The retail grocery industry has increasingly become very attractive in the recent past. Many firms have realized that this industry is lucrative given the increase of the number of people looking for healthy foods. In order to understand the attractiveness of this industry, Porters five forces will be used.
We will write a custom Case Study on The Whole Foods Market: Retail Grocery Industry 2010 specifically for you
807 certified writers online
The first force is the risk of entry by other potential competitors. This risk is relatively low because most firms these products highly perishable and therefore, prone to high risk if customers are not accessible in time. The bargaining power of the buyers is relatively low because they are convinced that such healthy foods are worth high prices.
They are always willing to pay such high prices. The bargaining power of the suppliers is also low because they are always striving to release these products while they are still fresh. They would try to avoid situation where they stay with the products for long because they can go at serious loss.
The threat of substitutes in this industry is extremely low. It is not easy for the customers to find a perfect replacement for these products. This makes retail grocery industry very attractive. Whole Foods is one of the leading firms in this industry.
The macro environment has a number of factors that affect the retail grocery industry in general, and Whole Foods in specific. The Political environment would dictate ease of doing business in this country. With political stability, the industry will have the needed security to conduct business.
The economic environment may also affect players in this industry. With economic recession, the industry may experience low sales because consumers will have less disposable income. As shown in the case, the economic environment is a main factor that has been considered to affect players in the industry.
The social environment may dictate the nature of products that players in this field may stock. Technology is coming out strongly as another important factor in the external environment. Environmental concern is another important factor. The Green Movement is a clear indication that consumers expect firms to be environmentally friendly.
Finally, the legal environment is a factor that must be considered in the external environment. In the internal environment, the financial position of a firm heavily affects its operations. A firm must understand its sales and the net income. The figure below shows the sales and net income of Whole Foods.
The figure above shows the sales made by this firm and the net income from the year 2005 to 2010. From the figures above, it is clear that this firm has been experiencing a steady increase in sales over the years.
Although the net income was a little unsteady, especially in 2008 and 2009, it started rising again in 2010. The slow rate of income in 2008 and 2009 can be attributed to the 2008/2009 economic recession in the country.
Based on the above findings, the main recommendation that the management should consider taking seriously is the need to increase its sales volume by going beyond its current market.
The management should consider moving to other European markets besides United Kingdom. China and India can also make very attractive market for this firm given the huge population they have. This will help in increasing their net income.