A Wholly Digital Whole Foods
Whole Foods Market, an American supermarket chain offering natural foods, is leveraging cloud-based software to completely revamp the customer shopping experience.
Whole Foods Market has aggressively expanded its U.S. and U.K presence through the acquisition of over 10 grocery companies over the past 20 years. Therefore, Whole Foods has enjoyed healthy growth; however, these acquisitions left the high-end grocery chain with a “fragmented technology infrastructure”3, which has inhibited its ability to improve the customer experience. In October 2015, Whole Foods announced a partnership with business enterprise software company Infor to merge the grocer’s twelve disparate legacy systems by developing a cloud-based solution that will improve Whole Foods’ entire supply chain.
Whole Foods identified the development and implementation of the Infor merchandising and supply chain management platform to be one of nine steps in achieving 5% sales growth in 2016. Whole Foods sees the completion of this step as instrumental in achieving its strategy of creating a differentiated customer experience that offers “new levels of transparency and accountability [by] leveraging technology to deliver an improved shopping experience.”2 To successfully complete this strategy, Whole Foods is focused on substantially improving its business and operating models with the help of Infor.
Revamping the Supply Chain
By utilizing insights from the Infor platform, Whole Foods plans to improve the entire supply chain from suppliers to its retail locations. With the new Infor software system, Whole Foods will be able to capture detailed information from suppliers as well as “send information back to suppliers on how products are selling and give them insight into trends”3. Greater insights into demand for products will also enable the retailer to avoid excessive waste associated with unsold perishable goods. Improved analytics will “help [Whole Foods] manage pricing to keep stock moving off the shelves”1.
In addition to pricing insights, the retailer’s new software system will assist in smarter decisions on how “product is presented and promoted to customers, including decisions on how stores are laid out, how much space is allocated to each product, as well as decisions on pricing and promotion”1 These insights around product, pricing, placement, and promotion will provide Whole Foods with greater operational transparency down to the individual store level.
A Transparent Shopping Experience
Data collected through the supply chain will also be leveraged to improve the customer experience by providing customers with better information on the products offered through the retailer. Infor has the potential to capture hundreds of attributes on every product offered through the retailer, down to granular details such as water usage to grow specific produce or when vegetables were harvested. By feeding this vital information back to customers, Whole Foods can increase transparency for its environmentally-conscious customers.
The implementation of the Infor cloud-based software platform has the potential to allow Whole Foods to “’leap frog’ the capabilities of its competitors.”3 For Whole Foods to realize the full potential of the Infor platform, the retailer must determine ways to merge their merchandising and supply chain data with other software platforms that it is currently leveraging, such as Apple Pay and Instacart. By integrating these platforms, Whole Foods can understand and predict customer habits, enabling the retailer to offer its customers a fully personalized shopping experience. Whole Foods is also in the process of launching 365 by Whole Foods Market – modern, smaller store format stores geared towards Millennials. Whole Foods can leverage insights captured from its new software system to help build 365 into a sustainable enterprise.
The Whole Foods partnership with Infor will result in a substantial, but needed, digital transformation that has the potential to help Whole Foods jumpstart its growth in the coming years. By leveraging data insights to revamp its supply chain, Whole Foods can drive operational efficiencies throughout the supply chain by improving the flow of data between its suppliers and its retail locations. Additionally, by providing customers with “an understanding of how a product’s been handled, treated and grown throughout the whole lifecycle”1, Whole Foods can further differentiate itself from its competition by providing a data-driven customer experience. A successful implementation of Infor will come with a host of challenges but presents Whole Foods with the opportunity to transform the retailer into a trailblazer in technology.
Sources:
1 Phil Wainewright, “Whole Foods Market teams with Infor to transform”, 2015, retailhttp://diginomica.com/2015/10/20/whole-foods-market-teams-with-infor-to-transform-retail/, Accessed 2015
2 Whole Foods Market, 2015 Annual Report, http://s21.q4cdn.com/118642233/files/doc_financials/2015/Annual/2015-WFM-Annual-Report.pdf, accessed November 2016
3 Beth Kowitt, “Whole Foods makes big bet on tech”, 2015, http://fortune.com/2015/10/14/whole-foods-retail-software/ accessed November 2016
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Very interesting article! It is interesting how Wholefood as a premium grocery store is implementing digitization to increase their product value and attract environmentally-friendly consumers. I wonder though with the rise of grocery home delivery apps, which is another form of digitization, that consumers are less concerned with where there food comes from in each step of the supply chain. On the scale of importance, how much does convenience weigh vs. the responsibilities of protecting the environment? Can Wholefoods use digitization to facilitate more delivery-type capabilities for the busy, health-conscious Millennial consumers they it serves?
Hi Naomi! Great post. I have a doubt, though: does the Infor technology just allow Whole Foods to share info with consumers on the origin / environmental footprint of the product and a better supply chain management? Why wouldn’t they build that in-house? And, are WF consumers so worried about the sourcing of those products? I thought the whole point of WF’s value proposition was that consumers didn’t have to worry of those things, since WF already worried for them and made sure that all of their products were environmentally friendly. I’ve never shopped in WF, so these are real doubts – not challenging the premise of your post!
Great post! Having worked at a company that sold products to Whole Foods, I can say that the retailer is in much need of a digital transformation. If Whole Foods can successfully implement the changes you outlined, it will be a big win for the company. Specifically, if Whole Foods is able to give suppliers access to detailed sales information, it will benefit all parties. Currently, Whole Foods operates on a regional buying model in which each region throughout the country makes their own purchasing decisions. I will be curious to see if the Infor platform is able to successfully aggregate the data from the different regions into a national view, as a lack of corporate level data is one of Whole Food’s current shortcomings. Also, given that Whole Foods sells a lot of prepared food in addition to packaged food products, I am wondering if/how the company is planning to leverage technology to improve the supply chain for that part of the business.
Thanks for the post! I am one of those shoppers who would really value details on water usage and farming practices (though admittedly I may be part of a small population), so if Infor can help Whole Foods provide more product information across the supply chain, I think that would further bolster Whole Food’s reputation for being a socially and environmentally responsible company – that being said, I would not be willing to pay an additional premium on top of Whole Food’s already high prices to access this information. Whole Foods would have to bet more on driving increased revenues from better understanding consumer purchasing behavior and offering recommendations to related products based on shopping history.
Great post, Naomi! I wonder if Whole Foods is looking to leverage digital technology to transform the need for brick & mortar stores themselves. As I hear more and more people using Fresh Direct or similar services that allow you to shop for groceries online, which allows the grocery store to centralize and better manage inventory, I wonder if what Whole Foods is doing to improve its supply chain is enough. Tesco is even creating virtual grocery stores (http://www.businesstoday.in/magazine/lbs-case-study/case-study-tesco-virtually-created-new-market-based-on-country-lifestyle/story/214998.html), so where will Whole Foods stores eventually fit in?
Based on the article, it seems like Whole Food’s partnership with the Infor platform is greatly needed in order to consolidate legacy systems and provide better information to customer and suppliers. However, I think there is a potential for digital technology to have an even bigger, transformational effect on the shopping industry.
I agree with Naomi’s suggestion, to invest heavily in predictive customer shopping analytics. It would be incredibly powerful for Whole Foods to be able to predict, plan for, and perhaps even influence customer purchase decisions before the customer even thinks about these decisions. For instance, if a Whole Foods shopper purchases organic milk every week, the day before the next anticipated purchase, Whole Foods could push a reminder to a customer, potentially even offering a discount on a certain brand of milk. On an even bolder scale, Whole Foods may even consider offering a subscription service for regularly purchased items to customers and managing it through digital technology.
Great post!! What Whole Foods is doing through Infor is fascinating, and I’m particularly inspired by how it is using the technology to improve sustainability in its own practices and in suppliers’. However, I wonder if Whole Foods will face any pushback from brands for just that reason — increasing transparency in terms of supplier practices such as water consumption, sourcing, etc. will naturally prompt additional pressure on suppliers to improve. This is a great thing, but from the supplier perspective it has the potential to raise costs and introduce added complications; I wonder if Whole Foods will lose any suppliers as a result of this. Ultimately, suppliers will with any luck realize that any changes they may need to make as a result of this initiative were probably inevitable, given the increasing demand by consumers that brands they choose are sustainable and responsible. I am heartened to hear that Whole Foods is leading the charge in order to drive meaningful change in this landscape.
Thank you for the interesting article. This post reminded me of the Barilla case where we saw how integrating the information flow in the supply chain can benefit different functions within the chain. I personally think that Wholefoods has a stronger position in actually implementing this all the way up to the manufacturers since they possess such a strong presence in the retail market. However, I think the ultimate judges for this initiative are the actual customers who shop at Wholefoods. It might be crucial for Wholefoods to properly display the abundant information and tell the right story to the shoppers in order to make this transformation actually work.