Whole Foods COO: 'We've been a very inefficient customer to deal with for a lot of suppliers'

By Elaine Watson contact

- Last updated on GMT

Whole Foods same store sales were down 3% in Q2
Whole Foods same store sales were down 3% in Q2

Related tags: John mackey, Whole foods

Centralizing the purchasing of non-perishables will ultimately make Whole Foods a lot easier to deal with, said chief operating officer AC Gallo during the retailer’s second quarter earnings call last week.

A new point-of-sale system rolling out to every US store by the end of 2016 will also support personalized offers, category management and supplier collaboration, said Gallo, noting that having to deal with 11 different sets of buyers for the chain’s 11 different regions in the US had proved frustrating for some suppliers.

We're very excited. We talked with about 1,000 suppliers at Expo West, a lot of them have been waiting for us to do something like this. We've been a very inefficient customer to deal with for a lot of suppliers, because they have to go to 11 different regions often and talk to the buyers in each region.

“So the idea that they are going to be able to come just to the global office and talk to the team here, work out their promotions, work out new items things like that, is something that they were very excited ​[about].”

He added: “There's a lot of opportunities there for us to reap once we can get really rolling with category management.”

Our suppliers are really excited about the digital coupons

Moves to offer customized promotions, including digital coupons, via the Whole Foods mobile app were also going down well, claimed executive vice president, operations, David Lannon:

Our suppliers are really excited about the digital coupons. [It’s] one of the very first times at Whole Foods that our suppliers will be able to get back data analytics on the performance of their promotions at Whole Foods. So again, we're in the early innings, but very exciting.”

Co-CEO John Mackey added: “This served as the launch of the first component of our national affinity program, as we now have actionable customer data on a national scale.”

Later this summer, customers in Dallas will also have access to Whole Foods’ new rewards program via the app, he added: “Once this market test is complete, we intend to roll out our rewards program nationally… With a rapidly growing customer database and a social imprint approaching 13 million followers, we are continuing to invest in digital strategies to convert our strong online traffic into sales.”

Category management: We're doing a lot of the pick-and-shovel work right now

As for category management, Gallo said: “We're doing a lot of the pick-and-shovel work right now, determining the categories, the rolling intent work for each category, hiring category leaders, really doing all that work… And we're going to be then running a pilot at the beginning of next fiscal year in the fall. And then, once we move beyond that pilot, then we'll start to actually rollout category management later next year.”

AC-Gallo-Whole-Foods

We're very excited. We talked with about 1,000 suppliers at Expo West, a lot of them have been waiting for us to do something like this. We've been a very inefficient customer to deal with for a lot of suppliers..."

A.C. Gallo, President and COO, Whole Foods Market

Asked about recent investments in pricing to combat the ‘Whole Paycheck’ moniker, he said, volumes had increased as Whole Foods had cut retail prices in some produce and perishable categories, but not by enough “as to offset the actual investments themselves.”

But he added: “We think that over the long-term, as customers get more used to these promotions… we'll start to capture a larger percentage of their shopping.”

Q2 same store sales were down

As more retailers have encroached on its territory, Whole Foods’ sales have fallen continuously over the last six quarters, as have its same-store sales (which were -3% in Q2, owing to a 0.9% fall in average basket size and a 2.1% fall in the number of transactions of Whole Foods customers).

For the quarter ended April 10, earnings before interest, taxes, depreciation and amortization were $353m on sales up 1.3% to $3.7bn.

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