Whole Foods – What is the wider plan?

As we enjoyed the yearly pilgrimage to Florida for Disney, Universal and a fair bit of retail therapy (visiting for me, spending for everyone else…) I thought it would be good to turn a spotlight on to a number of retailers in the US who are visited as part of the wider trips, Whole Foods being the first in this series.

As ever; all images from the visits are captured and filed with our image portal soon to open for a number of membership options. High quality imagery is easier to come by these days due to the prevalence of iPhone’s and the like.

However having someone on the ground, in the stores, patrolling the aisles who knows what to look at, what to capture and what story the wider images can then tell is far harder to come by.

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Mini sales pitch over – let’s take a look at Whole Foods, now firmly under the Amazon leash now and there have been discernible signs of a model coming that is less labour intensive and forgoes a number of the ‘bells and whistles’ that we are perhaps used to.

Whole Foods Prime delivery banner
Makes sense for Amazon to push online food picking in to Whole Foods via Prime Now.
Whole Foods, Orlando.

This store in Dr. Phillips, Orlando has been refitted and now has a Juice/Coffee bar to the left with Produce right in the entrance (as ever), the counters still go around the perimeter of the store but the Bar/Coffee area in the middle has gone entirely.

Pizza is a ‘self service’ option now, rather than being served to you by a team member, one counter was seemingly closed but the execution of that was messy to say the least.

Questionable shroud based work for the Cheese counter…

Visiting a number of Whole Foods around NY, NJ and FL means that you get a tiny picture of how the chain is progressing, however one store that has issues is still, one store too many.

There is a stark clarity that the new world for Whole Foods is more of a ‘supermarket’ with stronger counters offering meal solutions whilst also being suitable for online picking, this means they’re able to offer 2 hour shipping from each store for “Prime Now” deliveries….

Prime Now being picked ‘live’ in Whole Foods.

There seems to be far fewer ‘bells and whistles’ than we used to see, for example the store in Columbus Circle, NY was a ‘mecca’ of open food and food prep when you descend the escalators in to the food hall itself.

However this too has been refitted and the open prep space behind the scenes has been largely replaced by white tiled walls which creates a more ‘homogenised’ experience all considered.

The tactics of offering discounts on items for Prime customers isn’t necessarily a longer term play, sure for Prime members it works but, if you’re not a prime member then paying $99+ for variable discount on product that may / may not be for you in any case is questionable.

One can even use Alexa for the Prime deals, do you bring your Echo in to store?

It’s also exclusive. One understands that Prime is a members club and that’s fair for online deliveries etc. However offering lower prices to those members but not the wider customer base is questionable, as Whole Foods can only grow at the rate of Prime members – that’s assuming that they would switch their shopping from Walmart, Target and whoever else state to state they currently use.

Whole Foods does have price perception issues and the shift to provide lower prices will aid their cause, however there is still wider ‘insult pricing’ across the board with huge price points on some products. The absence of brands by and large (due to the health leanings of the chain) is fair, but to make the chain a destination for more customers, will see the need for more brands to be introduced to the range.

Walmart are the ‘low price leader’ and huge on brands.

The reason for this is twofold.

1) Brands provide security for a customers around quality and they also deliver the wider range for customers who then don’t necessarily have to go elsewhere for the rest of their shopping.

2) Comparable products can then be compared on a price basis with other retailers to adjudicate how value stacks up. It’s never just about price, some customers will pay a little more for convenience, or because they can get x,y,z from the store.

However Whole Foods can not afford to be out of line on these branded items, certainly not restricting them to Prime only discount either.

There are signs of change in terms of the store operation, look and feel and subsequent experience. Whether this would have come regardless of Amazon, or is because of the Amazon input and the need to satisfy a new P&L requirement is unclear.

However there is certainty as it’s happening and refitted stores are notably different, there’s a balance to be struck but the acquisition of Whole Foods still feels like an online fulfilment play with an opportunity to lock Amazon customers in further.

Whole Foods has a number of specialist customers who buy ethically.

The challenge is that Whole Foods has a loyal fan base of customers who are affluent and habitual purchasers, however they have to grow beyond online and make existing stores work harder.

Adding online picking will help but careful steps are needed so as to balance the need to make stores more efficient whilst continuing to look after core customers and attracting new ones, with or without Amazon Prime.

Change is good? The jury is out on the store changes in Whole Foods however the reality is that change was perhaps necessary in some cases…

But you can’t just attack the cost base forever……

NB – store was visited in May 2019.

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