No matter what you do, it's impossible to escape popular trends; organic products are everywhere and are waging war against what was once known as "common food." From your favorite restaurant to the neighborhood supermarket, these additive-free products are inescapable. In fact, according to the Organic Trade Association, organic food sales increased 11.5% in 2013, to $35.1 billion. So why is Whole Foods Market (WFM), one of the largest U.S. retailers of natural and organic foods, yielding a -32.32% YTD return?

So far, since May 2014, Whole Foods has seen its stock plummet from a high of $65 to just below $40, signifying a $9.38 billion loss in market cap. This is especially surprising given the company’s impressive growth over the past five years. During this period, the stock is up nearly 170%, even after realizing Whole Foods' dismal 2014 performance. Since 2009, the organic supermarket has grown succinctly with the rise of natural/organic foods in the U.S. When considering this fact, in addition to the continued growth of organic food markets, this year’s struggles are even more puzzling. If the company's problems aren’t related to lower demand, what exactly is eating away at Whole Foods' share price?

The answer, quite simply, is competition. As the demand for natural and organic foods continues to grow, traditional grocery store chains, like Kroger (KR) and Safeway (SWY), have adapted to the trend (introducing organic products of their own). Even Wal-Mart (WMT) began offering its own line of organic foods. This newly-introduced competition has lead to a series of problems for Whole Foods. Firstly, consumers who shopped for natural and organic products, only originally carried by Whole Foods, can now get similar goods at more popular supermarket chains (Kroger or Safeway). Although some people frequent Whole Foods for all of their grocery shopping needs, the majority of consumers are unable to do so because of the company's high food prices (i.e. the next part of its competition problem).

Currently, Whole Foods has exhausted its upscale urban neighborhood development plan; otherwise known as its prime demographic focus. As a result, the company is now forced to open stores in lower income areas, where consumers are increasingly hesitant to spend excess cash for "lavish" goods. This issue is further compounded by Wal-Mart’s Wild Oats organic product line, which undercuts the average price of organic products by 25%. Given this cheaper alternative, consumers in lower income areas have no reason to shop at Whole Foods, while wealthy individuals do so only out of preference. So... how can Whole Foods become a competitive business?

First and foremost, Whole Foods must sacrifice its high margins and lower its prices. Although high profit margins were a leading factor in the company’s ascension, markets now demand lower prices. Whole Foods must become a viable option for all shoppers, regardless of income, especially if it wants to compete with Kroger, Safeway, and Wal-Mart. Secondly, the grocer must continue its nationwide effort to open new stores, mainly to counteract lower food prices. Presently, there are only 388 U.S. Whole Foods locations, which is minute compared to Kroger's 10,000 domestic stores. Fortunately, Whole Foods' managers appear to comprehend this alarming statistic and plan to open 500 stores by 2017, and 1,200 in the long-term. In essence, with lower prices and more locations, Whole Foods will be able to capitalize from its diverse product offerings. By providing more grocery essentials (differentiation), opening new stores, and revising price points, Whole Foods will once again give customers a reason to shop at its outlets.

Clearly, Whole Foods must make numerous strategic changes in order to revive its stock price to reflect the price level that made it a 2013 S&P 500 darling. Luckily, from a fundamental standpoint, Whole Foods is rock solid. For each of the past five years, Whole Foods has displayed phenomenal growth and experienced above-industry-average profit margins. However, investors should expect future profit margins to decrease, as the company lowers prices to remain competitive (the fact that prices were initially high bodes well for the company).

Additionally, the fact that Whole Foods issues a dividend, albeit low, will allow the company to more easily transition, and should keep stakeholders temporarily content. As the organic grocer begins to make significant operational changes, costs will likely increase, which could drop its short-term stock price. Thus, a dividend provides an incentive for investors to hold Whole Foods stock. If traders decided to dump WFM stock, the selloff would guarantee a lower share price.

Ultimately, investors who are considering a position in Whole Foods Market should wait for public displays of the necessary aforementioned changes. If management successfully signals a corporate restructuring plan, Whole Foods stock will be a solid long-term investment play (as the company should return to its prior $65 glory).