threat of new entrants in supermarket and grocery industry

However, the sales of the firm will reduce as more firms join the industry. This means that Whole Foods Market can not run out of business due the competition that is attributed to entry of new firms in the industry.

Thus the threat of new entrants in the market is low. The switching cost is also low since the investors can easily shift to a different line of business such as selling non-organic foods at low costs. The capital requirement for joining the industry is low due to the fact that investors can establish profitable but small organic food companies. The firm focuses on high level of product differentiation and the same applies to other firms in the market. The company enjoys economies of scale due to its large number of stores and distribution centers. Learn More Porter’s Five Forces Model Threat of New Entrants Second, the company can obtain cheap supplies as organic farming becomes more popular due to the concerns over environmental degradation. First, the company can increase its revenue by taking advantage of the high demand for organic foods. These factors present growth opportunities to Whole Foods Market in two ways. Finally, the concerns over environmental degradation promote the production of organic foods. Second, the clients are well educated and have the purchasing power that encourages spending on organic foods. First, there is increased awareness among the clients on the role of organic foods in promoting long-term health. The increase is attributed to three factors which are as follows. The industry recorded $ 76 billion in sales in the last financial year which is 5 % higher as compared to the pervious year (Whole Foods Market, 2011). The competition is a threat to the company’s growth plan. This has prompted Whole Foods Market to focus on customer oriented strategies through emphasis on high level of quality standards (Whole Foods Market, 2011).

Thus there are high levels of product differentiation and innovation. The organic foods industry in North America and UK is undergoing a revolutionary change as firms compete for clients and quality products. Retailing organic foods is associated with two main trends namely, high competition and steady growth. This paper will analyze the competitive environment of Whole Foods Market using the porter’s five forces model and the SWOT analysis. The company’s mission is “to promote the vitality and well-being of all individuals by supplying the highest quality and most wholesome foods available” (Whole Foods Market, 2011). Whole Food Market has its headquarters in Austin, Texas and boasts of 300 stores and 9 distribution centers that are located in North America, Canada and the UK. Other products include seafood, meat, poultry, educational books and gift baskets (Whole Foods Market, 2011).

Threat of new entrants in supermarket and grocery industry