Whole Foods Market Inc is planning to reduce costs and strengthening association with suppliers. The rising competition is eroding profit growth for the food retailer. Whole Foods is focusing on technology-driven automation in retailing operations. It aims at saving $300 million a year.
The natural and organic foods retailer Whole Foods has long given broad discretion to local managers and regional heads over buying everything from cheese to store designs. Now, the food retailer is focusing on centralizing some functions, while streamlining the business operations.
The Wall Street Journal reports that the proposed changes may be risky for Whole Foods as it has to balance the enhancing efficiency and without losing local flavor. Mostly the specialty offering have been contributing to the success of the company. Whole Foods is also increasing automation in business operations as it's deploying software to ease the tasks of scheduling staff and replenishing shelves.
Whole Foods is keen buying packaged foods, detergents and other non-perishable goods at over 430 stores to facility at Austin, Texas. As part of the cost cutting drive, Whole Foods is expecting to save $300 million a year by September 2017. The cost reduction plan also includes 2,000 jobs cut. Whole Foods is facing competition from Kroger Co and Costco Wholesale Corp. Competitors are doing well with natural and organic products at lower prices.
With an objective of attracting millennial market, Whole Foods has opened a new chain of stores called '365.' Whole Foods is changing its business focus to strengthen and enhance the market share among millennial shoppers. Towards this, Whole Foods has launched 365, a chain of grocery stores offering at low prices, as reported by The Christian Science Monitor.
To attract customers, Whole Foods is also planning to offer attractive discounts on organic foods. John Mackey, Whole Food's co-chief executive, said: "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."
Whole Foods has reported earnings and revenues beating market forecasts for the first quarter. The earnings per share (EPS) were 46 cents a share as against the forecast of 40 cents a share. The company earned revenues of $4.83 billion as against the prediction of $4.81 billion. The share price rose six percent after the announcement of results on 10 February.
The revenues were up three percent owing to reduced costs, enhancing value effort and other sales promotions, according to CNBC. Recently it lunched digital coupon on mobile app nationally. The company management is hoping for better returns to shareholders in the near future.
Whole Foods' stock tumbled 45 percent during the past one year. The retailer is feeling pressure over the falling stock price. The share price outpaced S&P 500 by five percent. The share price fell over 50 percent since October 2013. The sales growth of the company eased 1.8 percent for the quarter ending January 2016. Whole Foods' stock further rose 5.95 percent to $30.65 on last weekend (12 February).
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