Marketing Evergreen Natural Grocers in Canada - Essay Example

? Marketing Evergreen Natural Grocers in Canada and Marketing Evergreen Natural Grocers in Canada Company Background Evergreen Natural Markets is a series of prosperous natural food retailers located in the Rocky Mountain region of the United States. The markets began their operations in the year 1966 under the initiative of the entrepreneur, Donald Slater in Evergreen, Colorado. Donald died in 1998; his daughter Kathleen Norton assumed the responsibility of managing the business (Doyle, 2012). Evergreen has acquired several groceries since its inception, with the most recent acquisition of Arugula Grocers on April 4, 2012. Evergreen Natural Grocers deal with natural and inorganic products, and offers competitive prices while ensuring high quality services to customers. Evergreen Natural Markets is characterised by rapid growth, which can be confirmed by its twenty-three stores in nineteen locations in Colorado, Wyoming, and New Mexico. Evergreen Natural Grocers achieved total annual revenues amounting to $175 million and net income from investment of $4.3 million during the financial ending December 2012 (Doyle, 2012). Evergreen Natural Grocers has adopted an expansive strategy for growth. The company has identified a potential market in Canada for selling its products. Five Porter’s Analysis of the Canadian Market Threat of New Entrants The supernormal profits earned by the Evergreen Natural Grocers will attract the entry of new firms. Retail outlets such as Wal-Mart and Humana Inc. have began supplying natural foods and supplements in the Canadian market parallel to Evergreen Grocers. The profits earned by Evergreen Grocers will trend towards normal and finally fall to break-even in the long-run (Hemmings, 2011). Sources of threat of new entrants include economies of scale, product differentiation, easy access to distribution channels and lenient government policy. Threat of Substitute commodities Most of the Canadians prefer consuming fresh-from-the farm products to the processed natural products. Businesses have engaged in extensive supply of substitutes for natural products supplied by Evergreen Grocers. The Canadian buyers have high propensity to substitute because of low switching costs for consumer foods. The markets, therefore, are characterised by cutthroat competition where new substitutes are brought to market every day. Substitutes are also supplied in forms of direct medications meant to heal illnesses associated with the defects of malnutrition (Fisanick, 2010). Bargaining Power of Buyers The Canadian market comprises of enlightened buyers who are sensitive to price and quality changes. The buyers have the ability to put Evergreen Groceries under pressure, which has an effect in the buyers’ sensitivity to price changes (Raff & Schmitt, 2009). The Canadians have access to all market information and can force the reduction of prices in the event of failing to reflect the true value of the commodity. Bargaining Power of Suppliers Suppliers comprise the market for inputs such as raw materials, components, expertise, labour and energy. Manual labour exhibits features of scarcity in Canada due to low population growth rates, hence, labour is expensive to afford. The Canadian believe in the principles of total quality management; their supplies in terms of raw materials and components are costly because they are prepared based on excellent quality standards. Employee solidarity through labour unions is very strong in Canada, implying the bargaining power of suppliers is effective and all regulations related to labour supply must be adhered to all costs. Intensity of Competitive Rivalry Natural foods manufacturing units in Canada have embraced sustainable competitive advantage through intensive innovations. Most companies have gone online, and have online supply units to aid in marketing and supplying of their merchandise. The level of advertising expenses is high because of increased competition for advertisement airtime and strategic locations of promotions. The firms in Canada have high degree of transparency and they have inspired their customer trust through the quality products they offer. The company faces stiff competition from conventional supermarkets, supercenters and retailers dealing with natural foods and other inorganic products (Raff & Schmitt, 2009). These competitors include Whole Foods Market, United Natural Foods Inc., Sprouts Farmers Markets and Sunflower Farmers Market. These outlets deal with natural foods similar to Evergreen Grocers. They may potentially affect the company’s profitability through commanding part of Evergreen’s market share. SWOT Analysis Strengths The corporate strategies of Evergreen Natural Grocers include acquisitions and partnerships. The grocery’s chief executive director embarked on several acquisitions, which are expected to give the grocery wider market share in the regions of operation. Evergreen Markets Chief Executive Officer led the acquisition of Arugula Grocers on April 4, 2012 (McKee & Fill, 2011). The CEO requested the co-workers in Arugula to participate in sharing commitments in availing the healthiest products and genuinely caring about the company’s customers. This 7-store supermarket acquisition in Las Vegas contributed to the company’s growth in revenues and assets by 35% (Doyle, 2012). Evergreen Natural Markets has a strong reputation for improved performance of its newly acquired stores. Two years following the acquisition saw the company sales increasing by 20% per square feet. The acquisition of Fireside Foods led to increase in sales by 50% while profit margins doubled (Cohen, 2002). These improvements did not result from price increases, but the primary drivers were the company’s focus on key performance measures and more strict measures of controlling finances than those in place in the acquired groceries before take-over. Financial discipline is a vital component in its accounting system. The larger proportion of the company’s growth is attributed to acquisitions. Evergreen Natural Grocers purchase independent grocery stores in the Rocky Mountain of the US and collaborates with existing management to seek ways of enhancing high quality performance. The company integrates newly acquired stores to balance local decision-making autonomy based on the community’s knowledge with a strong set of core values and principles of operation (Kotler & Armstrong, 2012). The company has a steady record of growth in sales of between 2% and 3% per year. Most of the Evergreen Grocery offer delivery services to customers who do not have cars, the elderly and disabled who are unable to carry bags by themselves to the groceries. Evergreen Natural Groceries acquire grocery stores run by managers with proven records. The formula for delegating involves collaborating with the managers of acquired stores by decentralizing control relating to managing people and customer service delivery, but centralizes matters relating to sensitive data. Weaknesses The company’s current ratio ranges between 1.0 and 1.2. This ration is less than the acceptable ratio, which should vary between 1.5 and 3.0. The current ratio indicates that the company may have difficulty in fulfilling its current obligations. The cash conversion cycle of Evergreen is 3.2 days (Doyle, 2012). This implies that the company may face financial problems in meeting cash obligations that fall due within one to three days. Evergreen Natural Grocers are growing at a rapid rate, thus reducing the management’s ability to offer personalized services to customers. This may lead to reduced chances of customer orientation and satisfaction (Czinkota, Ronkainen & Czinkota, 2010). The strategic management may experience problems with meeting the personal needs of each customer. Another weakness of the company concerns the present management’s unwillingness to mentor the newly acquired groceries. This was evidenced by the reluctance of Evergreen managers to mentor the newly acquired Arugula Groceries. Additionally, the company allows the existing management to continue operating the acquired stores. There are chances that poor management from the acquired stores may extend to the new businesses and cause them to collapse. Slotting allowances is not popular among the newly acquired stores. Most of the store operators believe that slotting allowances causes disadvantages new manufacturers and local food manufacturers who may not afford to pay them. This issue may create conflicts among the management of Evergreen Grocers. Opportunities Political/Legal The target market of Evergreen Natural Grocers comprises of a highly educated and health conscious citizens of Canada. This market is made up of consumers from the elite society with an understanding of their health rights and consciousness of their healthy requirements (Iacovetta, Epp & Korinek, 2012). The market compels Evergreen to seek the best methods of quality, safety and consistency in supply to avoid undesirable consequences of law and politics. Economic Evergreen’s target market is made up of the upper income class and elites. The company plans to place typical stores in prime areas of Canada with lower occupancy costs. The acquired groceries’ managers plan to maintain the responsibility of purchasing stock from nearby farms, bakeries and food manufacturers of items popular with their customers. This will create a shorter supply chain, which will help in cost minimization. The two independent grocery stores that Slater took over during the 1970s in Boulder and Golden increased the opportunities of gaining economies of scale that will continue supporting the expanded range of products across the world. Evergreen Natural Grocers acquired three additional stores during the 1980s, making it the first independent multi-grocer to specialize in natural foods in the region. Evergreen Acquired Austin, Texas-based Whole Foods Market in mid 1990s, which led the consolidation in natural and organic food retail market segment (Iacovetta, Epp & Korinek, 2012). Evergreen build two distribution stores in 2004 that boosted the company’s extent of supply. The company positioned the stores in the southeast part of Colorado and Durango. Each sore covered two hundred thousand square feet of space. These mega warehouses promise the company efficient distribution system that can sustain a growing number of stores to other countries, including Canada. The stores enable Evergreen Natural Grocers to reduce chances of in-store inventory reductions and fewer stock-outs. The company has large financial savings that can be used to support construction of distribution centres and critical infrastructural facilities. Socio-cultural The Canadians believe that natural food products and supplements are healthier than the chemically produced artificial foods. Evergreen Natural Grocers can maximize on this believe and supply varieties of natural supplements to meet the nutritional needs of the supplements (Fisanick, 2010). Evergreen Natural Grocers display quirky, original hand-painted signs at the entrances and outside the buildings attract the attention of passers-by. The company will benefit from public attention if it displays hand-painted designs in the Canadian outlets since Canadians treasure cultural artefacts (Iacovetta, Epp & Korinek, 2012). Technological Evergreen stores have an opportunity of introducing a personal shopper program in which customers can place orders using mobile phones or e-mail orders by maximizing on Canada’s advanced technology. The company has significantly invested in information technology, thus supporting its operations and financial controls. Evergreen Grocers can exploit the Canadian technology and hire the experts from the country to install a state-of-the-art system that process and schedule deliveries while managing replenishment. The company’s information system will ensure better inventory control, reduce stock-out and shrinkage risks, and aid in setting appropriate prices that tally with customer utility (Warner, 2010). The Canadian Stores have the potential of adopting either 18-digit or 13-digit Universal Product Code. The company will use analytics to link electronically the warehouses with the central office to enable store managers to access data for better prediction of products needed in different markets. Environmental The Canadians believe in the green policy, and any product that is not embracing environmental sustainability is discarded from the shelves (Foreman, 2009). Evergreen Natural Grocers have an upper hand in the Canadian market because they have adopted a strict green policy. Evergreen Grocers rely on differentiation through quality and service. This strategy attracts customers since they continuously seek uniqueness (Warner, 2010). Store employees are knowledgeable about the products of the company, which enables them to engage actively with customers. Butchers clearly talk about the practices on the farms from which their beef and lamb. The staff is concerned with the sources where the dairy, fresh produce and fish come from with regard to environmental sustainability. Threats Political/Legal Disease outbreak Law suits may scare away customers especially those who consume meat, milk and fish. In 2001, Washington Department of Health and Benton investigated an E.coli outbreak among the students at Finley Elementary School. Investigation results revealed that outbreak resulted from was consumption of under-cooked beef served in tacos for lunch (Mellon, Self & Startin, 2000). This information spread to the neighbouring Canada, and may have caused fear among the Canadian consumers of natural products. Cases like these revealing faulty of meat suppliers would make customers lose confidence in groceries, including Evergreen Natural Grocers. Economic The global economic cycles, especially during recessions have widespread implications on the performance of Evergreen Natural Grocers in Canada. The economic recession of the year 2008-2009 declined business performance across the cities of Canada. Canada, like other countries, is recovering from this economic dwindles, and may not promise stable business in the short-run. The Natural Food Merchandiser magazine once reported that the Canadian markets have high demands for natural products evidenced by 11.4% sales growth in 2010 (Mellon, Self & Startin, 2000). This may attract an influx of groceries in the regions and risk the business’ chances of survival. More than 65% of Evergreen stocks comprises of perishable goods. These command higher profit margins to take care of spoilage risks (Foreman, 2009). If the company increases prices slightly, it may experience more than proportionate decrease in quantity demanded since the market is characterized by perfect competition. Socio-cultural The sales of Evergreen Grocers may be restricted by beliefs and customs of people to stock particular types of foods. This affects specifically meat products. Some populations do not consume certain types of meat such as pork and fish. For example, the company cannot stock pork in Canadian areas inhabited by Muslims. Technological Technological advancement in Canada may force Evergreen Grocers to install and maintain expensive technologies that meet the service requirements of the natives. Huge initial costs may be required to realize these goals; the company will need to invest in purchase of machinery and hiring experts to coordinate the installation and evaluation processes. The employees may object advanced technologies used by Evergreen Natural Grocers. For example, while integrating Arugula with Evergreen, rumours spread that Evergreen managers would refuse to mentor Arugula unit if asked (Boone, 2012). The reason for this was that Norton was learning to emulate the top-down style of using technology to impose processes and policies without regarding local constraints. Conclusion Evergreen Natural Markets is rapidly growing in the face cutthroat competition. The corporate strategy of the company is acquisitions and partnerships. The company’s SWOT analysis reveals that the company is trying to counter its weaknesses and threats while maximizing on the available strengths and opportunities. Through a series of acquisitions, Evergreen Grocers have rapidly grown and invested outside the Rocky Mountain region of the United States. The Canadian market provides potential conditions for success of the Evergreen Natural Grocers; however, the groceries need to check and work on its weaknesses in order to gain a competitive advantage and diversify its market share. References Top of Form Boone, L., 2012. Contemporary marketing, 2013 update. s.l.: Cengage learning custom p. Cohen, W. A., 2002. El plan de marketing: : procedimientos, formularios, estrategia y te?cnica. Bilbao: Deusto. Czinkota, M. R., Ronkainen, I. A., & Czinkota, M. R., 2010. Principles of international marketing. Australia: South-Western, Cengage Learning. Doyle, A. C., 2012. The white company. UK: Andrews. Fisanick, C., 2010. Food. Farmington Hills, MI: Greenhaven Press/Gale, Cengage Learning. Foreman, P. L.,2009. City chicks: Keeping micro-flocks of laying hens as garden helpers, compost creators, bio-recyclers and local food suppliers. Buena Vista, Va: Good Earth Publications. Hemmings, P., 2011. How to Improve the Economic Policy Framework for the Housing Market in Israel. Iacovetta, F., Epp, M., & Korinek, V. J., 2012. Edible histories, cultural politics: Towards a Canadian food history. Toronto: University of Toronto Press. Kotler, P., & Armstrong, G., 2012. Principles of marketing. Boston: Pearson Prentice Hall. McKee, S., & Fill, C., 2011. Business Marketing Face to Face: The Theory and Practice of B2B. Goodfellow Publishers. Mellon, F. A., Self, R., & Startin, J. R., 2000. Mass spectrometry of natural substances in food. Cambridge: Royal Society of Chemistry. Raff, H., & Schmitt, N., 2009. Buyer power in international markets. Munich: CESifo. Warner, A. G., 2010. Strategic analysis and choice: A structured approach. New York: Business Expert Press. Bottom of Form Read More