The organic grocery business is expected to explode as Americans become increasingly focused on healthy diets and fresh ingredients.

And that’s both good and bad news for Whole Foods Market, which has long reigned as the nation’s largest organic grocery chain. While there’s increasing demand for the free-range meat, sustainable seafood and locally-grown fruits and vegetables the Austin, Tex.-based grocer is peddling, Whole Foods is also facing more competition than ever from the likes of Sprouts and Fresh Market and major retailers such as Kroger and Wal-Mart that are taking note of the category’s big growth opportunities.

“They were for the longest time the only game in town for a natural, organic experience, and that’s not really the case anymore,” said Jim Hertel, managing partner at food retail consultancy Willard Bishop.

So far, the company has struggled to fend off these newcomers. Sales growth has slowed, and investors have taken it out on the company’s stock, dragging it down about 30 percent this year.

Whole Foods reported Wednesday that sales grew 3.1 percent at stores open at least a year during its most recent quarter, right in line with analysts’ expectations. For many retailers, that kind of growth would be satisfying to investors.  But for Whole Foods, it marks a slowdown from the impressive 7.5 percent uptick in same-store sales the company saw last year and which investors have come to expect.

Whole Foods is fighting back with an aggressive expansion plan.  It opened 13 stores in the last quarter alone, including in small cities such as Palm Desert, Calif., bringing its store count in the United States to 401.  It has 116 more stores in its development pipeline and believes there is long-term demand for about 1,200 stores nationwide.

The company launched its first national advertising campaign in October, a $15 million to $20 million effort to build brand recognition in new markets where the company can’t count on word-of-mouth buzz.  The campaign includes commercials during TV programs such as “Modern Family” and “Scandal” and print ads in the New York Times and other major news outlets.

Whole Foods also plans to renovate about 70 percent of its older stores over the next year, which it believes will boost sales in those locations. For example, the company told investors on Wednesday that a recently renovated Indianapolis store swung from negative comparable sales to double-digit sales growth after a refresh. But many of the older Whole Foods stores face challenges that a decor refresh cannot fix:  Some of the smaller stores can’t handle more shoppers. Many also have very limited parking capacity, which can be a turnoff to prospective customers.

As Whole Foods fans out across the country, it also continues to grapple with issues around its pricing.  It has earned a reputation for gobbling up a shopper’s “Whole Paycheck,” but its efforts to get more competitive on price have so far been mixed.  Earlier this year, chief operating officer A.C. Gallo said the company saw “a huge lift” in pounds of salmon sold when the company experimented with lower prices on seafood.  And yet in similar experiments with packaged food items, the company has not seen as much success, Gallo said at the time.

The company is also testing other ways to appeal to price-conscious customers, including matching competitors’ prices on key items and establishing a rewards program for regular shoppers. It has recently expanded its rewards program from one store to 11 and said it plans to roll it out to the majority of its stores by next holiday season.

In a conference call with investors Wednesday, company officials said they were encouraged by the results of its efforts to compete on price.

Grocery retailers, including traditional supermarkets, are struggling to accommodate shoppers evolving habits, including making more small trips to pick up items and spending some of their grocery budget at convenience stores, dollar stores or even drug stores.

Hertel said this pattern might spell trouble for large stores such as Whole Foods and supermarkets like Giant. Grocery retailing is a business of razor-thin profit margins, and these big stores typically make their money on center-store foods, or the packaged goods in the middle aisles, rather than on so-called perimeter foods, such as fresh produce and meat.

“What drew people to Whole Foods predominantly was the quality of the perimeter departments,” Hertel said. “Now that that is no longer distinctive, they could start to lose significant parts of the shopping trip,” including those key center-store sales.