Friday, 8 May 2015

Whole Foods' Other Problem

Whole Foods Market, Inc. is a fast growing natural and organic foods retailer, riding the healthy food craze, which has allowed the company to charge premium prices for its products, compared to conventional products. The trouble is this: Whole Foods Market doesn’t own the organic farms that produce the products it sells at its stores. It buys those products from others. So do scores of other retailers, who have been expanding their presence in the market for natural and organic food, and competing with Whole Foods Market on both fronts -- the resource market, where the company buys organic food; and the commodity market, where it sells it. That’s just one of Whole Foods’s problems. The other problem -- more severe in our opinion -- is that the company is running out of affluent neighborhoods to sell its produce in. That’s market saturation, which slows down sales growth, intensifies pricing pressures, and compresses profit margins. Whole Foods Key Metrics

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