Whole Foods Pestle

PESTLE Analysis

Political Factors

“A Healthier You” Government Strategy

Reporting of organic prices.

Safety Inspections Services.

Evaluation: POSITIVE impact

Economic Factors

GDP: в†' 3.9% in the 3rd qtr

Real Personal Consumption expenditures в†'3.0% in 3rd qtr

Disposable Personal Income в†' 6.1 % in the 3rd qtr

US Business Cycle: At “slump”/ Wages/Labour

European Markets: Weak dollar against Euro, Surging Energy Prices, Increasing Interest Rates

Evaluation: MODERATE impact

PESTLE Analysis

Socio-cultural Factors

Population Demographics: aging and longer life expectancies.

Increasingly more health conscientiousness population.

Social pressures regarding the environment and animal welfare.

Trend towards eating out rather than cooking.

Greater knowledge of links between health issues and food.

Evaluation: POSITIVE impact

Technological Factors

Emerging new internet capabilities: On line shopping service.

Improved telecommunications facilities - NB for distribution & retailing of goods.

Modern and advanced technology for processing of goods.

Evaluation: WEAK

PESTLE Analysis

Legal Factors

Employment Law

Competition Law

Health & Safety Law

Environmental Law

Organic Food Production Act 1990 & US Department of Agriculture established labeling standards in 2002.

Evaluation: MODERATE

Environmental Factors

< 1% of US farmland certified organic in 2004

Environmental concerns.

Seas over-fished using damaging fishing practices.

Recycling and Energy Consumption

Evaluation: POSITIVE

PESTLE Analysis

Conclusion to PESTLE Analysis

Overall the macro environment is positive for WFM.

Economic indicators must be monitored closely both in the US and internationally. Legality of all its operations must be maintained.

Action must be taken with respect to its usage of modern technology.

The company advocates and educates staff and the public regarding environmental issues and concerns.

Porters 5 Forces Analysis

Competitive Rivalry

Trader Joes, Sunflower Markets and Fresh Market.

Since 2006 WFM merged with its main competitive rival: Wild Oats Markets.

Initial strategy of large stores was competitive, now competition.

Sunflower Market stores opening in locations where there is relatively few WFM and Wild Oat Stores.

Evaluation: STRONG

Potential New Entrants

Likely, but WFM well established and market is well saturated and very competitive.

Evaluation: WEAK

Porters 5 Forces Analysis

Substitutes

Conventional supermarkets with natural and organic food lines e.g. Wal-Mart, Kroger.

Conventional supermarkets now selling more Organics than the 14,500 independent natural food stores.

Since 2002 mainstream supermarkets have expanded their selections

Since 2005 organic products sold in 75% of the conventional stores

Fresh Fare targeting customers who shop at both conventional supermarkets and Whole Foods

Conventional stores much greater in number and sales revenue.

New supermarket chains have stores averaging 55,000 square feet

Major food processors e.g. Kraft are purchasing and utilizing organic foods in the manufacture of their own ranges.

Restaurants and Deli’s selling natural and organic foods.

Evaluation: FIERCE

Porters 5 Forces Analysis

Suppliers

Sellers/distributors of natural/organic foods - locally, regionally, and national

Competition for products:- competitors can purchase large volumes and pay in cash e.g. Trader Joe’s.

< 1% of US farmland certified organic in 2004, USDA goal 5% by 2013

Retailer competition for limited resources.

Leading food processors investing in organic foods = greater supply options e.g. Campbell’s organic tomato juice.

Evaluation: STRONG

Buyers

Consumers of natural and organic foods and products.

Modern consumer targeted are wealthy and well educated.

Consumers selective but not bound by