Whole Foods’ Industry City, NY online only store – Photo: Whole Foods Market
Whole Foods gets a lot right and wrong
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
It’s been more than three and a half years since Amazon.com’s acquired Whole Foods. While many of the worst predicted fears have not come to pass, some of the expected improvements have also failed to materialize.
For example, although the online shopping experience is “second to none,” according to Craig Rosenblum, VP of industry transformation at Inmar Intelligence, “shopping in stores has become a nightmare due to the overwhelming number of workers picking online orders. It’s hard to get up and down the aisles.”
Whole Foods also only rolled out curbside pickup nationwide in October.
Recent sales figures bear out the challenges. Amazon’s third-quarter sales from brick-and-mortar stores — mostly Whole Foods — declined 10 percent. Amazon’s overall 37 percent sales hike confirms huge online gains, presumably at Whole Foods, as well.
The irony is that Amazon has invested in creating more modern, spacious stores with restaurants and additional fresh food areas, says Neil Saunders, managing director of retail at GlobalData. “But because shops are also being used to fulfill online orders, they seem more crowded and cluttered.”
High standards for product selection that weed out items with unacceptable ingredients and value sustainability, traceability, etc. have continued. Whole Foods’ reputation for discovering and bringing new items to market, however, has taken a hit.
Even before the acquisition, a shift to centralized buying was seen as leaving less space for local and regional brands. While the company has taken steps over the last year to highlight local foods popular with customers and to balance centralized and regional decision-making, Whole Foods isn’t seen as an innovation leader the way it used to.
“Whole Foods has become a lot less nimble in terms of bringing on new products nationally,” confirms one manufacturer partner, citing private label expansion as one reason.
Finally, reducing prices on key items and giving discounts to Prime members has done little to shed the “Whole Paycheck” reputation. That could be a problem as organic becomes more mainstream at other grocers.
The related issue is “value for the money,” contends Mr. Saunders. “Customer service is often better at Target and Walmart than at Whole Foods, where too many staffers are surly, which undermines justification for premium pricing.”
Discussion Questions
DISCUSSION QUESTIONS: Which aspects of the Whole Foods’ shopping experience appear to have improved versus becoming worse under Amazon’s ownership? Do you see many issues as pandemic-related and solvable, or are competitors catching up?
Poll
BrainTrust
Jeff Weidauer
President, SSR Retail LLC
Doug Garnett
President, Protonik
I am thoroughly convinced, judging from what’s happened to Whole Foods, that Amazon believes that all groceries will be online in 10 years. My local Whole Foods used to be chock full of new ideas, brands and interesting products. Now they rarely have strawberries. Strawberries! Half the shelves are empty, the whole front of the store is a warehouse, the cafe is closed and there are more pickers in the store than customers. Does that sound like they care about the old “in-store experience” factor? There are huge signs when you check out reading “2 Hour Delivery!” in Amazon blue. The writing is literally on the wall.
I have to agree with you on the pickers. Their presence damages the shopping experience.
But I disagree with you on OOS. That is not something we experience at all. And I strongly disagree about new and interesting products. In the core store there are new and interesting things all the time. In produce, they have choices that one would never find in a traditional supermarket.
Lee, for me it’s blueberries! I now only shop Whole Foods when they have Amazon Prime weekly sales. When I walk in, it is pretty quiet and there is no innovation anymore, quite a few out of stocks, and this is a fairly new store I shop. I do see a large row of Amazon lockers and a section carved out for Amazon order desk, etc. I guess this is store/region specific?
As someone that works for Whole Foods as a Prime Shopper, I completely agree with your comment and it sounds like you shopped at the store I work at with no strawberries and empty shelves. The store is no longer welcoming and looks sterile. The positive “in-store experience” no longer exists because the focus is on fulfilling e-commerce orders.
I am a major inconvenience to customers trying to shop inside of the store because I have to fly around them in order to meet the demands of metrics like being able to pick and bag a minimum of over 100 items per hour. If a customer asks me for assistance, my metrics go down and I am reprimanded for it. There is no longer a focus on in-store customer service. Yes, there are more pickers than customers and everywhere you turn, you see an Amazon sign.
Amazon’s online grocery growth is fantastic and part of that is thanks to leveraging the Whole Foods brand and store infrastructure. However, that growth has been to the detriment of stores, many of which are now mini-fulfilment centers crammed full of pickers walking the aisles and lobbies and restaurants turned into packing areas. The experience has gone downhill. That’s not good enough for an expensive retailer that charges a premium – and yes, despite the price cuts, it remains a significant premium to the rest of the market.
Being absolutely frank, I’ve never thought of Whole Foods as being a great grocer, even before Amazon acquired it. It is a good place to go for some things and for healthy foods. However it falls way, way short of being great. Service is hit and miss. Range innovation is modest. Stores aren’t anything special. And the taste of products is not always that good. There are better grocers out there. Wegmans, Stew Leonards and others lead the way. Whole Foods doesn’t run with that pack!
Wegmans? Stew Leonards? Nobody runs with that pack!
I will speak from very personal experience and say that online shopping at Whole Foods has been a lifeline for many people I know during the pandemic. While the store has sometimes struggled to stay in stock on some popular items, the overall experience has been fantastic. Lots of delivery windows, plenty of organic options, communicative shoppers, great produce and always on-time delivery have enabled my family and others to shift 75 percent of our grocery purchases to Whole Foods. I suspect that the stores are indeed full of people picking online orders, and wonder if they might consider dark stores at some point if the online demand persists. However, in the meantime, I am extremely grateful for the great service they have provided.
Amazon’s focus is and always will be online. Running a traditional retail business is tough – you really have to understand what your customers want and what brings them to your store, and then make sure you look after them. Whole Foods is a hostage to their own success in online business and that is causing problems for the traditional retail outlets. Customers do not want to be crowded by staff picking for online orders who are probably on a time-to-pick target that means they do not care what the “customers” in the shop think of them. This makes for an uncomfortable mix in the store. Walmart has understood this and are moving to local fulfillment. Amazon has not yet worked this out or if they have they are not interested.
Amazon has shifted Whole Foods to an online fulfillment model. The primary use for stores is to pick local orders; in-person shoppers are an afterthought and a distraction.
Can we put the “Whole Paycheck” thing aside? I was in a regular supermarket yesterday and noted Nature’s Path cereal, which we buy at Whole Foods. Each selection was $1 to $2 more per box than at Whole Foods. A half gallon of organic milk is $3 less expensive at Whole Foods. Premium beer is $1 to $3 less expensive for a six-pack at Whole Foods.
For me, Whole Foods beats everyone else at check-out. It is fast and efficient and provides no confusion. If the line get long, as associate comes and monitors. Their staff is excellent. They know the store. They can tell me exactly where products are and even take me to them. (A grocery store isn’t my personal beat.)
What is bad? The delivery shoppers. Really bad! Both for Whole Foods and the independent ones. Often I see more of them than there are shoppers, even during high traffic periods. And they don’t seem to know where products are as they crisscross the store. To me the only solution is that they not be allowed during prime shopping hours or open hours at all. The other side of that argument is that Whole Foods is the go-to place for quick online ordering and delivery. Order in the morning, have it in the afternoon. Maybe I can’t have it both ways?
I really can’t opine on if it is better under Amazon. Probably, because it is better than it was years ago. But that could be just the normal progress a management team makes in moving their business forward, and would have been accomplished with or without Amazon.
Overall, Amazon invigorated Whole Foods’ e-commerce experience and it will solve physical stores’ pandemic pressures. In the meantime, cramped aisles from in-store fulfillment makes Whole Foods e-grocery even more attractive.
Omnichannel pricing is undergoing transformation and centralized processes will drive efficiencies. Yet retaining premium prices could be deliberate. As part of the economy grows in affluence, Amazon can protect its margins by using Whole Foods to target and get closer to upscale consumers.
Whole Foods’ quality assortment still shows leadership by reflecting consumer values like sustainable and organic goods. All the insights gleaned from e-commerce informs Amazon about which products, including private labels, would make its assortment even more competitive.
Fulfillment has been thrust into the front and center of store operations, because of the significant uptick in the use of the delivery services. I see this as a transition period. In few months to a year, we should see the grocery and Big Box retailers have more specialized aisles for delivery pickup, automated checkout and post-pay capabilities. In the back of the store, we will see specialized build-outs with automated pick/pack/sorting to pre-stage the orders for the hour, etc. There is a ton of improvement that is possible and absolutely critical.
This is what happens when large corporations, that have no corporate competency about the business they just acquired, try to manage that new business. Usually valued points of difference, like Whole Foods’ leadership in fresh quality produce, get lost behind efforts to drive efficiencies, like driving down costs with discounts for customers who already have enough disposable income to pay for Prime membership. Factor in the accelerated shift to online fulfillment and yes, Amazon has been in over its head for quite some time. Still, I would not under estimate Amazon’s ability to recalibrate and get it right with Whole Foods. Their relentless focus on customer satisfaction is hard to match in any industry.
I know this is the venue, but this thread is a pile of inside baseball. The average consumer does not relate to the shopping experience the way the people here do. Yes, there are tons of Amazon shoppers, but again, the average consumer is still there.
The data in this article also makes no sense; saying that brick and mortar sales declined 10 percent in 2020 does not lend any credence to your argument that there is some sort of issue with the in-store experience. The issue is with the virus.
I am also really surprised to see supposed retail professionals lamenting supply chain issues as a failure of the in-store shopping experience. If there are no strawberries in the store, IN JANUARY, it is not because the Whole Foods model of brick and mortar stores doesn’t work. Noting that the cafe is closed as another point? Come on people. You know there is a pandemic, right? And inviting people to congregate for long periods of time in a grocery store is unsafe?
The references to Whole Paycheck and surly store clerks are the kind of thing you see on Yelp, not on an industry discussion board. The level of service in all grocery retail is not what it once was, but that is due to consolidation and private equity cost cutting more than it is changes made to Whole Foods. Stew Leonards, name checked by a couple of people, is a shell of its former self.
The fact that in-store sales are down is significant. In-store grocery sales at most other retailers – from specialists like Kroger to generalists like Target and Walmart – are up. And they are up to a significant degree. Whole Foods is an exception; its stores have not been a winner during the pandemic. Admittedly, some of this is a deliberate part of Amazon’s efforts to shift sales online, but that is not the whole story.
Our consumer tracking data shows that some consumers have deserted Whole Foods stores – more so than for other grocers – for a variety of reasons. One of those is the in-store experience, especially as it relates to crowding. This is noticed by some shoppers, especially during a pandemic when social distancing has become more of an issue.
And that leads to another point: most observations by folks on here are based on evidence. They are based on data from the industry, results from customer surveys, insight from discussions with people in retail, and so forth. Sure, there are some personal opinions thrown in, but by and large they are well informed-opinions. Feel free to disagree, but perhaps use some evidence to refute the points being made. It’s far more engaging and interesting that way!
Whole Foods is a myth, a lovely Amazonian vision, based upon replacing a really wonderful customer culinary experience with digital efficiencies executed on the backs of third-party shoppers and the dreaded, mainstream centralized buying. Whenever homebound life returns to what used to be normal, many humans will be craving sumptuous, visual, and sensory retail grocery experiences. Whole Foods was the hallmark of sensory shopping for groceries. Now Whole Foods is the warehouse for third-party pickers. Literally squeezing shoppers out the door. To me, it’s a reminder: be careful of bright and shiny digital objects pumped up by media as the future of grocery shopping. Humans must be diligent in protecting their day-to-day real-world human experiences so as not to lose touch with the simple joys of human life.
Amazon is a logistics company, maybe an effective brander of personal electronics, but not (yet) a great fresh merchant. They need to focus on the “grocery” part of grocery distribution. I think Whole Foods’ problem is systemic, not pandemic-oriented. But, I also think Amazon has the capability of ramping up the learning curve quickly when it focuses on a category, so I think they can course correct if they choose to.
There’s a clear lesson we should all learn from Whole Foods: There’s no magic pill that will make retailing easy.
When Whole Foods was purchased, I wrote about how it would be interesting to see what Amazon did with the retailer. In the end, they’ve built up their online a bit and struggled to find a clear approach to managing the stores. Many of the discount approaches in store have been executed crassly and turned the nice shopping experience into the “feel” of a dollar store.
I continue to wish Amazon well with the future of the purchase. But the early expectations that there was simply some Amazon pixie dust missing and that Whole Foods would quickly become an entirely other thing were misplaced.
People may complain about what Amazon has done to the Whole Foods shopping experience, especially post COVID. I am not sure Whole Foods would have survived COVID without Amazon acquisition. As much as people loved the Whole Foods store experience, the ownership of Whole Foods sold the company because they know it was losing the organic premium battle. Add COVID to the mix and Whole Foods has to pivot to online fulfillment as a primary business because the majority of shoppers demanded it.
In-store shopping has become stressful for masked up trying to get in/out quickly and not exactly browsing for innovative products or experiences. I think the key is whether post-COVID Amazon will continue to pivot Whole Foods to online grocery, and whether shoppers stick to online grocery when they have to the option to go back to the store.
After reading the comments, in answer to the question “has Amazon made WF better or worse?” I think the clear answer is: “yes…it’s one or the other!”
I think it’s fair to say this merger was entered into with people having strong opinions about the companies and personalities involved, and that probably colors how they react to the product now (loved WF and/or Mackey, you’re likely disappointed, loved Amazon and/or Bezoz, you’re likely thrilled).
Some other observations:
Whole Foods and Amazon are sending mixed signals. For example, I went to Amazon to order something and they had the item and said it could be ordered and delivered in 2 hours from Whole Foods. I then went to Whole Foods to buy the item, it was on the shelf, but the price was 39% higher than if I had ordered it online. Asked if they would honor the price and was told these are two separate companies.
With mixed messages like this, you lose customers.
Yes, order pickers in stores sometimes get in the way, but only because they behave not like ordinary customers, but like store employees. It’s annoying. I also agree about the large clutter. I myself watched the pickers leave empty boxes in the trading floor. This means only one thing — there is no control over the operating standards. And maybe even the standards themselves are not there. The service of online orders was made, but the standards of how exactly and with what level of quality it should be performed did not have time to create, so this is a mess.
Crowded aisles full of carts and pickers is not unique to Whole Foods. This is happening to all grocery stores that are working to integrate physical stores with e-commerce convenience. Until the retail format can be designed to separate fulfillment with customer experience, this will continue to be an issue. It’s an opportunity for designers to solve. But first, we need to get through this awkward transitional phase.
Whole Foods made a huge pre-pandemic investment in creating a unique in-store shopping experience with restaurants, bars, and other experiential offerings while also building out a streamlined digital experience. However with the increase of online shopping caused by COVID-19, the number of Amazon Prime shoppers has made the in-store experience less than desirable.
Whole Foods needs to look at micro-fulfillment options to lighten the traffic in the aisle and revitalize the in-store experience to realize the potential of their pre-pandemic investments.