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: 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?