| Name | Whole Foods Market (WFM) [Delisted since Amazon takeover in 2017] |
| Industry | Food retail |
| Founded | 1980 |
| Headoffice | Austin, Texas |
| CEO | John P Mackey |
| Revenues | $10.9 Billion, 2020 |
| Net income | $0.414 Billion, 2020 |
| Competitors | Walmart, Kroger, Target, Trader’s Joe, Sprouts, Fresh market |
Whole Foods Market is an organic and natural food supermarket chain in the US, UK, and Canada and its food features include free from colors, artificial preservatives, and flavors. The company was founded in 1980 in Texas by John Mackey and in 2017, it was acquired by Amazon.com. Whole Foods Market product lines include meat, apparel, snacks, fruits, body care, wine, pantry staples, seafood, prepared foods, sweets, and specialty items. The company ranked 9th in the list of 10 global organic food brands (Fortune, 2021; YahooFinance, 2021). Let’s now go over a detailed SWOT Analysis of the company.
Whole Foods Strengths 2021:
- Brand reputation.
Whole Foods Market has a strong brand image and recognition for organic food such as fresh meat, vegetables and fruits. In 2021, the company ranked 35th best retail brand and 27th in global retail brands in 2020 (SyncForce, 2021). - Market leadership in organic food.
In the organic food industry, Whole Foods Market has a strong market position and ensures products meet utmost quality. According to Forbes (2020), the company has amazing array of healthy products and a fantastic place to shop for sustainable, organic and fair-trade products.
- Amazon eCommerce capabilities.
Bradley (2020) appraised that Amazon has provided e-commerce capabilities to Whole Foods Market and helped the company to achieve growth during the lockdown. The online sales for the company grew 37% and helped the brand to reposition as a customer-orientated brand.
- 365 – Whole Foods Market value brand.
Whole Foods Market has a successful brand called 365 to boost the organic product range and products come in pre-packaged plastic bags. Ochwat (2021) pointed out that with the ‘365 brand’, customers can expand shopping affordability through matching prices with regular stores but also enjoy luxury brands with more savings (Whole Foods Market, 2021). - Large US stores network.
Whole Foods Market has reputation for quality products free from artificial flavouring and colours. In 2021, the company has 503 stores in the US and California has the highest number of 92 stores and Chicago city has the most stores of 12 (ScrapeHero, 2021).
Whole Foods Weaknesses 2021:
- US market dependence and lack of internationalization.
95% of Whole Foods Market stores are located in the US and 97% of revenues are generated from the US. The company has 8 stores in the UK and 12 stores in Canada (WholeFoodsMarket.co.uk, 2021). With its dependence on US markets, it lacks diverse revenues and is vulnerable to economic changes in the US market. - Whole paycheck and niche segment.
Stevenson (2021) stated that Whole Foods Market has a brand image that belongs to the upper-middle class who are willing to pay a premium for quality products. The company has been trying to change its image as a whole paycheck reputation and launched 365-brand to compete with lower-priced rivals. - Brand dilution.
Whole Foods Market has a strong reputation for quality products at premium prices. However, the 365-brand for private labeling has diluted the image of the company. The company has blurred its image for product innovation and premium quality to compete with low-cost rivals (Chernev, 2021). - Poor in-store shopping experience.
Ryan (2021) discussed that the customers’ in-store shopping experience because staff picking up products for online orders. The shops are used to fulfill online orders and there is more staff on the shop floor than customers. - FDA and product recall.
Whole Foods Market has recalled 30 food items from October 2019 to November 2020 due to a lack of undeclared allergens sold in the deli and bakery section. The product recall demonstrates the lack of quality control and the company selling misbranded food products (FDA, 2021).
Whole Foods Opportunities 2021:
- Micro-fulfilment centres.
Whole Foods Market should develop micro-fulfilment centres for online orders. Devanesan (2021) pointed out that the inventory can be moved to the fulfilment centre and remove pickers from roaming the stores. The micro-fulfilment centre can be opened based on square feet, height and layout of the store. - Value-based pricing.
Whole Foods Market can use a value-based pricing strategy to change its image and perception of the customers. The product pricing based on the value rather than the historical price would allow overcoming price accusations in the market (Harvard Online, 2021). - Global expansion.
According to GlobeNewswire (2021), the global organic food and beverage market is expected to reach $849.7 Billion with a CAGR of 14% from 2020-2028. Currently, Whole Foods Market has most of its operations in the US and a limited global presence. The global organic food market provides a new opportunity for the firm to expand in the international markets and diversify its revenues (Zohari, 2021).
Whole Foods Threats 2021:
- Weak supply chain.
Whole Foods Market shift to centralised purchasing has neglected local and regional brands. Umholtz (2021) pointed out that the centralised supply has reduced new products and half of the store shelves are empty. Recently, the freezing temperature in some states has crippled the supply chain of the company and stores ran out of supplies. - Corporate culture clash.
According to Alansaari (2020), Amazon has a corporate culture of uniformity and employees paid for performance with little concern for staff turnover. On the other hand, Whole Foods Market culture reward employee for loyalty, the individual store has autonomy and customer service at the heart of the company. Whole Foods Market as a subsidiary of Amazon has diluted its corporate culture and it has turned into an automated-orientated company. - Lack of business strategy.
Whole Foods Market lacks business strategy to leverage its resources and maintain unique customer experience. Loizos (2020) stated that the in-store pickers do not have time for customers; stores are used as fulfilment centre, the centralised purchasing has reduced innovation and product offering stuck between value price and organic food (Wicks, 2020). - Threat of substitute.
According to Hirsch (2020), Whole Foods Market has strong threat of substitute from low cost competitors such Target and Walmart. However, the low price competitors use competitive pricing to attract customer which affect market share and profitbality of the company. - Small market share.
Whole Foods market has small share and generalists like Kroger and Walmart have major market share in food retailing as shown in the diagram below
Whole Foods SWOT Analysis Conclusion:
With a strong brand reputation, Whole Foods Market has a large store network, amazon e-commerce capabilities, and market leadership in organic and natural food in the US. However, the challenges for Whole Foods are brand dilution, poor supply chain, whole paycheck perception, and intense competition. Despite the challenges, the company has the resources, network, and market knowledge to tackle branding and operational issues as well as exploit new business opportunities to remain the market leader in the organic food industry.
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References:
- Alansaari, Nawal (2021). Why The Amazon and Whole Foods Acquisition Never Made Sense.
- Bradley, Lauren (2020). Amazon’s Whole Foods Wins Food & Beverage eCommerce Market Share.
- Chernev, Alexander (2021). Strategic Marketing Management: Theory and Practice – Cerebellum Press.
- Devanesan, Joe (2021). Micro fulfilment is the 2021 supply chain strategy to watch.
- FDA (2021) . Product recall .
- Forbes (2020). What’s Next For The Whole Foods Market Brand?
- Fortune (2021). Whole Foods Market.
- Globenewswire (2021). Global Organic Food and Beverages Market Is Expected to Reach USD 849.7 billion by 2028 .
- Harvard Online (2021). A beginner’s guide to value-based strategy.
- Hirsch, Lauren (2020). Whole Foods’ price cuts are a sign of a ‘cutthroat competitive landscape’ in grocery.
- Loizos, Connie (2020). That Whole Foods is an Amazon warehouse; get used to it.
- Ochwat, Dan (2021). Inside the rebranding of 365 Everyday Value.
- Ryan, Tom (2021). Amazon Prime Delivery Is Disrupting Whole Foods (And Not In A Good Way). Forbes.
- ScrapeHero (2021). Number of Whole Foods in USA – 2021 Store Location Analysis.
- Stevenson, Seth (2021). It’s Finally Clear Why Amazon Bought Whole Foods.
- SyncForce (2021). Whole Foods Market.
- Umholtz, Katelyn (2021). Empty shelves at Whole Foods, Trader Joe’s? Grocers cite freezing temps, Texas supply chain.
- Whole Foods Market (2021). 365 by Whole Foods Market: Going Above and Beyond.
- WholeFoodsMarket.co.uk (2021). Our stores UK.
- Wicks, Lauren (2020). Whole Foods Is Closing All of Their Budget 365 Stores.
- YahooFinance (2021). 10 Biggest Healthy Food Brands in the World.
- Zohari, Tony (2021). The Uppsala Internationalization Model and its limitation in the new era.
