SWOT analysis (continued)
In this part, we’ll continue our SWOT (strengths, weakness, opportunities, and threats) analysis of Whole Foods Market (WFM) from the previous part, shifting our focus to at Whole Foods’ weaknesses. Major weaknesses of Whole Foods that could prevent or reduce the firm’s growth are as follows:
Whole paycheck image
Whole Foods Market has historically been perceived as pricier than competitors and has earned the “Whole Paycheck” status because of its high prices. But this positioning has historically served the company well. However, in fiscal 2015, the speciality retailer began to struggle to maintain its market share as large grocers like Kroger Company (KR) and Wal-Mart Stores (WMT) started offering similar products for a fraction of Whole Foods’ costs.
Declining same-store sales
With the entry of large grocery chains like Kroger (KR) and Costco Wholesale Corporation (COST) into the Whole Foods’ former niche business, the company has continuously seen a fall in its same-store sales. Whole Foods’ same-store sales grew by an average of around 8% during the last 15 years. However, in its last reported quarter, fiscal 4Q15, this metric saw a decline of -0.2%.
Little activity in the online grocery space
The online grocery segment is growing by leaps and bounds and provides a huge opportunity for grocery players to expand their market share and sales. According to the Brick Meets Click data, online grocery sales as a percentage of total grocery sales is expected to go up from 4% in 2014 to 11%–17% in 2023.
Kroger (KR), the largest grocery chain of US, recently acquired Harris Teeter and Vistacost.com in an effort to increase its online presence. Whole Foods, however, has yet to make a significant mark in the online grocery segment.
To read an overview of Whole Foods’ competitor Kroger, see the Market Realist series The Kroger Company: from Corner Store to Supermarket Giant