Positive/Negative Strategies

On a positive note, Whole Foods’ differentiation and brand visibility aspects are a good reference for startups, students, and struggling businesses that are looking to break out. According to Hoskinson and Kuratko (2018),Whole Foods has built a strong and infallible brand that is both respected and admired by competitors and customers alike. Even those customers who find its unfriendly pricing know and value its brand; this makes the company stand out from the competition. Stobart (2017) adds that quality is a cardinal ingredient in the firm’s differentiation and brand development; Whole Foods sells only items whose quality is not just unquestionable but unrivaled. It identifies it as the go-to outlet when it comes to quality and product preference. Finally, Whole Foods’ organizational culture, which is inspired by value-addition, employee motivation, and objective management, enables it to outperform most retailers while remaining stable and progressive.

Negatively, Whole Foods’ overreliance on the US market is a poor strategic attribute that needs to be rectified urgently. As at 2015, for instance, the domestic market generates 97% of the firm’s revenues; this is a dangerous position that exposes the company to risks such as declines in revenue and profitability as soon as the US market experiences volatility or shrinks(Hoverstadt & Loh, 2017). To be clear, this is what happened in 2008-2009 when the US economy took a huge hit; the company was even compelled to amend its strategy to become more price-conscious. In summary, Whole Foods needs to add more locations, besides Canada and the United Kingdom, to complement its American presence and diversify risk.

Insightful Strategic Elements

First, Whole Foods has successfully combined strategic adaptability with a strategic focus, a feat that many companies around the world are unable to accomplish. Over the years, the company has chopped and changed its strategic approach without deviating from its strategic orientation, meaning that while it has revised its techniques, its objectives have remained constant(Hoverstadt & Loh, 2017). For example, while it has historically charged more for its items, desperate times occasioned by the collapse of the American economy in 2008 saw the company stock more value-priced inventory and turn to a pricing strategy that convinced customers that its items were indeed cost-effective compared to rival offerings (Gamble, Peteraf, Strickland, & Thompson, 2015). Ultimately, the business became more competitive without compromising its strategic goals. It must be noted thatthese moves were unprecedented as Whole Foods traditionally competes on value rather than pricing; also, companies as large as Whole Foods typically lack this level of strategic fluidity as they are hampered by bureaucracy and rigidity, among other size-related flaws.

Second, Whole Foods understands and executes to great effect on the concept of experience, which is a central component of any strategic blueprint in the modern business environment. The company’s stores are organized and designed to provide customers with a superior experience that overrides any reservations that they may have about the price (Gamble et al., 2015). Strategically, Whole Foods is aware that since it spends more than competitors to procure its inventory, it cannot participate in price wars; therefore, it delivers incredible shopping experiences to attract and retain customers. Except for dire economic situations, this strategy has been largely effective throughout the firm’s existence and is a testament to its tactical acumen.

Competition

Presently, Whole Foods’ two biggest rivals in the natural food and organic facet of the food retailing sectorare Trader Joe’s and Fresh Market.According to Gamble et al. (2015), others compriseof a number of local supermarkets, local autonomous vendors of health and natural foods, national megastores such as Target and Wal-Mart, small chains, national and regional supermarkets. These stores have started selling a larger and more diverse inventory of natural and organic goods, warehouse clubs such as Sam’s Club and Costco, boutique grocery retailers, small-scale sellers of health food, local producers’ markets,and vendors of nutritional supplements and vitamins. Whole Foods’ strategy does not revolve around the company’s competition, but it has undoubtedly been affected by its rivals as it has previously made strategic changes to achieve competitive advantages in the market.

As an example, the 2008-2009 global economic downturn forced the company to alter its strategy to better adapt to the new economic conditions and reassure customers who were worried that they might have to pay more for groceries at Whole Foods (Gamble et al., 2015). The business adopted an aggressive drive aimed at increasing the volume of value-priced stock in its outlets, bettering customers’ perceptions concerning the value of making purchases at Whole Foods, and clearly showing customers how its prices compared to competitors’. One of the key features of this strategy shift was an intensification of pricing research efforts to track the prices of its supermarket competitors; this allowed the company to slash the prices of products it deemed key to improving clients’ value perspectivesvis-à-vis its rivals (Gamble et al., 2015). Whole Foods has also used economic value added (EVA) management and employee empowerment to stimulate better – more efficient and effective – store management than its competitors.

Weaknesses

According to Bossidy and Charan (2002), one of Whole Foods’ biggest weaknesses is pricing, in the sense that many customers think they cannot afford to shop at its outlets. As much as it has worked hard to change this perception, including by revising its pricing strategy to attract low and medium-income earners, Whole Foods’ average prices for similar offerings are still higher than those sold by competitors. In trying to illustrate the magnitude of the problem, it even has a nickname – Whole Paycheck – that stemmed from popular opinion that the ordinary American shopper is priced out of Whole Foods items (Gamble et al., 2015). This unpleasant label is a play on the company’s name and the notion that its exorbitant prices can drain a shopper’s entire salary. Consequently, customers who are price-sensitive are unlikely to shop at Whole Foods until they are convinced that its pricing accommodates their financial capabilities.

Recommendation for the Future

Considering Whole Foods’ core strength – quality – and primary weakness – overdependence on the American market – the best course of action is to grow its international footprint as this represents its most significant opportunity to increase profitability and acquire more customers. It can also offset the threat posed by low-cost retailers by strategically adjusting its pricing blueprint to avoid buying a cheap image that is not in line with its brand identity.

References

Bossidy, L., & Charan, R. (2002). Execution: The discipline of getting things done. New York:

Crown Business.

Gamble, J., Peteraf, M., Strickland A.J., & Thompson, A.A. (2015). Crafting and executing

strategy: The quest for competitive advantage (20th ed.). New York: McGraw-Hill.

Hoskinson, S., & Kuratko, D.F. (2018). The challenges of corporate entrepreneurship in the

disruptive age. Bingley, UK: Emerald Group Publishing.

Hoverstadt, P., & Loh, L. (2017). Patterns of strategy. London: Taylor & Francis.

Stobart, P. (2017). Brand power. Berlin: Springer.

 
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