Why Is It So Hard to Compete with Whole Foods?

For years, Whole Foods has been seen as the model for the next wave of food retailing, a chain that focuses on consumers interested in healthy eating.
Whole Foods describes itself as “America’s Healthiest Grocery Store.” “Who are we? Well, we seek out the finest natural and organic foods available, maintain the strictest quality standards in the industry, and have an unshakeable commitment to sustainable agriculture. Add to that the excitement and fun we bring to shopping for groceries, and you start to get a sense of what we’re all about. Oh yeah, we’re a mission-driven company too.”
As a result, many firms have tried to emulate Whole Foods, often with less than stellar performance. Why is it so hard to follow Whole Foods’ lead?
According to Annie Gasparro, writing for the Wall Street Journal: 
“It’s harder to be Whole Foods Market Inc.  than many companies thought. A year ago, interest in the specialty-grocery business was booming. Fairway Group Holdings Corp., a chain of about a dozen stores in New York and neighboring states, raised $177 million in an initial public offering last April, and its stock jumped 33% on its first day of trading. When Sprouts Farmers Market Inc. followed with an IPO in August, it fetched at least $333 million, and its shares surged 123% in their market debut. Today, that enthusiasm has given way to grim reality, as mounting competition and mistakes like overexpansion buffet their operations.”
“In March, Fresh Market Inc., based in Greensboro, N.C., reported a 90% drop in fourth-quarter net income, thanks partly to a write-down of real-estate and other assets, and said it would close four of its 155 stores. In September, British Grocer Tesco PLC put its U.S.-based Fresh & Easy chain into bankruptcy protection.”
Click the image to read more about the problems faced by fresh grocers.

 

 

This entry was posted in Part 1: Overview/Planning, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 4: Store Location Planning, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer and tagged , , , , , , . Bookmark the permalink.

One Response to Why Is It So Hard to Compete with Whole Foods?

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