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Whole Foods Market - Essay Example

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The organic food industry is one of the lucrative industry segments. Data from sources state the market size of the organic food industry at 55 billion US dollars as of 2009that represents a buoyant growth of about 207 percent as of 2000. …
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Whole Foods Market
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Download file to see previous pages The US and Germany constitute the top markets for this industry segment. Some of the other industry trends include emergence of private label brands, as well as a growing demand in the developing economies. The report also shows the market to grow by about 4.2 percent in the present year. It also shows large scale consolidation and foray of major brands into this segment (Sahota, 2010, p.1-11). USA the major market for Whole Foods is the most growing market for the industry with trade values in the industry segment being pegged at 28.6 billion US dollars in 2010 representing a growth of almost 11.8 percent annually. The growth trends of the organic foods also outperformed the sales growth in the entire food category segment reflecting a major shift in consumption patterns of individuals with a shift towards the organic food category (Organic Trade Association, 2011, p.1). These aspects are highly encouraging for a market player like Whole foods whose core product offering happens to be organic foods. Competitive Environment Analysis Porter’s Five Forces Model The competitive environment of any organization can be analyzed using the framework of the five force model proposed by Michael Porter. The five forces and their effect on Whole Foods are stated below: Bargaining Power of Buyers Considering the fact that a large number of retailers including supermarket chains are stocking organic food items, customers are flooded with choices, however with very few specialized organic food stores the bargaining power of consumers is medium. Bargaining Power of Suppliers Suppliers for organic foods normally include farmers, and other small and marginal players that are present in considerable numbers, moreover with specialized training for farming being provided by corporate the bargaining power of suppliers is considerably low. Threat of New Entrants It is quite difficult for a new player to establish in the market considering the cost of operations and access to suppliers, however exiting supermarket chains can pose a threat if they chose to make a foray in this sector, hence the bargaining power of new entrants is medium. Threat of Substitutes Substitutes for organic food include food items that are being preserved or created artificially. In spite of the awareness among consumers with regards to the benefits of organic food, synthetic food items still have an edge over the aspect of lower cost. This makes the threat of substitutes high for the industry. Competition among Existing Players The competition among the players are extremely high with major supermarkets like Wal-Mart and Kroger selling organic food items, although the number of specialized organic food stores is quite less and they are not present in a big way that makes the threat of this force high. The most significant threa ...Download file to see next pagesRead More
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