Whole Foods Market Inc. has only recently edged its way into the American food market, yet it has already become extraordinarily popular with its target audience. The Grocery Retail Industry, in which Whole Foods operates, is a subdivision of a greater Food Industry. The Grocery Industry has been expanding recently, with its total revenue making $655 billion in 2019 and continuing to grow (IbisWorld, 2019). The timeliness of delivery and the process of handling the products are the main constraints faced by the industry since the two factors mentioned above define the quality of the products (Narayan & Chandra 2015).
Therefore, despite having managed to become the undisputable leader of the Grocery Retail Industry, the company will have to focus on improving and enhancing its distribution processes within its SCM framework to strive in the competitive setting of the Grocery retail market.
The attractiveness of the industry in which Whole Foods presently operates is moderately high. Groceries as a crucial part of the dieting choices for most buyers can be seen as a very popular resource. Moreover, with the rise in the influence of Whole Foods within the industry and the emphasis on healthy lifestyles, the number of people purchasing groceries and especially the healthy options produced by Whole Foods will increase (Conaway et al. 2018). Thus, the attractiveness of the industry is expected to grow as long as health-related and environmental concerns remain in the limelight of the public attention.
Applying Porter’s 5 Forces framework to the Grocery retail Industry and the performance that Whole Foods has been delivering in it, one will notice that the threat of new entrants is quite high. Armed with innovative solutions, new entrants in the Grocery retail Industry pose a challenge to Whole Foods, encouraging the company to reinforce its competitive advantage. Specifically, the introduction of new entrants to the market will imply lower prices per unit of a product, which will reduce the level of Whole Foods’ competitiveness given its current pricing framework.
In light of the rigid pricing policies that Whole Foods has been implementing, the bargaining power of buyers is quite high. With the rise in the number of clients that regularly use Whole Foods, the pressure that they put on the company in terms of cheaper pricing options, discounts, and other ways of revisiting Whole Foods’s current pricing policies increases exponentially (Conaway et al. 2018). Thus, the bargaining power of buyers is quite substantial at Whole Foods, and it is likely to shape the corporate policies and encourage Whole Foods to seek opportunities for a more cost-efficient framework.
However, as the bargaining power of buyers intensifies and the pricing policies of Whole Foods changes, the range of customers to whose needs the firm will cater may change to people from a lower economic background, which, in turn, will mean a change in their bargaining power.
The extent of the bargaining power of suppliers within the Grocery Retail Industry and specifically for Whole Foods is presently quite large, balancing between medium and high. Although the number of the available suppliers is quite high, Whole Foods can switch between them, which means that the range of their influence is restricted (Conaway et al. 2018). Whole Foods uses the services of trusted and renowned companies such as Nature’s Healthy Gourmet Inc., which support environmental policies and introduce innovative solutions to the industry. Thus, Whole Foods currently has quite large competitive advantage compared to its competitors, yet the firm may need to redesign its framework for managing its SC
Conaway, RN, Regester, K, Martin, S, Nixon, C & Senior, B 2018, ‘Amazon Whole Foods: when e-commerce met brick-and-mortar and saved the brand of conscientious capitalism’, Journal of Marketing Development and Competitiveness, vol. 12, no. 3, pp. 112-122.
IbisWorld 2019, Supermarkets & Grocery Stores Industry in the US – market research report. Web.
Narayan, G & Chandra, R 2015, ‘Factors affecting the purchase of food and grocery products from modern retail stores: an empirical study’, IUP Journal of Management Research, vol. 14, no. 2, pp. 7-23.