Wild Oats Swot free essay sample

It offers a selection of perishable foods designed to appeal to both natural foods and gourmet shoppers. The company’s private label offerings feature over 2000 SKUs. Whole Foods Market markets its private label products under different brand names 365 Everyday Value, 365 Organic Everyday Value, and the Whole Brands family. The products sold under the 365 brand (365 Everyday Value and 365 Organic Everyday Value) are less expensive than other products offered at Whole Foods Markets stores. The 365 Organic Everyday Value brand provides all of the benefits of organic food at lower prices. Whole Kids Organic is an organic food product line developed for children under the Whole Kids label. Whole brands family includes Whole Kitchen (pre-packaged fresh and frozen grocery), Whole Treat (frozen desserts and candies), Whole Catch (frozen seafood items), Whole Fields (produce and produce support items), Whole Pantry (pantry items such as flavored olive oils and vinegars), Whole Creamery (cheeses), Whole Ranch (frozen burgers and franks) and Whole Paws (pet food). We will write a custom essay sample on Wild Oats Swot or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In addition to these, the company has number of store-made and regionally-made fresh items sold under the Whole Foods Market label. It also offers specialty and organic coffees and teas through its Allegro Coffee Company subsidiary. This wide product range allows the company to address multiple customer segments and price points which help to limit it from fall in demand for any specific product or segment. Weaknesses: Relatively small scale of operations The company has small scale of operations as compared to its competitors. It has 263 stores in 37 states in the US, 7 stores in Canada, and 6 in the UK. The company’s competitor, Supervalu, has 2,478 stores and its operations span across 48 states in the US. Safeway, another competitor of the company, has 1,775 stores across the US and Canada. Beside these companies, Whole Foods Market has to compete with big players, like Wal-Mart, which operates in 15 countries. All of these retailers are expanding its natural and organic food offering. Whole Foods Matket’s relatively small scale of operations is likely to prove a drain on the resources of the company. Conservative advertising policy The company relies heavily on word-of-mouth publicity, a disadvantage in comparison to those rivals who aggressively use print, television and online media. It spends meager amounts on advertising and marketing. In 2007, Whole Foods Market spent 0. 5% of total revenues on advertising. Although demand for organic foods is increasing, there is scope to step up the growth rate through aggressive advertising given that consumer awareness of organic products is still relatively low. Competition in the segment is also increasing as more retailers begin to offer organic products. With Whole Foods Market still relying heavily on word-of-mouth publicity, as a result, its new stores may take longer than usual to break even. Opportunities: Increasing demand for organic products Natural and organic food products segment is one of the fastest growing categories in food retailing. In 2006, organic food market grew by 12. 3% to reach a value of $15. 9 billion. The US is the most lucrative market for organic food in the world, accounting for 43. 3% of global market’s value. In 2011, the US organic food market is forecast to have a value of $26. 3 billion, an increase of 65. 6% since 2006. Consumers across the US are showing increased preference for natural, fat-free and healthy food products. Increasing customer preference for organic foods is likely to favorably impact the company’s sales. Expansion in UK – and other geo-markets The UK organic food market grew by 30% in 2006 to reach a value of $2. 9 billion. The UK market for organic food is expected to increase by 86. 5% since 2006 to reach a value of $5. 4 billion by 2011. Also, UK accounts for 19. 9% of the European organic food markets value. Whole Foods Market has six stores in the UK; it operates five stores acquired from Fresh Wild. The sixth store company opened in June 2007 is 80,000 square foot store in London, and is its first major store in Europe. The company could exploit the growth of the UK organic food and drinks market to expand its existing operations, which would result in earning incremental revenues. Whole Foods does not currently participate in markets outside North America and the UK. Acquisition of Wild Oats The company acquired Wild Oats, a natural and organic foods retailer in North America in August 2007. Wild Oat’s acquisition has added 74 stores (70 in US and 4 in Canada) in Whole Foods Market’s chain of stores. This acquisition will boost the competitive position and provide wider presence in the natural and organic food market in the US and Canada. This would also increase company’s customer base and leverage growing demand for natural and organic food products to increase its revenues. Threats: Competition The company faces intense competition in the single market it operates in. Its competitors currently include other natural foods supermarkets, conventional and specialty supermarkets, other natural foods stores, warehouse membership stores, small specialty stores and restaurants. It faces competition from Kroger’s, a US retailer operating 2,507 stores under numerous banners including Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers and Smith’s. Kroger’s also operates 791 convenience stores. Big players like Wal-Mart and supermarkets like Safeway are expanding product ranges and introducing natural and organic personal care products. Increased competition may have an adverse effect on profitability as the result of lower sales, lower gross profits and/or greater operating costs such as marketing. Labeling and other regulations As the company operates in the natural and organic foods market, its stores and products are subject to several laws and regulations relating to health, sanitation and food labeling. Several federal agencies and departments including the Food and Drug Administration (FDA), the Federal Trade Commission (FTC), the Consumer Product Safety Commission (CPSC), the United States Department of Agriculture (USDA) and the Environmental Protection Agency (EPA) set critical standards for the manufacture, processing, formulation, packaging, labeling and advertising of products. Failure to comply with these standards could result in penalties and seizure of marketing and sales licenses. These regulations also result in additional compliance costs, which reduce company’s margins. Economic slowdown in US The US is the key market of the company. According to the IMF world economy outlook, the real GDP growth of the US is expected to slowdown in 2008. The GDP growth of the US economy is forecasted to slow down from 3. 3% in 2006 to 2. 8% in 2008. A weak economic outlook for the US would put pressure on the revenues of the company. Summary: Whole Foods Market is a retailer of natural and organic food products. The company offers a broad product selection in all its stores, including seafood, grocery, meat and poultry, bakery, prepared foods, specialty, nutritional supplements and vitamins, body care, books, floral products, pet products and household products. The company has recorded strong financial performance in the recent years, which has helped the company to pursue its expansion plans. However, competition in the organic and natural foods market threatens to erode the market share of the company that could reduce its margins.