Whole Foods Case.docx - Whole Foods Market The Deutsche Bank Report Travis Simpkins Mitchell Cameron Madelynn Meisel Gianpaolo Barelli Michael Reilly

Whole Foods Case.docx - Whole Foods Market The Deutsche...

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Whole Foods Market: The Deutsche Bank Report Travis Simpkins Mitchell Cameron Madelynn Meisel Gianpaolo Barelli Michael Reilly Tyler Novak Alec Fong
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Whole Foods Strategy & Competitors Due to its intense competition, the grocery industry has historically been a low- growth industry, yielding low long-term growth rates of 2% to 3%. These low margins tend to favor large competitors, and as a result small competitors are typically forced to close or be acquired. The grocery industry can be divided into four key segments: Conventional grocers such as Kroger, Publix, Safeway; Supercenter such as Wal-Mart, Target; Natural grocers such as Whole Foods, Sprouts, and The Fresh Market, and wholesalers such as Costco and Sam’s Club. Whole Foods strategy is to market their company as the leading natural and organic food supply store. The company was able to maintain a high growth rate from their initial IPO drop date in 1992 until the American recession of 2008 by expanding their stores through acquisitions and increasing same-store sales. Stores such as Wal-Mart and Target cannot be considered as true competitors of Whole Foods because they target different demographics and sell slightly different products. Although Wal-Mart was the largest food retailer in the United States in 2014, with 25% market share, their business model varies greatly from that of Whole Foods. Wal-Mart stores are typically found in lower income neighborhoods, and offer quantity rather than quality goods. Despite the stiff competition in a low-growth environment, natural grocers have grown rapidly over the past twenty years. Increasing trends of health-conscious consumers fueled natural grocers growth by over 20% per year since 1990. Although the natural and organic segment’s success ignited competition from both old and new players, Whole Foods maintained its position as the market leader for the natural and organic industry.
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