Reasons for the Initial Success of Whole Foods
The initial success of Whole Foods can be attributed to various factors one being that its founders understood what customers wanted regarding taste, quality and convenience. They had an understanding of who their customers were, a factor which played out in their favor when it came to the lifetime value of customers and word of mouth (Tice, 2010) . Whole Foods thereby made it its priority to offer its customers top-quality foods obtained through sustainable agriculture. This business strategy enabled Whole Foods to increase perceived product values that they created for their customers thus allowing them to charge premium prices for their products.
In addition to the conscious capitalism approach that its developers employed, Whole Foods mainly stressed on providing quality products over quantity (Tice, 2010) . Whole foods took advantage of the trend shift in customer’s minds to value qualitative stuff at a higher price over much junk at a lower price. Using this strategy that came after the Supersize movement, they were able to convince consumers that foods of high quality underwent through rigorous processes of testing and standards measure and thus were worth premiums. Consequently, one of the marketing strategies of Whole Foods involved the movement of the natural/organic products, and as consumer became more educated on nutrition, they benefited tremendously (Tice, 2010) . More consumers came to understand what was in the foods provided by Whole Foods and thus did not hesitate to go back for a more wholesome approach to living.
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Why Whole Foods lost its Competitive Advantage
Whole Foods has lost the initial competitive advantage that it had in the sale of organic products due to the increased competition that surrounds natural products (Zanoni, 2017) . Therefore, it continuously sees a decline in its market comp store sales in addition to its total annual gross margin. As of today, consumers of organic foods can readily get their organic foods at their local grocery stores or even online from Amazon. Due to the availability of organic foods at various stores across the U.S, fewer consumers are now shopping at Whole Foods (Zanoni, 2017) . Moreover, this competition places pressure on the market prices of Whole Foods thereby making them lowe r their costs to keep up with the increasing competition. As a result of this, Whole Foods experienced a decline in its gross margin, a factor that puts negative pressure on its profits. In short, consumers now have more choices of organic foods thereby making it difficult for Whole Foods to grow its comp store sales.
Value Drivers that are used by Whole Foods
In the face of increasing competition, Whole Foods has realised that it needs to stay differentiated to continue thriving in the organic foods market. Therefore it has focused on the value drivers of product features, customization, customer service and compliments. As of now, Whole Foods is offering various categories of product features that include organic and local foods that are of high quality (Tice, 2010) . Moreover, Whole Foods is using sustainable fishing, is using responsible packaging and has additionally set an animal welfare standard to lure in more consumers. Consequently, they have developed an innovative human resource program that predominantly focuses on making employees happy, continuing education and creating self-directed teams to attain a superior shopping experience for its customers. This value driver enables staff at Whole Foods to cater to the needs of various customers by employing their highly trained abilities.
Additionally, consumers of organic foods can now order any product they want online thereby adding to efficient customer service. Whole Foods consequently allow the cereals, grains, fruits and sugar that they offer to be customized, and have further incorporated hot foods that customers can buy by the pound into the products that they offer (Tice, 2010) . More importantly to remain differentiated and thus attract more customers, Whole Foods has introduced compliments that allow t heir consumers to have the knowledge that 5 per cent of their total profit margins is allocated to charity in addition to supporting the local community. As of now, Whole Foods has developed Take Action Centers in each of their stores predominantly for educating consumers on various topics related to food and nutrition such as genetic engineering, organic foods, sustainable agriculture and pesticides. Moreover, they have started a project of enhancing salad bars in every public school that is near their store locations. Furthermore, they have expanded they're in stores educational efforts with "Wellness Clubs" which give customers the opportunity to learn first-hand the benefits of healthy cooking and eating.
Does the Firm Risk being Stuck in the Middle
The strategic initiative to have Whole Food to reduce its cost structure risk getting the chain store stuck in the middle. Even though the new “365 Everyday Value” store format that is being developed by Whole Foods which predominantly focuses on providing discounts on private labels, that is, selling food at low prices under private labels, is well established against other competitors offering discounts such as “Trade Joe”, it offers various challenges to Whole Foods. This strategy may ultimately divert the attention of customers from Whole Foods chain stores to ‘365 Everyday Value’ rather than pose competition to other organic foods stores. Moreover, the private label product line of Whole Foods that offers vast amounts of lower priced products can end up staling the high-quality premium priced products that it provides consumers and ultimately reduce the base organic food sales of Whole Foods.
Other Strategic Initiatives that Whole Foods can Launch to more Successfully Drive its Business Strategy
Due to the recent competitive disadvantage that Whole Foods is experiencing compared to its competitors, it should implement strategies that will facilitate them to compete in the stringent organic food market successfully. Being that most of the organic food stores belonging to Whole Foods are mainly scattered across the U.S and that the chain store plans on introducing more stores in America, it depends predominantly on the United States market. This offers a disadvantage in its marketing strategy due to the limited consumer base (Gregory, 2017) . For example, Whole Foods can experience tremendous consequences in its performance if in any case, the United States faces any adverse economic changes. Thus, Whole foods should place its focus more on other markets outside the U.S to divide its risk factors across various global markets.
Consequently, Whole Foods mainly depends on a limited network of suppliers to satisfy its market quality standards, with its primary supplier being United Naturals. This is a considerable disadvantage that will prevent Whole Foods from expanding its market reach as a result of price scales and quality options. Therefore, Whole Foods should strive to increase its supplier network so that it can improve the quality and variety of the products it offers which may help them to reduce prices of their products (Gregory, 2017) . Moreover, since Whole Foods is facing the threat of low-cost competition from other firms providing organic products such as Wal-Mart, it should adjust its pricing strategy to meet the purchasing capacity of its consumers relative to other competing firms.
References
Gregory, L. (2017, January 31). Whole Foods Market SWOT Analysis & Recommendations. Retrieved July 2018, from Panmore Institute: http://panmore.com/whole-foods-market-swot-analysis-recommendations
Tice, C. (2010, September 01). Whole Foods at 30: 5 Reasons It's Organic Success. Retrieved August 2018, from https://www.cbsnews.com/news/whole-foods-at-30-5-reasons-its-an-organic-success/
Zanoni, D. (2017, March 6). Thread regarding Whole Foods Market Inc. Retrieved August 2018, from The Layoff: https://www.thelayoff.com/t/Mc57e3b
