January 7, 2016
Photo: RetailWire
Whole Foods uses tech to streamline operations
Pricing and public perception are areas in which Whole Foods has trouble winning. A slew of bad press and the legal matter of a $500,000 settlement in New York City over allegations of overcharging has led to concerns that the biggest name in natural may be running out of gas. But the company hopes to turn things around. One way is by streamlining its operations with new technology.
According to Marketplace, the grocer is undergoing a tech overhaul. Jason Beuchel, chief information officer at Whole Foods, discussed a number of the coming developments, including a new point-of-sale system that allows customers to more easily take advantage of coupons in the offing. There is also a kiosk system that will allow customers to order and customize their sandwiches by iPad, so they can shop while they wait for food during the lunchtime rush.
Such technological innovations are in keeping with CEO John Mackey’s nine-point plan, which he announced on a November conference call after a reported sales growth slowdown and transaction decline in the fourth quarter.
On that call, detailed in a MarketWatch article, Mr. Mackey, said the plan was being enacted to communicate differentiation, improve price perception and evolve the business. Other changes in addition to improving in-store efficiency with technology included personalized promotions and a focus on growing online sales.
Increased store efficiency and other improvements might not address the problem of poor public perception in the wake of 2015’s scandals. In a PYMNTS article, Mr. Mackey seemed exasperated with what he perceives as the company being repeatedly tried in the court of public opinion on issues such as the NYC pricing scandal and the viral flap over $6 asparagus water at a Whole Foods location.
But the chain may face bigger challenges than bad PR. The once untouchable position of Whole Foods in the natural foods space has been eaten away at by grocery competitors such as Kroger and other mainstream grocers who offer natural foods at a lower price point.
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Zel Bianco
President, founder and CEO Interactive Edge
Warren Thayer
Editor Emeritus & Co-Founder, Frozen & Refrigerated Buyer
Recent Discussions
Discussion Questions
Will increased efficiency and new technology effectively address the problems Whole Foods is facing? Where should Whole Foods focus its technology investments?
Poll
Whole Foods paved a new path in grocery, of course competitors and mainstream grocers are going to following and working to surpass Whole Foods. Efficiency and technology are important, but Whole Foods needs to find ways to either lower price points or offer more value to stay competitive.
No. Whole Foods has a public perception problem — a long ingrained perception of being Whole Paycheck. When combined with significantly increased competition in organics, the chain is in trouble. If the new technology will reduce prices, good. If not, it’s just gimmicks that fail to address the core issues.
Increased efficiency and new technology could improve things from a cash flow and sales standpoint, but Whole Foods’ biggest problem is Kroger and other mainstream chains that have finally jumped in hard on better-for-you/organic/natural. It’s amazing that Whole Foods was allowed to dominate that obvious and fast-growing segment for so long without a more serious challenge. The simple fact is that they aren’t the only game in town anymore. I remain a fan and I love the stores and the innovations they’ve pioneered over the years. But I won’t be buying Whole Foods stock anytime soon.
No, no, no. They can use some tech to catch up but the market of those willing to pay such high prices is shrinking. A majority of Millennials are becoming much more price sensitive and Whole Foods must address that. They can differentiate in other ways, but the natural nut food focus is a no-win space for them. They need to redefine WHOLE. They do not own FOODS, natural or not.
I agree with both comments above. Customers don’t know or care about efficiency — they care about their own experience, their own pocketbooks and how they feel about giving their business to the company.
That said, not many do fresh prepared food options better. They also have many exclusives that quite a few others don’t have.
Like most retail challenges, it’s likely going to come down to their core shopper base and their own personal relationship with the brand. I personally love the place and often go out of my way for it, as do many of my peers.
Problems or not, Whole Foods remains the gold standard of natural food. Their core customer will soon be a Millennial who will expect to use technology in most daily transactions. Grocers who rely on paper coupons that customers have to rip off while in the aisle risk being lost in the shuffle.
This is an image, perception and pricing issue. Whole Foods has been a customer service-first retailer and is built upon this principle. Higher retail prices are only providing Whole Foods with opportunities to better manage their costs, which in turn allows them a great choice between increasing profits, lowering retail prices or both.
It is not an investment in technology that is going to fix the problems at Whole Foods. They are going to have to do something that is going to change the marketplace’s view that customers are no longer getting value for the dollar spent. If they can’t change the perception they will no longer have a differentiator to support their business model.
No, technology is not the answer. Not sure I have even heard anyone complain about inefficiencies in shopping Whole Foods.
Their focus, IMHO, should be in their differentiators. If my husband is cooking for a special event, he cares how long ago the fish were swimming and in what body of water. Some folks care that they are buying produce that is local and therefore fresher.
Aren’t those the things that bring shoppers to Whole Foods?
But that’s just my 2 cents.
Technology by itself can only do so much. The real story yet to be told is how the information gathered from these new touch points and pilot programs that are now collecting customer data will enable the Whole Foods business teams with new and actionable insights to enhance customer experiences going forward — both at point of initial contact and in driving relevant future engagement opportunities. The underpinning information architecture will be key, the analytic capabilities realized will be the difference makers. In this respect, Whole Foods is also behind the curve compared to peers, but making all the right moves to start evolving the organization towards an analytically driven company … exciting to see!
Technology can help many of their processes and will help to improve execution so investment in innovation is critical. Now the big BUT. Rightly pointed out in the article summary is Whole Food’s biggest competitor in the future: All grocers committing a larger portion of shelf space to natural and organic food products. WF is a great experience and definitely has its niche. However, growing its share is going to be increasingly difficult.
Adding to the pain of the derogatory label of “whole paycheck” in place of the company’s name, we found Whole Foods struggling with a price gouging issue. This may have created a market perception with some lasting downward effects. Addressing these opportunities for consumer relations improvements with a bigger and better information technological capabilities seems to be a most interesting approach. Spending these dollars on community outreach, marketing and sales events is another consideration for those facing a decaying market perception, and is a more traditional path that I am sure was considered and put aside. The path chosen, if successful, will hold much for many to learn.
Being a semi-regular whole food shopper, I have noticed they have pricing accuracy issues in the fruit section, where discounts on the shelf isn’t reflected on POS. I think in this case perception is a bit of reality. Their price points on some organic products are now more competitive, but as the writer says, their leadership in the organic space are being eroded by other retailers from Trader Joe’s to conventional grocery stores and even Walmart now carries some organic items.
Technology will give it some efficiency and customer service improvement, but Whole Foods will need to improve from a merchandising perspective to stay the category leader.
As Whole Foods battles accusations surrounding cost, I think it is wise for them (as it seems they are currently doing) to focus on raising the bar in other areas, like customer experience.
Technology that will save customers time will certainly be advantageous. iPads and other ordering services that minimize wait time will probably draw new shoppers. Additionally, technology that saves employees time, thus enabling them to help more customers in store will be effective.
Data collection will also enable Whole Foods to better serve their customers, through both increasing employee efficiency and understanding customer needs. Similarly, data collection in store may help Whole Foods get behind PR issues, before problems attract unwanted attention.
As tech becomes more expected, Whole Foods will certainly have to level-up, or risk getting left behind by competition.
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Whole Foods paved a new path in grocery, of course competitors and mainstream grocers are going to following and working to surpass Whole Foods. Efficiency and technology are important, but Whole Foods needs to find ways to either lower price points or offer more value to stay competitive.
No. Whole Foods has a public perception problem — a long ingrained perception of being Whole Paycheck. When combined with significantly increased competition in organics, the chain is in trouble. If the new technology will reduce prices, good. If not, it’s just gimmicks that fail to address the core issues.
Increased efficiency and new technology could improve things from a cash flow and sales standpoint, but Whole Foods’ biggest problem is Kroger and other mainstream chains that have finally jumped in hard on better-for-you/organic/natural. It’s amazing that Whole Foods was allowed to dominate that obvious and fast-growing segment for so long without a more serious challenge. The simple fact is that they aren’t the only game in town anymore. I remain a fan and I love the stores and the innovations they’ve pioneered over the years. But I won’t be buying Whole Foods stock anytime soon.
No, no, no. They can use some tech to catch up but the market of those willing to pay such high prices is shrinking. A majority of Millennials are becoming much more price sensitive and Whole Foods must address that. They can differentiate in other ways, but the natural nut food focus is a no-win space for them. They need to redefine WHOLE. They do not own FOODS, natural or not.
I agree with both comments above. Customers don’t know or care about efficiency — they care about their own experience, their own pocketbooks and how they feel about giving their business to the company.
That said, not many do fresh prepared food options better. They also have many exclusives that quite a few others don’t have.
Like most retail challenges, it’s likely going to come down to their core shopper base and their own personal relationship with the brand. I personally love the place and often go out of my way for it, as do many of my peers.
Problems or not, Whole Foods remains the gold standard of natural food. Their core customer will soon be a Millennial who will expect to use technology in most daily transactions. Grocers who rely on paper coupons that customers have to rip off while in the aisle risk being lost in the shuffle.
This is an image, perception and pricing issue. Whole Foods has been a customer service-first retailer and is built upon this principle. Higher retail prices are only providing Whole Foods with opportunities to better manage their costs, which in turn allows them a great choice between increasing profits, lowering retail prices or both.
It is not an investment in technology that is going to fix the problems at Whole Foods. They are going to have to do something that is going to change the marketplace’s view that customers are no longer getting value for the dollar spent. If they can’t change the perception they will no longer have a differentiator to support their business model.
No, technology is not the answer. Not sure I have even heard anyone complain about inefficiencies in shopping Whole Foods.
Their focus, IMHO, should be in their differentiators. If my husband is cooking for a special event, he cares how long ago the fish were swimming and in what body of water. Some folks care that they are buying produce that is local and therefore fresher.
Aren’t those the things that bring shoppers to Whole Foods?
But that’s just my 2 cents.
Technology by itself can only do so much. The real story yet to be told is how the information gathered from these new touch points and pilot programs that are now collecting customer data will enable the Whole Foods business teams with new and actionable insights to enhance customer experiences going forward — both at point of initial contact and in driving relevant future engagement opportunities. The underpinning information architecture will be key, the analytic capabilities realized will be the difference makers. In this respect, Whole Foods is also behind the curve compared to peers, but making all the right moves to start evolving the organization towards an analytically driven company … exciting to see!
Technology can help many of their processes and will help to improve execution so investment in innovation is critical. Now the big BUT. Rightly pointed out in the article summary is Whole Food’s biggest competitor in the future: All grocers committing a larger portion of shelf space to natural and organic food products. WF is a great experience and definitely has its niche. However, growing its share is going to be increasingly difficult.
Adding to the pain of the derogatory label of “whole paycheck” in place of the company’s name, we found Whole Foods struggling with a price gouging issue. This may have created a market perception with some lasting downward effects. Addressing these opportunities for consumer relations improvements with a bigger and better information technological capabilities seems to be a most interesting approach. Spending these dollars on community outreach, marketing and sales events is another consideration for those facing a decaying market perception, and is a more traditional path that I am sure was considered and put aside. The path chosen, if successful, will hold much for many to learn.
Being a semi-regular whole food shopper, I have noticed they have pricing accuracy issues in the fruit section, where discounts on the shelf isn’t reflected on POS. I think in this case perception is a bit of reality. Their price points on some organic products are now more competitive, but as the writer says, their leadership in the organic space are being eroded by other retailers from Trader Joe’s to conventional grocery stores and even Walmart now carries some organic items.
Technology will give it some efficiency and customer service improvement, but Whole Foods will need to improve from a merchandising perspective to stay the category leader.
As Whole Foods battles accusations surrounding cost, I think it is wise for them (as it seems they are currently doing) to focus on raising the bar in other areas, like customer experience.
Technology that will save customers time will certainly be advantageous. iPads and other ordering services that minimize wait time will probably draw new shoppers. Additionally, technology that saves employees time, thus enabling them to help more customers in store will be effective.
Data collection will also enable Whole Foods to better serve their customers, through both increasing employee efficiency and understanding customer needs. Similarly, data collection in store may help Whole Foods get behind PR issues, before problems attract unwanted attention.
As tech becomes more expected, Whole Foods will certainly have to level-up, or risk getting left behind by competition.