Whole Foods in Canada Harvard Case Solution & Analysis

Whole Foods in Canada Case Study Solution

Economic factors

Over time, the rate of inflation increases in Canada which have significant impact on interest rates with the direct implication for customers. Perhaps, the pristine landscape and high quality of life in Canada are considered the greatest assets of the country in attracting the world’s most talented and brightest workers to relocate to Canada.

The organization targets people earning handsome amount for the sale of its products to the people who can afford to purchase organic and natural products. In 2018, the consumers in Canada have made less than few trips to the grocery store i.e. -2 percent on average but they have spent more +3 percent. The expenditure of average fast-moving consumer goods (FMCG) reached 8650 dollars. The regional purchasing behavior of Canadian consumers can be seen in Appendix A.

As the spending habits of consumers vary by province, where they shop also demonstrates unique intricacies. The Canadian market is dominated by conventional retailers & accounted 68.6 percent of the fast-moving consumer goods (FMCG) dollars. Though, as many discount stores tend to popup in different regional areas, such format of retail is growing rapidly and giving run to conventional retailer for their money (THE BUYING POWER OF CANADIAN CONSUMERS, 2019).

Demographics& Psycho graphic forces

The composition and nature of the consumer marketplace is changing with the passage of time. Today, the retailers are dealing with customers who are more technology savvy and educated. One of the greatest challenge faced by the retailers is how to retain the current customers who are getting older as well as attracting new customers. A combination of technology and education has produced a more informed customer, a customer who assess and evaluates more than one option before making buying decision. In Canada, customers prefer to research about product online and access information that is delivered from more critical and independent sources (unplanned information on blogs or social media), by marketing organization (planned information). The customers also rely on word-of-mouth information and social network.

Additionally, there are some customers who prefer to make purchases from similar brand, at the same location and at the same retail chain. However, there are other customers who prefer to shop with new retailers and try out new brands in unexpected places. By having a comprehensive and thorough understanding of lifestyle profile of Canadian customers, a retailer could better serve them through adjustment in their retail mix. The retailers have the opportunity to explore the likelihood of serving the underserved and un served customers through offering products and services to them which are not widely available from the traditional channel of retail. A Canadian customers are now interested in having a unique shopping experience that are less monotonous and routine. In Canada, the customers have issues while making wise spending decision in the market which is dominated by the service. The asymmetric information is one of the examples, in which the seller has completed information related to the good but the consumer information is not complete.

Competitive Pressures

The structure of the retail market in Canada has considerably changed in recent period of time. A large number of non-Canadian based retailers primarily from United States significantly recognized their existence in Canada, taking new modes and techniques with them to smoothly run the business operations such as electronic data interchange with Suppliers, using big box retail format and everyday low prices. The customers in Canada have been benefited from the added convenience &reduced prices related with changed structure of retail market, but the retail environment in Canada have significantly become more concentrated, homogenous, losing some of the diversity and distinctiveness that the consumer in Canada have enjoyed in past. At grocery stores, many consumers seeks cost savings, trading down to private label brands and stocking up on promotional items. In response to the increasing consumer demand for the reasonable and affordable products, the private label product line are expanded by various brands in Canada which appeal to the price sensitive customers. In Canada, the competition among the organizations competing in the food and beverage industry is high. To increase the market share; the competitors can offer organic foods to their potential customers. The introduction of organic food in the market has been trending, which attracts a number of organizations for the better expansion of their business. Thus, Whole Food is acquiring different stores to slow down the level of competition.

Food retaining is one of the intensely competitive and large industries in Canada. The competition is not just dependent to national, legal, regional & international specialty and conventional supermarkets, but also on warehouse membership clubs, natural food stores, farmers markets and restaurants, smaller specialty stores, online retailers, warehouse membership clubs, each of which compete on the basis of the store experience and ambiance, customer service, convenience product quality & selection, price, or a combination of these elements.Whole Food has total of 12 stores in Canada. The company is threatened by the fierce external competition mainly from discount stores and supercenters.

Comparing financial performance of Whole Foods with competitors

The comparison of the financial position of Sprout Farmers, Kroger Co. and Whole Foods, it can be seen that the Whole Foods Company did not perform well between 2016 and 2018. The growth rate of the sales reduced from 9% to 3% and gross profit declined from 8% to 2%. While, the sales and gross profit of Sprout Farmers is declined from 15% to 12% and the sales of Kroger Co. reduced from 6% to -1% and gross profit increased positively from -24 to 0%. Ultimately, the financial position of Sprout Farmers is comparatively better than Whole Foods and Kroger Co. The figures can be seen in appendix D.

Competition

The industry of food retailing is one of the most competitive industry worldwide. The competition of WFM is conventional, international, local, regional, line of superstores, clubs of warehouse membership, and stores of natural foodstuff, restaurants, online retailing and companies providing home delivery. The competition of the company is based on the selection of product, quality of product, services provided to customers and their prices or all in one combination. Whole Foods has more than 300 stores in UK and North America. It sales a large number of organic deli and bakery food items which are certified and it is not sold by other grocers’ competitive grocery market................

 

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