The Supermarket and Grocery Store Industry’s External Environment

There are many external factors that affect a company and even an industry.  Whole Foods competes in the Supermarket and Grocery Stores Industry in the U.S. (44511).
In the Mind Map below, created using XMind, you can see the four external factors that influence this industry.  These environments are Technological, Political, Economic, and Socio-Cultural.

Political Environment


Monopoly (Photo credit: thatmushroom)

The factors I chose to discuss in this external environment include regulations to maintain a competitive playing field for all companies within the industry.  There have been many regulations set out by the government to ensure that monopolies do not exist within industries.  One of the regulations is the Sherman Antitrust Act which prohibits monopolies and monopolistic activities which would drive competitors out of the industry.

You do the scanning yourself and then pay by S...

You do the scanning yourself and then pay by Switch. Quite a novelty the first or second time you use it. I am easily pleased! (Photo credit: Wikipedia)

Technological Environment

There have been many technological advances within this industry.  One of the more recent advances is the introduction of self-checkout registers in grocery stores.  This gives people the opportunity to check themselves out at the grocery store instead of waiting in line for an employee to do it for them.  This eliminates the amount of people needed to run the register because by having four self-checkouts, you only need one person to run them all, eliminating about three employees.  This may be saving some money for the companies who have installed these checkouts.  Also, a customer may have a good experience in this location because they were able to purchase their items more quickly through the use of a self-checkout, so they may return to that store because of this experience.


Dollar (Photo credit: Images_of_Money)

Economic Environment

The recession seems to have hurt many industries due to less shopping, but the Supermarket and Grocery Store industry did rather well.  People were making their meals at home rather than spending money each day on meals.  They were doing more grocery shopping and home preparation.  The only problem is, as the recession ends and the economy is stronger, people may shop in grocery stores less and eat out in restaurants more.

Sex or gender?

Sex or gender? (Photo credit: AJC1)

Socio-Cultural Environment

Gender and income play an important role in this industry.  Since women are a majority of the grocery shoppers, then the stores have to gear their marketing, promotions, and store set-up to what women would prefer.  Also, they need to determine where these middle income ($40,000+) reside and build their stores there, since this income level does a majority of the shopping in this industry.



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Whole Foods Revenue & Net Income Compared to Competitors Kroger and Safeway

Whole Foods Market

Whole Foods Market (Photo credit: Wikipedia)

The Supermarkets and Grocery Store Industry in the United States is extremely competitive.  With industry revenues of $491.2 billion, it is important to determine the revenue contributions from the major players in the industry.  Not only is revenue contribution an important aspect when comparing financials, but so is net income.  A company may have high revenues, but if their costs are also high, they will have little profit or net income.  It is important when looking at the major players, that you compare their financial information.

This post reflects important financial information involving Whole Foods and its two competitors, Kroger and Safeway.  The financial information I chose to display in two separate graphs are Revenue and Net Income.

This chart represents revenues for Whole Foods, Kroger, and Safeway over a three year period.  As you can see in the graph, Kroger has significantly higher revenues than both Whole Foods and Safeway.  This is when it becomes important to look at the net income of the three companies.  While Kroger and Safeway both have much higher revenues than Whole Foods, it is important to determine if their profit is also much higher than Whole Foods.

In the most recent year that information is available, Net Income for the three companies is fairly similar.  All three companies hover around the $500,000 mark.  This is why it is important to look at multiple aspects of financials when comparing companies because from the revenue graph it looks like Kroger is much better off financially than Safeway and especially Whole Foods.  However, if you look at this graph, Whole Food’s net income rises over the three years while both Kroger and Safeway rise from 2009 to 2010 and then fall from 2010 to 2011.  Whole Foods has the opportunity here to generate higher net income than these two competitors if they can keep their costs low.

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