Company Background
Wegman Food Market is a chain of grocery stores primarily operating in the northeastern and mid-Atlantic region. The food business was founded in 1916 by brothers John Wegman and Walter and currently operates 109 stores making annual sales of $14 billion (Wegmans, 2022). Business performance, opportunities, and challenges to growth are relative to the internal and external environments. Wegman’s success is attributable to a favorable external environment and effective internal operations. While a PESTLE analysis will describe the political, economic, sociological, technological, legal, and environmental factors that influence the external environment, the VRIO analysis evaluates the value, rarity, imitability, and internal organizational factors that give the food giant a competitive edge.
Political and Economic Factors in Wegman’s Pestle Analysis
Political Factors
In Wegman’s business context, political factors related to leadership and tax regulations created and enforced by national governments could constrain or expand the organization’s activities. Political stability is key to Wegman’s expansion of its physical stores and political stability. For instance, tax regulations by local and state governance implicate the company’s ability to expand and profitability. The tax regulations and policies in America and Canada are favorable to the expansion of Wegman’s activities. Moreover, changes in the political party that could be pro or anti-business influenced Wegman’s performance. Therefore, political stability is a fundamental component for Wegman and all stakeholders.
Economic Factors
The overall economic performance in Wegman’s regions of operation directly influences the company’s earnings. For example, the recent decision by Congress to increase the minimum wage may positively affect Wegman’s performance considering consumers’ expenditure will heighten as a result. However, a report by Statica (2022) of the annual change in the consumer price index indicates that commodity prices in 2022 were 7.1% higher than in 2021. Wegman’s pricing correspondingly increased with the increase in the consumer price index. The changes in pricing implicate the disposable income and will certainly decrease client demand leading to fewer sales for Wegman.
Social and Technological Factors Affecting Wegman
Social Factors
Whereas social factors encompass cultural norms and expectations, health consciousness, population age, and growth elements that affect Wegman’s marketing, technological factors are the production, information, and communication resources affecting the organization’s technical capability. Regarding social factors, as consumers become more health-conscious, Wegman can leverage the opportunity to offer organic and healthy food assortment to enhance consumers’ perception of the brand (Verdon, 2022). Additionally, consumers increasingly embrace E-commerce as many people enjoy shopping online.
Technological Factors
Evaluating the technological factors, the widespread use of mobile phones and computers has improved Wegman’s prospects by increasing market share and sales. E-commerce platforms allow Wegman to engage with consumers, which improves the consumer experience.
Legal and Environmental Factors Affecting Wegman
For successful and sustainable operations, companies ought to abide by regulatory measures implemented and participate in maintaining healthy climatic and topographical conditions. First, various legal factors must be considered, including anti-discrimination legislation, employment restrictions, food and safety standards, data protection laws, and consumer protection laws for e-commerce enterprises. Notably, Wegman observes the requirements set by the Food and Drug Administration (FDA) and the Food Safety and Inspection Service (FSIS).
Environmental Factors
Environmental policies significantly impact human livelihoods, health, and well-being. Wegman’s sustainability plan includes achieving 95% zero waste in its organic farms by eliminating non-recyclable products and using electric delivery trucks (Wegmans, 2022). However, since retailers are responsible for 25% of global emissions, Wegman should develop environmental policies to reduce carbon footprints.
Value in Wegman’s Vrio Analysis
Value in VRIO analysis highlights whether or not the products produced by Wegman Grocery have the potential to exploit an opportunity or mitigate a threat in the marketplace. One value advantage Wegman enjoys its ability to provide organic products without artificial additives. To further improve its brand and the items they sell, Wegman cooperates with various farms with similar values and goals. Moreover, the grocery retail giant prides itself on spacious stores ranging from 75,000 to 140,000 square feet (Wegmans, 2022). Wegman has put in place Wellness Keys in the products describing the health benefits of different foods and maintains competitive pricing to ensure consumer satisfaction.
Rarity and Imitability Factors Affecting Wegman
Rarity describes the resources that are uncommon and not possessed by many organizations hence rare. Notably, Wegman has limited unique resources since it cooperates with other farms that share similar values. However, the size of the company’s buildings and the diverse choice of products might make them stand out among their competition, as Wegman Food Market has stated that these features are greater than those of their competitors. Considering Wegman products are not rare, it has a high imitability as other firms can produce similar products and services. Production of organic goods and products for people with dietary limitations is not unique to other stores. For example, Whole Foods is known as one of the most influential figures in organic foods, and they cooperate with farms to provide good products (Deering, 2022). Due to cooperation with other firms with similar values and the production of common goods, Wegman has a low rarity and high imitability.
Wegmans’ Organization Analysis
Organization in VRIO analysis is Wegman’s ability to capitalize on its management systems, processes, structures, and culture. First, Wegman benefits from effective human resources nurtured through employees’ scholarships and a positive culture. Another aspect of Wegman’s organization is customer feedback regarding services rendered and the overall experience as a means to improve operations in their stores. Efficient organization in Wegman has established customer loyalty and better ratings for the grocery chain.
Opportunities for Wegman’s Growth
While it may be factual that Wegman’s has a loyal consumer-base in the region it operates, there is still much room for expansion to increase the size of its consumer markets. Wegman’s food market is current only present in the Northeastern and Mid-Atlantic areas (Wegmans, n.d.-a). In this situation, there is an opportunity for growth as the company is to make expansions to other regions, such as Mid-Atlantic. Fortunately, the brand image of this organization is positive, meaning that it will not be as difficult to penetrate into new regions successfully. Furthermore, Wegman’s Food Market has proved itself as a company that offers a wide variety of consumer products and it is ranked relatively better than supermarkets and other food suppliers within its category. However, this company has not yet capitalized on the emerging technology of e-commerce. Currently consumers have become accustomed to online shopping and so Wegman’s Food Market should invent ways to ensure that customers can make orders from the comfort of their homes. On that note, Wegman’s has an opportunity to improve its supply chain management to ensure that food products are delivered to consumers as swiftly as possible, especially considering the perishable nature of groceries.
Challenges to Wegman’s Growth
Great competition exists, as the already established and highly successful companies like Walmart and Whole Foods have dominated the industry for several years. Also, while e-commerce is an opportunity for Wegman’s Food Market, it is also a challenge for the company because of a change in perception among consumers in recent years. After the COVID-19 pandemic, people altered their focus towards e-commerce as it proved to be a reliable way to shop without risking contacting the illness. Although the pandemic has abated, the trend of online shopping is still present among the masses.
Also, Wegman’s Food Market is a private company and a prevalent challenge for such businesses is the relative scarcity of financial resources to increase its scope of operation.
Plan to Raise Capital
Wegman’s Food Market is a private company meaning it cannot source for capital in a similar manner with publicly-owned companies, yet most of its competitors are publicly-owned. Therefore, there is need for this food supplier to raise more capital so that it can expand its region of operations beyond where it is at the moment. There are various way for private companies to raise capital but there are limited options in the case of Wegman’s Food Market because of the high capital requirements in context. Therefore, the first step is to understand precisely where this company want to expand to and calculate all the necessary financial responsibilities involved. There should be a detailed plan of action that highlights all the requisite information that investors may need to know before they make their final decision. The next part of the plan is to look for affluent businesspeople that may be interested in investing in Wegman’s Food Market expansion plan. It is imperative to have a persuasive pitch presentation about the expansion plan to get the investors in context onboard. The final part of the plan involves scheduling meetings, making offers to each of the investors listed, indulge in negotiations and to closing deals to raise the desired capital.
References
Deering, S. (2022). These 10 Grocery Stores Sell the Most Organic Produce—and Yes, Costco Makes the List!Parade: Entertainment, Recipes, Health, Life, Holidays. Web.
Hastwell, C. (2020). How Wegmans Creates a Culture of Safety for Its Frontline Workers. Great Place to Work®. Web.
Verdon, J. (2022). The Pandemic Changed How We Shop For Groceries, Adobe Report Shows. Forbes. Web.
Wegmans. (2022). Company Overview. Web.