Whole Foods 365: It’s All About Efficiency

The Washington Post: We’re inching closer to the launch of 365 by Whole Foods Market, a new, lower-priced grocery store that the organics giant is betting will help pull it out of a rough patch … The first 365 store is slated to open May 25 in the Silver Lake neighborhood of Los Angeles … Jeff Turnas, president of 365 … said in an interview that he and his team have ‘looked and turned over every stone to find efficiencies.’ That includes, for example, trying to lay out stores in a way that reduces the time it takes for a worker to get from the stockroom to the shelves.”

“Even the product assortment in these smaller format outposts is designed in part with an eye toward greater efficiency … with a center-aisle grocery item like olive oil, Turnas said, they tried to narrow the offerings … prepared food bars will be ‘a little more get-it-yourself, self-serve’ than those in a traditional Whole Foods … There will also be a kiosk called TeaBot built by a company of the same name that allows shoppers to create customized tea blends that are served up hot to the user in less than 30 seconds.”

“365 is also building its stores around a program called Friends of 365, in which it will turn over a small section of its square footage to like-minded retailers to make shopping more of an experience … Speculation has been running wild about what kinds of retailers might be included … Turnas said they’ve received video pitches or other inquiries from at least one tattoo parlor, more than one marijuana dispensary, and a pet grooming business. The thought process for choosing the Friends will vary from location to location.”

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MIT & Target Take Aim at Truth in Produce

The Washington Post: Imagine a scanner the size of a grain of rice, built into your phone. You go to the grocery store and point it at something you want to buy. If it’s an apple, the scanner will tell you what variety it is, how much vitamin C it has and how long it has been in cold storage. If it’s a fish, you’ll learn whether it’s really orange roughy or just tilapia being passed off as something more expensive. If it’s a muffin, the device will tell you whether there’s gluten in it.”

“Although you won’t be able to do it tomorrow, this isn’t some kind of distant Jetsonian vision of the future … TellSpec and SCiO, are working on handheld scanners designed for consumer use … Target, one of the nation’s largest retailers, is collaborating with MIT and business design firm Ideo in a venture called Food + Future coLab, based in Cambridge, Mass., which has the broad mission of helping consumers better understand their food.”

Target “is putting industrial-strength scanners in its distribution centers … According to Casey Carl, Target’s chief strategy and innovation officer, ‘We’ll deliver better freshness, quality and shelf life,’ because produce that’s old or inferior — or not what the label promises — will never make it to the floor.”

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How Walmart & Whole Foods Shoppers Are Alike

Perfect Price: “The distribution of spending at Whole Foods and Walmart —stores that are diametrically opposed in the cultural imagination —are actually quite similar in terms of the distribution of spend. Slightly more people spend less than $25 on a trip to Whole Foods, and slightly more spend between $25-$100 at Walmart, but overall, the distribution of how much people spend on trips to these stores are remarkably alike.”

“Far and away, consumers spend the most at Costco, the third largest retailer in the United States … At the very bottom of the list is 7-Eleven, the largest convenience store chain in the United States. The average spend per trip at 7-Eleven is less than 15% of that at Costco … The average spend for trips to Walmart, Whole Foods and Trader Joe’s all fall in the range of $50-$55 .. Trader Joe’s shoppers are heavily concentrated in the $10-$100 range with nearly 9 out of every ten falling in the category.”

comparing_the_amount_spent_on_shopping_trips_to_whole_foods_walmart_trader_joes_and_costco

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JC Penney To Display Dresses Like Oreos

The Dallas Morning News: “What does a $2.49 package of Oreo cookies have to do with a $24.99 colorful summer dress? … A prominent display of Oreos in the supermarket includes pictures of the cookies, maybe with milk, and a discounted price in big print. Then there’s a rack of cookies right there. If you had to hunt down the Oreos, you might forget about them.”

At Penney’s, a “rack of dresses will be right behind the mannequins where shoppers can find them. Plus there’s a big sign with the price.”

“We’re making it as easy as possible to buy the dress,” says JC Penney CMO Mary Beth West, who “spent most of her career in the consumer packaged goods business devising ways to get us to spend billions of dollars on brands such as Ritz, Philadelphia, Nabisco, Kraft Mac & Cheese, Jell-O and Cool Whip.”

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Main & Vine: New Kroger Format Emphasizes ‘Community’

Seattle Times: A new, small-format Kroger store in Gig Harbor, WA, combines quality produce (like Whole Foods) and lower prices (like Trader Joe’s) but most of all is positioned as “not just as a grocery store but as a community hub, where local products are prominently displayed, community involvement is highlighted and people can hang out in the store’s two-level cafe area.”

“In the ‘brew and blend’ cafe area, beers including those from Gig Harbor’s 7 Seas Brewing are on tap, and coffee from Gig Harbor’s Cutters Point Coffee is served. Customers can eat sitting at tables and chairs or can people watch from lounge chairs on the upper level.”

“Local and regional wines and beers are arrayed prominently in the adult-beverage section, Gig Harbor’s Artondale Farm has its own stand for soaps and lotions, local artists painted the murals on the walls, and a product display features a small wooden boat built by Gig Harbor BoatShop … The name came from what the company wanted the brand to represent, with ‘Main’ evoking the Main Street of a community and ‘Vine’ conveying green and fresh.”

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Whole Foods: New Limits on Local Store Autonomy

The Wall Street Journal: “Whole Foods is shifting more responsibility for buying packaged foods, detergents and other nonperishable items for the more than 430 stores to its Austin, Texas, headquarters. It is deploying software to simplify labor-intensive tasks like scheduling staff and replenishing shelves … The measures are part of a broader push to beat back competition from retailers such as Kroger Co. and Costco Wholesale Corp. that have expanded their range of natural and organic products, and frequently offer them at lower prices.”

Co-CEO John Mackey: “We want to evolve the structure in such a way that we take out redundancy and waste, and at the same time though, we’re not diminishing the culture, the empowerment efforts that make Whole Foods Market special.”

“The relative autonomy Whole Foods has long granted its stores and regional units—now 12—reflects a bedrock principle of Mr. Mackey, who helped open the first Whole Foods in 1980 … The model worked well for Whole Foods for years as it grew rapidly and established itself as the leading retailer of natural and organic groceries … But the need to offer more competitive prices is stepping up the pressure for greater efficiency.”

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Where Groceries Thrive

Fortune: An online startup called Thrive is attempting “to offer natural and organic goods at the price of the conventional non-organic equivalent … Thrive prices products to only cover the company’s costs to fulfill and ship, instead making the bulk of its money through a subscription model. The company charges a $60 membership fee, pegged to the cost of a Costco membership.”

“It’s Whole Foods-type products at Costco-like prices,” says co-CEO Nick Green. Thrive sells only non-perishables. “It’s where no one else wants to play,” Green says. “Fresh food is a blood bath right now. We said, let’s look at the part of the grocery that really shouldn’t be in the grocery store.” Thrive launched about two years ago and now has “about 150,000 members.” “We can’t scale the infrastructure fast enough to service the demand,” Green says.

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