Whole Food
Whole foods was founded in 1980 in Austin, Texas with the staff of only 19 people and by 2009 whole foods was a leading brand in natural and organic food industry with 289 stores in USA, Canada and in Great Britain. Whole Foods offers highest quality, least processed, most favorable naturally preserved and fresh foods available, and it marketed them in appealing store environment with best customer service.
As you can see in exhibit # 1, there are substitute for organic food. People can grow in their own backyards, there are so many small farmers market, also people can do hunting and fishing and the biggest substitute is non organic food which is cheaper and easily available anywhere. When the recession hit this industry, sales went down and those people probably switched to non organic food in order to be in budget. The power of buyer is medium to high because there are other sellers who offer similar product at same price and with good customer service. Threat of entrant is low because you need to have a learning curve and also the capital requirement is high in order to start up the business. The power of supplier is low because there are many suppliers and also there is no shortage of supply. Price is little bit higher than non organic food but supply is meeting the demand. Also in this industry backward integration is possible, as whole foods did by opening fish farms which is 60% of their sales. The rivalry is very high because there is a industry growth, and differentiation is not possible. Although they sell exotic products but still their major revenue is from organic meat and vegetables which any one can buy it from supplier and sell it in stores. Also, buyer switching cost is nothing; they can go to a different store next time. In short, this industry is risky but from moderate to high.
Exhibit # 2 shows that there is lot of opportunities in this industry. Since whole foods is the industry leader they have more strengths than other
As you can see in exhibit # 1, there are substitute for organic food. People can grow in their own backyards, there are so many small farmers market, also people can do hunting and fishing and the biggest substitute is non organic food which is cheaper and easily available anywhere. When the recession hit this industry, sales went down and those people probably switched to non organic food in order to be in budget. The power of buyer is medium to high because there are other sellers who offer similar product at same price and with good customer service. Threat of entrant is low because you need to have a learning curve and also the capital requirement is high in order to start up the business. The power of supplier is low because there are many suppliers and also there is no shortage of supply. Price is little bit higher than non organic food but supply is meeting the demand. Also in this industry backward integration is possible, as whole foods did by opening fish farms which is 60% of their sales. The rivalry is very high because there is a industry growth, and differentiation is not possible. Although they sell exotic products but still their major revenue is from organic meat and vegetables which any one can buy it from supplier and sell it in stores. Also, buyer switching cost is nothing; they can go to a different store next time. In short, this industry is risky but from moderate to high.
Exhibit # 2 shows that there is lot of opportunities in this industry. Since whole foods is the industry leader they have more strengths than other