Whole Foods Market Appears to Have a Supply Problem

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Whole Foods Market
Whole Foods Market produce section in Houston as posted on Twitter by Business Insider

Pictures of empty produce sections and disheveled shelves are circulating widely on Twitter as a new order-to-shelf inventory control system is wreaking havoc on morale and supply at Whole Foods Markets across the country, according to a Business Insider report quoting seven anonymous employees.

Employees say the “OTS” system was put in place prior to Amazon’s acquisition of Whole Foods, and described it as “militaristic” and resulting in the opposite of the intended effect as it has started to remove focus on customers.

While acknowledging the system is resulting in savings due to reduced food spoilage in stock rooms, employees told Business Insider it had gone too far. Store managers are walking through aisles and stock rooms with checklists to make sure every item is in its right place and there is no excess stock, and writes up the department head if something is amiss, according to the report.

Two midtown Manhattan stores WholeFoods Magazine visited on Wednesday appeared intact and bustling with lunchtime shoppers. Those were the Columbus Circle and Bryant Park locations.

However, analysts from Barclays earlier this week reported the out-of-stock problem and BI said the Union Square market near its offices was depleted.

The out-of-stocks come at a time when the higher visibility at Whole Foods and the lower prices are driving more traffic to stores. As with anything involving Amazon Whole Foods, the news was gaining momentum and spreading by day’s end.

“Out of stocks are a perpetual problem in grocery,” said Bill Bishop, chief architect of Brick Meets Click, a retail consultancy, in an interview with WholeFoods Magazine. “The only way to completely eliminate them is to increase the inventory on the shelf for the faster moving products. Seems most likely the increase in out of stocks has been caused by the new system, which reduced inventory in the backroom without increasing the inventory of faster moving items on the shelf.

“A partial fix to the problem,” he added, “would be simply returning to the old system and paying the price for slower inventory turns and increased shrink. A complete solution would involve resetting all the shelves to provide enough inventory on the fast moving products so that they remain in stock between deliveries.

“This certainly is a logical solution,” Bishop continued, “but it’s one that would require the store to take that additional space from slower moving items and most retailers would not want to do that because they’d be concerned about shopper reaction.

“At the core of this problem is the old fashioned approach to shelf management planning and supply chain execution. So far few retailers, with the exception of the hard discounters, and even they have problems with this, have solved it,” Bishop noted.

Now would be a good time for independents to market their in-stock availability.

What are you seeing in your market? Share your comments in the field below.

1 COMMENT

  1. Bill’s comments are well-founded. He IS the expert in this space. I could not agree more.
    Technology is great and I believe retailers need to adopt it. It does not, however, help a retailer to put their total trust in technology when the technology is not supported throughout the entire supply chain. Like Bill said, retailers need to go back to what works. Blaming the technology for out-of-stocks is meaningless when your name is on the front of the store. Shoppers want what they want and if they can’t find their vegetables on your shelf, they will simply shop your competition. Then, how hard will you have to work to get them to come back?

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