Tech investments are poised to drive growth for Whole Foods

Dive Brief:

• During Whole Foods' first-quarter earnings call last week, CEO John Mackey shed light on three technology investments that the company hopes will reduce inefficiencies and boost sales, according to Retail Info Systems News.
• These include data-driven category management, spearheaded by the company’s partnership with data firm dunhumby; product kiosks, which have been shown to boost sales of prepared foods by as much as 100%; and automatic replenishment, which speeds product from the loading dock to the store shelf.
• "We're basically examining every aspect of our retail operations and asking what are we doing here that's not creating value, that's just adding unnecessary cost," Mackey said during the earnings call.

Dive Insight:

Prior to last week’s earnings report, investors had hoped Whole Foods would break out of its sales slide. Instead, what they got was a sixth straight quarter of same-store sales loss.

Since the company isn’t attracting as many new customers it would like, it’s doing the sensible thing by focusing on its most loyal customers.

The new tech investments outlined by Mackey aim to save the company money while also adding more items to the baskets of those who regularly shop at Whole Foods. Data-rich category management will tell the company more about what these shoppers want, allowing it to deliver targeted promotions that influence purchase decisions. The product kiosks, currently available at Whole Foods’ Bryant Park location in New York, will deliver high-demand prepared foods more quickly. And automatic replenishment will reduce costly out-of-stocks while also potentially allowing stores to reduce back-of-store space in favor of show floor space.

Efficiency is the new watchword for Whole Foods following years of specialty splurges that earned it the nickname “Whole Paycheck.” In a competitive industry where natural and organic goods are no longer exclusive to natural and organic retailers, Whole Foods faces major headwinds. But don’t count it out just yet. The company that was once the envy of all retailers could have enough drive and ingenuity to engineer a turnaround.