Whole Foods digital presence “low-risk” strategy to boost sales

By Elizabeth Crawford

- Last updated on GMT

Related tags: Marketing, Whole foods

Whole Foods digital presence “low-risk” strategy to boost sales
Whole Foods Market continues to evolve in the face of increased competition and gain market share by responding to consumers’ changing shopping habits with a broad online presence that is gaining traction. 

“We recognize the changing technology and growing demand for customization has fundamentally altered retailing forever. Customers now expect to connect with the brand whenever and however they choose, and it is part of our broader digital roadmap. We are rapidly building out an extended customer experience beyond the four walls of our stores,”​ said the retailer’s co-CEO Walter Robb.

He explained during the company’s first quarter earnings call Feb. 11 that this digital experience includes online ordering for at-home delivery in several major markets through a partnership with Instacart, the ability to easily buy groceries with Apple Pay and an interactive smartphone application that helps consumers make shopping lists based on healthy, budget-friendly recipes.

“Since announcing our 15-market partnership with Instacart in September, our average weekly online delivery sales have already passed the $1 million mark,”​ and account for as much as 5% of total sales in some stores, Robb said. These results are compared to average weekly sales per store of $724,000 for the consolidated company.

These sales will continue to grow as Whole Foods adds more products and food service to it is list of delivery options, said Executive Vice President of Operations David Lennon.

He also noted that while home delivery likely is cannibalizing some in-store sales, it is generating incremental sale. For example, it helps keep sales from falling during bouts of bad weather when people do not want to leave their houses.

“We’re seeing some exciting stuff with the bad weather lately where we’re seeing orders really take off before bad weather,” ​he said. In addition, some parents are using the Instacart service to buy groceries for their children who are at college or live away from the home, which gives Whole Foods access to a group of consumers who may not otherwise shop at the more expensive retailer.

He also noted that as Instacart reaches capacity in some stores, the retailer is working to add it to more stores and expand coverage.

Instacart also allows Whole Foods to reach convenience shoppers who previously opted for competitors because they were closer.

“Whole Foods Market is not going to have a supermarket on every corner. And yet, we have loyal customers. So, we’ll begin to get more of the convenience business through Instacart than we’ve had before,”​ said co-CEO John Mackey.

Reflecting on these early results, the Instacart business is “a low-risk, high-reward market share driver”​ that likely will continue to improve Whole Foods’ business, said Jerry Gray, a financial analyst with Cowen and Company.

Smart phone app engages consumers

Whole Foods new smart phone application is now live with nearly 60,000 downloads to date. The app is in direct response to consumers’ increasing reliance on digital technology to find recipes, healthy ingredients and plan shopping trips.

The app gives consumers “access to personalized and local store offers, events and information, along with 3,700 tested recipes where ingredients can be added to shopping lists with a single tap,”​ Robb said.

Whole Foods also expects its offer to allow consumers to buy groceries with Apple Pay to expand given its rapid uptake by consumers already. Robb notes that this payment option “has grown quickly to 2% of sales.”​ The launch of Apple Watch later this year likely will increase the payment options use as well, he added.

The adaptation of this service and the other digital offerings “further [reinforce] the notion our customer base wants to take advantage of the latest digital technologies,”​ Robb said. 

These digital initiatives also are earning their keep by helping to drive up the company's overall sales, income and profit, the executives said. 

The company's first quarter, which ended Jan. 18, brought in record sales of $4.7 billion – a 10% increase over the same time period last year. Net income also increased 5.7% to $167 million as did gross profit, which climbed 9.5% to $1.6 billion for the quarter. 

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1 comment

Good news

Posted by MoodyFoodie,

This is exciting news. The general public probably do not realise how far behind some European countries the US is in terms of online grocery shopping and home delivery. There are a few local-delivery companies jumping on board and a few chains which offer "curbside collect" but it's in its infancy compared with the UK. And the bricks and mortar UK supermarkets are still far from empty. Ironic when supposedly, convenience is king in the US! This is a good move for Whole Foods and for consumers who would like the option to shop in support of their values and offerings but don't have a local store. Win/win and I for one hope it catches on; it's high time.

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