Whole Foods: New Strategies to Drive Sales Will Lead to UpsideWFM) is a leading retailer of organic and natural foods. The company offers floral, meat, seafood, bakery, coffee, tea, wine, nutritional supplements, vitamins, and a collection of other products.
Whole Foods started 11 new stores in 2014, and is planning to launch another 8 stores this financial year. Its gross profit decreased last quarter as its cost of goods sold continued to increase as it is planning to launch new value stores with low prices to maintain its position.
Going forward, Whole Foods is planning to open a uniquely branded store concept named “364 Whole Chain Store” next year.
Due to an increase in the obesity rate from 15% in 1974 to 35% in 2011, and an increase in calories to 25% since 1970, consumers have become more health conscious. As a result, they have started preferring organic and natural food products.
Whole Foods is launching new products to meet growing demand for organic food
Whole Foods launched Creminello Fine Meats artisan deli hams and Pole and Line Yellowfin Tuna products this quarter. The Hams do not contain antibiotics and are 5-step animal welfare rated. In addition, Whole Foods also added four new flavours to the Ham line, which includes Rosemary Cotto, Truffle Cotto, Brown Sugar Cotto And French Cotto. The Tuna is gluten free.
In terms of opportunities, Whole Foods can maintain its position by cutting prices and stepping up its advertising efforts. It has also launched its first national TV ad campaign emphasizing food quality and public health, which is generating a lot of excitement among customers.
It doesn’t have any international exposure at present, but has made an attempt to leverage its upscale brand in continental Europe. This push into Europe will help Whole Foods improve its addressable market. According to Interpack:
“In 2010, Europe had the largest share in the global organic food and beverages market with revenue of $27.8 billion. Germany is the biggest consumer in Europe with a share of 32 percent of organic food and beverages in the region.”
Going forward, Europe is expected to sustain its growth momentum in organic foods, so Whole Foods will find a lot of opportunity in this market.
How Whole Foods will tackle growing competition?
Wal-Mart aims to drive down the prices of organic food by bringing out 100 new products in partnership with Wild Oats. Some of these products will cost about 25% less than those sold by its competitors.
Whole Foods, to hold on to its customer base, has started focusing on lowering prices, especially in fruits and vegetables. While focusing on this strategy, Whole Foods has not pulled back its higher-margin items.
Whole Foods, in order to tackle the growing competition, has spent $20 million on its advertising campaign. The ads go to great length to crown the company as “America’s Healthiest Grocery store” in hopes of retaining and expanding its customer base.
Looking ahead, Whole Foods will also bring a chain for millennials. This chain will be smaller and more focused on value, innovative technology, and a curated selection than the traditional Whole Foods Market. The chain will also be cheaper to open and build.
Thus, Whole Foods is adopting a number of steps in order to improve its position in the market. This makes the stock a good bet for the long run.
Published on Sep 18, 2015By Ayush Singh