger and Wal-Mart, and local farmers’ markets and coops such as those found around Charlottesville, VA. The threat of new entrants is high as more existing food retailers chase the product differentiation and variety of organic foods. Exhibits 2 and 3 show a list of competitors, key figures, and strategies of those competitors.
Whole Foods has the advantage of being the first large mover in the organic retail industry.
Substitutes in the