- Whole Foods employees say stores are suffering from food shortages because of a newly implemented inventory-management system called order-to-shelf, or OTS.
- Whole Foods says the system reduces unnecessary inventory, lowers costs, and frees up employees to focus on customer service.
- Employees acknowledge that less food is spoiling in storage rooms, but they describe OTS as a "militaristic" system that crushes morale and leads to many items being out of stock.
- "Last week, we ran out of onions and potatoes twice," an employee of a Brooklyn Whole Foods store said. "Entire aisles are empty at times."
- "It has for weeks had empty shelves, and I shop there twice a week," one customer told Business Insider. "The prepared-food section is not refreshed, and food looks stale."
January 18, 2018
What's up with the empty shelves at Whole Foods
Business Insider investigates:
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85 comments:
Empty sections at Pick N Save. But that because Kroger is moving their brands in to replace Roundy's.
Clearly we need a government take over of not only health care, but grocery stores.
Amazon has taken over. If they don't watch themselves they will kill Whole Foods.
Artificial Stupidity.
With a computer you can make millions of mistakes per second!
Though it may be more efficient, making your store look like a typical Eastern Bloc grocery during the height of the Cold War strikes me as poor marketing. If they drive customers away because of this, they may end up losing far more money than they save with this new system.
It just means just-in-time isn't working yet.
Maybe growing pains, maybe sabotage.
Somebody in the 70s put just-in-time in at Kmart and never got it working. They instantly ran out of stuff and stayed run-out, and got taken over by some other failing retailer.
We have Sprouts here. Sprouts inventory has been full and varied. It's a pleasure to shop there and I feel better about not further feeding the behemoth.
Sounds to me like bad management by the individual store managers.
Perhaps purposeful as a form of protest against Amazon?
Has Amazon been fixing the end-of-quarter books by playing games with inventory? They are new to the grocery business, but this seems odd and exceptional - not just the product of a learning curve. How can one run out of potatoes?
I think, politically, we like the owner of Whole Foods, but he is botching it.
Our neighborhood Sprouts is a block away from Whole Foods, and seems to be doing a pretty good business.
Amazon has been a huge resource to me so I have no complaints.
The resources of the world at your fingertips with one click shopping, and two days later it's in your mailbox.
Imaging trying to find all that stuff in local stores even when there were local stores.
This morning, in Boston's tony Cambridge St. Whole Foods, the deli was out of soppressata. Curses!
From what the article says, the OTS system was put in a year ahead of Amazon's purchase. If anyone should be able to fix a just-in-time inventory system, it's Amazon.
There are a lot of Whole Foods in the nation. It can hardly be difficult to find some with empty shelves; nor are disgruntled shoppers all that rare.
The challenge for Whole Foods is that they're losing shoppers to Trader Joes. Trader Joes beats them on price by having smaller stores, many fewer products, and a much leaner inventory system. That, I suspect, is the real push behind the inventory system.
Whole Foods would rather see a headline like "Entire aisles are empty" than "Whole Foods is bleeding money".
Of course weather issues, especially in the more northern states, could mean that a system that is somewhat adequate during the spring/summer/fall might fail miserably in the winter months when storms produce "runs" on stores, and truck shipments are delayed. Having nothing back in the storeroom could easily result in bare shelves during periods of bad weather.
Still, the photos in the article are appalling and indicate a genuine problem for this chain.
Or maybe this explains it:
Whole Foods gets stores to comply with OTS by instructing managers to regularly walk through store aisles and storage rooms with checklists to make sure every item is in its right place and there is no excess stock. If anything is amiss, or if there is too much inventory in storage, the manager in charge of that area of the store is written up. After three write-ups, they can lose their job.
If the store shelves are bare, you don't get written up and lose your job. If you pre-order because you know the supply chain is a bit iffy and demand will come in spurts, you do get written up and lose your job. Such an "incentive" system could well produce bare shelves!
I see no reason to assume that Amazon management knows how to run a grocery chain just because they're Amazon.
WF's clientele is not the same as CostCo's. WF's, save with a transformed clientele & cost structure, is never going to be a "Just-In-Time" kind of place.
The good news about the PRIVATE sector, though, is that you can experiment like this. If it works, great! If it doesn't, shoppers go to Sprouts. At least it doesn't impinge on you like the large, clumsy, federal government.
Amazon ramped up its Amazon Fresh delivery in our area last year (got 90 days free subscription) then closed it down by the end of the year. Which is odd because we're in a nexus of both food supply and distribution warehouses. We get 2hr delivery if we want.
No reason why, but my guess was to not compete with Whole Foods. I stopped shopping at Target when everytime I went there, they were out of stock. It ramped up my Amazon purchasing about a decade ago. I don't mind getting out and about, but if its a crapshoot whether it'll be a wasted effort, I won't waste the effort.
Now a Sprouts is opening up in a few weeks a couple miles away. I hear rave reviews (echoing what was said here).
Just as I decided to sharply reduce my Amazon purchasing in 2018.
The reviews have gotten sketchy at Amazon, and I'm not a fan for many reasons, but they do have extremely good customer service. And they are still the only ones who always have the oft obscure books I am needing in a moment's notice.
But, I'm happy to avoid their various entries into fresh foods. They seem to be focused on efficiency rather than quality, and having good customer service is a great idea if the customer service isn't really all about explaining why items aren't in stock or what else to buy. Do Whole Foods shoppers have a lot of returns or need a personally curated shopping experience?
A lot of people seem to be assuming that this is somehow Amazon's fault, but the article claims it was a system that was in place before the buyout. At any rate, it's certainly Amazon's problem now.
As MaxedOutMama points out, it seems like a poorly thought out system if it encourages managers to have bare shelves rather than just simply tightening inventory control. The best laid plans and all that.
But cost savings!
Ha, they are scaring the hipster employees by trying to make money. Trigger trigger trigger.
Curious George said...
Empty sections at Pick N Save. But that because Kroger is moving their brands in to replace Roundy's.
1/18/18, 10:41 AM
I've noticed that too.
And I've also noticed the empty shelves at WF. I stopped in there a few weeks ago because I happened to be in the neighborhood and needed parsley, fresh basil and garlic for a recipe. There was no (curly) parsley, no basil, and the garlic was of very poor quality.
First World problems, I know.
Inventory visibility is always going to be a big factor in a store that the customers walk through and choose their purchases. It is simple human nature to like to walk through a store with full inventory on display. On-line stores can get away with just-in-time inventory control because they have the flexibility to deliver your purchase from multiple points, but a brick-and-mortar store can't do that as easily. It sounds to me that Whole Foods was losing money due to high spoilage rates- over-stocking the back rooms- and has now over-reacted to that problem. Maybe fine-tuning this policy will provide the success they were looking for.
roadgeek said...
But cost savings!"
What are the cost savings, exactly? I mean, they’ve lowered the prices on a few things and every so often they’ll have a good sale on items like steak or cheese or salmon that are normally quite expensive. But I haven’t noticed any great difference in the price when it comes to the majority of items.
I asked a few of the employees right after the Amazon deal how they felt about it. They did not seem very enthusiastic.
The venders will soon start to complain that their products aren't on shelves. Having products visible to the public is important marketing, even if you're a granola munching, coconut milk swilling hippy.
Maybe a few posters of Che and Bernie would help for a while.
Walmart has just started "Scan & Go". I'll try it next trip. In theory, I scan an item's bar code, put it in a bag, and walk out of the store (because my credit card is in the app). Wow-ee wow am I excited to not stand in line again.
I wonder if all the grocery chains are in the middle of a huge shift in process.
The picture at the link made me think of Venezuela! Is Whole Foods owned or run by leftists?
I haven't noticed this at our Whole Foods but I was too busy noticing I was the only one shopping for myself. Curse you Instacart!
Sounds like growing pains. Revisit in 6 months.
Been noticing the same thing in Colorado. My wife's favorite breakfast tea vanished from the shelves 2 weeks ago, happened to show up yesterday.
mockturtle
We have Sprouts here. Sprouts inventory has been full and varied. It's a pleasure to shop there and I feel better about not further feeding the behemoth.
In addition, Sprouts has lower prices.
"We have Sprouts here."
And, in less than one year they will be out of business. You heard it here first.
Maybe this is a sign of things to come. The cheapest method to get people their groceries is just in time inventory, but that doesn't work with shoppers just showing up at the grocery store. There are going to be fluctuations which, if the main goal is to not oversupply any product, will lead to temporary shortages. So this method doesn't work that well with a standard brick and mortar retail store. But could work better online, if people have a large amount of consistent items in their weekly grocery list. Just in time inventory can certainly work if the retailer has a couple days notice of what they are going to need. Then maybe traditional grocery stores will shift to more niche items, or staples with a premium attached to them, for the shopper who suddenly discovers they need shallots and crème fraîche for a recipe, or that they need beer, chips, and guacamole.
Think of it as decluttering. They simply need to fill the empty spaces with photographs and signs:
The things you think you love-like a pound of Yukon golds-can't reciprocate. That relationship is one sided.
Trader Joe's has had the same "problem" for years on certain items. But I'm not complaining,
since TJ's prices are generally less than Whole Foods for comparable items.
But OOS is usually not a problem at TJ's if you're an early bird. Their organic Tuscan worms smothered with mushrooms & garlic in frozen pot pies are truly delicious.
And I've also noticed the empty shelves at WF. I stopped in there a few weeks ago because I happened to be in the neighborhood and needed parsley, fresh basil and garlic for a recipe. There was no (curly) parsley, no basil, and the garlic was of very poor quality.
First World problems, I know.
1/18/18, 11:27 AM
We don't know all there is to know. For instance, Stew Leonard's, a small, upscale grocery chain in CT and NY, is out of basil till further notice; and although they are having some shocking sales on proteins, I have been noticing for the last quarter or so that there has been a tick in prices. Inflation, or something.
So we may just be at some sort of market inflection point. Which maybe AMZN/WF is weathering less well than others.
But we may only be seeing a piece of the elephant.
Just-in-time works well if the reorder stock points are properly set, kanbans are properly utilized, and order lead times are appropriate. JIT to a shelf may prevent double handling and overstocking, which are probably the goals, but it's a difficult balance to maintain. If, as MaxedOutMamma says, management is intervening to negatively influence the Kanban performance then system collapse is almost inevitable. Particularly so if order lead time is too long. I've done hundreds of these JIT setups and I always used an employee kaizen team event to sort through the process, identify the relevant variables and develop the standard work to guide the employees. I suspect their order lead times and/or available shelf space do not support direct restocking for high turnover SKUs and there is no standard work promulgated. They need a lean consultant to help them through this if they don't have the skill set themselves, and it doesn't appear they do.
"There was no (curly) parsley, no basil, and the garlic was of very poor quality. "
Interesting, I also noticed there was no basil when I made a special trip to the grocery store last week. Maybe there is a basil shortage.
Millenials and regressives, who like to lecture the rest of us on the joys of socialism, will get a small taste of what life will be like under socialism.
Whole foods moves a lot of "sell it or smell it inventory" such as fresh meat, fruit and veggies, but so do many supermarket chains with bigger stores than Whole Foods. Me thinks that the problem may involve the common "new owner/new system equals employee resistance to change."
The secret to success in retail supermarkets is sales velocity (inventory turns) - because margins are not large. In the old days (like 20 years ago when I left the business), suppliers offered cash discounts of upwards of 3-5% to get paid early and the total profits for the year for most stores would come in at about 2.5%.
But inventory rules for Amazon's amazing distribution system cannot possibly work for fresh food operations - so you have to wonder if Amazon executives have stepped in something. On the other hand, rumor has it that Amazon has bigger plans for all those retail locations owned by Whole Foods, so stay tuned in.
Interesting, I also noticed there was no basil when I made a special trip to the grocery store last week. Maybe there is a basil shortage.
Basil is so easy to grow and just pull off leaves when you need them.
"On the other hand, rumor has it that Amazon has bigger plans for all those retail locations owned by Whole Foods, so stay tuned in." Do you think they want to turn them into online order pickup locations and delivery hubs?
I thought Basil has to grow in a relatively dry and warm soil condition?
Amazon is a huge learning machine, so I expect any issues will get fixed really fast. Amazon is willing to take risks, and sometimes it pays off, and others times it does not. Aldi's is coming into the grocery market, basically a lower end version of Trader Joes (owned by part of the same German family).
Reviews on Amazon are a challenge, but Amazon keeps on changing review rules. They keep on closing loopholes that have been used to game reviews.
Amazon is running Whole Foods the same way they run the rest of their business. All that's missing are the constantly changing prices.
Bread & Circus was a great grocery store here in Cambridge. Whole Foods took then over but never quite measured up. I'd say the one to check out these days is New Seasons, but so far they've only got stores in the Portland metro area and a few other places on the West Coast.
StephenFearby said...
"Trader Joe's has had the same "problem" for years on certain items. But I'm not complaining,
since TJ's prices are generally less than Whole Foods for comparable items."
I no longer go to Trader Joes. They changed their baker of baguettes. What they have now is what I can get at Jewel. Soft crust and doughy inside.
I've taken to eating Aldis bake it yerself. Close but no baguette. Sigh.
There's a whole foods down the street next Meijers. I go to Meijers. Probably because I don't eat arugala. I don't even know what arugala is.
They may just need a new set of employees.
My recent visits to the two, Milwaukee County, Whole Foods stores did not show any general lack of produce or other products.
JIT sounds like it'd be great for something with somewhat predictable demands;
but, if there's a snowstorm forecast, the first thing people do is stop by the grocery store and stock up on stuff they don't need.
Which pisses me off!
There'll be 3 inches of snow in the forecast, and when I stop at the local grocery store to buy 2 gallons of maple syrup, there will be a HUGE LINE!
What is it with people thinking they need all that stuff? and what about my pancakes?
I hate Whole Foods anyway. I couldn't care less if their shelves are empty. I haven't been in one in years.
On the other hand, I love Amazon.
mockturtle said...
Interesting, I also noticed there was no basil when I made a special trip to the grocery store last week. Maybe there is a basil shortage.
Basil is so easy to grow and just pull off leaves when you need them.
1/18/18, 12:56 PM
Yes, but if illegal immigrants/migrant workers have been pooping in the basil fields, maybe the chains are quietly trying to save our lives without making a fuss.
Huh, now I understand why I couldn't find little tomatoes the other day.
The Vault Dweller said...
I thought Basil has to grow in a relatively dry and warm soil condition?
1/18/18, 12:59 PM
Yeah. I haven't had much luck in growing it in Wisconsin. I fared better in DC, when I had 4 different kinds of basil growing in pots on my deck, along with a small rosemary bush.
The Vault Dweller said...
I thought Basil has to grow in a relatively dry and warm soil condition?
We have no problem growing it in New Hampshire.
One of my favorite sayings regarding retail inventory management was made by Richard Sears, one of the founders of Sears and Roebuck. He said: " You can't sell goods from an empty wagon." Every Finance and Inventory department in the retail business should have that written on the wall in letters ten feet high!
It's apparent that in the real world one can't reduce inventory to zero. For pretty much the same reason that streaming audio or video needs a local buffer if the output isn't going to stutter or judder.
And so, when the corporate brass start punishing managers for keeping too much inventory, the usual answer is not to eliminate the inventory but to push the problem back to suppliers. It's not that there's no inventory, it's just that now the supplier is carrying more of it instead of you.
And sometimes that just gets silly. As when a production facility that obviously has tons of inventory on its premises noneless can point to an accounting program that insists it has no inventory at all! Because, of course, all that on-site inventory remains owned by suppliers until the moment it is removed from the supplier's on-site "warehouse."
And somehow this is supposed to be more efficient, even though everyone can see that the cost of carrying that inventory hasn't been eliminated, it's just been shifted.
This is the same sort of efficiency one gets by demanding that customers pay within 30 days, but suppliers must wait 90 days to get paid: just enjoy that improved cash flow! Yet inevitably the supplier must find a way to get paid for having to wait 90 days, just as surely as they'll find a way to cover the cost of carrying your inventory. But, it looks better and you no longer have to explain why you're keeping so much inventory.
As for Whole Foods: if order-to-shelf is more efficient, then just think how efficient direct-to-consumer will be! And (another gain!) customers won't squeeze the melons until they own them.
I suspect some of these problems are caused by the recent storms across the US (snow in AL for instance); it appears that most of the empty shelfs are in the produce departments. However good management should have been able to offset a good deal of the problem. I am always amused when somebody like the WSJ gets all excited about a Systems or Finance guy being put in charge of a retail operation. Invariably, within twelve months, you have the kind of problems Whole Foods is having. Retail - all retail- is a tough business.
Sounds like the company owners want to be Socialist. I mean empty shelves? That's the hallmark of socialism.
I’m happy to report that there ere no vacant shelves at Walmart yesterday. But they were running dangerously low on my favorite brand of pork rinds.
The Walmart near me had quite a few missing items. Every year they fail to anticipate the snowbirds, I guess. Or maybe they're still taking inventory.
Basil can be grown indoors with adequate lighting.
Always hit or miss on whether bone-in chicken thighs are available.
Almost never have "Step 4", non-premium cut steak, either in the case or on sale.
Always out of the whole roasted chickens at 6 PM. C'mon people!
And the prepared food counter offerings have been pared back, at least as far as omnivores go.
Disappointing, Amazon.
Have they tried out these new Amazon ways in Venezuela yet?
Shit hole foods?
JIT systems require constant human input, a fact that's seldom mentioned when selling them to the naive and inexperienced. Physical reality lies to virtual reality like a mofo.
Because of Trump, people have a lot more money in their pockets to buy food, and they are buy like crazy.
buying
Supply chain systems are great and can provide tremendous value to the company and its customers. If the stores are experiencing shortages of this type: customer wants to buy product X but it is out of stock, then the supply chain system (their OTS) is not working properly.
-sw
No Whole Foods for us in Iowa. We do have "Fresh Thyme" a Spouts/Trader Joe's clone, which is doing great business. Maybe it's hard to be the "Farm Fresh" king in a land with actual farms. Also, odd empty spaces is usually a precursor to a further bust-out and Chapters 7-11.
Actually I think AllenS is right. Trump did it. The Bas***d.
I liked Whole Foods because the staff handled fresh fruit and berries more carefully and they lasted longer, almost off-setting the huge price differential. I wonder if they will keep that up.
Mock, when it comes to growing indoor plants, I seem to have a black thumb. I stick to cut flowers, which I usually buy at Trader Joes. Their flowers ate much more reasonably priced than Whole Foods flowers.
https://www.youtube.com/watch?v=2UFc1pr2yUU
It's getting real in the Whole Foods parking lot.
You know the deal with those little shopping carts they got.
The Madison Whole Foods had no onions this evening.
What kind of grocery store doesn’t have onions?
What kind of grocery store doesn’t have onions?
It sounds very Soviet-era.
Perhaps it's all a cynical ploy -- create food shortages so that people will appreciate the people who pick our food. Ergo, vote to open the borders wider.
So many new food deserts now that Trump is President ... for shame!
First world problem: I desperately need some Appenzeller cheese a couple weeks ago for a Swiss fondue. Our daughter was home and requested one, just like she knew growing up. Whole Foods used to carry it in San Diego when we lived there and so did a German foods speciality store in Carlsbad. But since moving to Orange County, I had never sourced it. I called around to every WHole Foods in Orange County, only to find that they no longer carried it. Nor did a couple of specialty cheese stores around Newport Beach. I almost gave up but finally found one shop in Anaheim that had some. I paid a dear price for that cheese.
What kind of grocery store doesn’t have onions?
Several local grocery stores sell loose onions for 80c-$1.00/lb, or a 3 lb bag of onions for ~$1.70. It is not uncommon for the bagged, cheaper onions to not be in stock.
”Several local grocery stores sell loose onions for 80c-$1.00/lb, or a 3 lb bag of onions for ~$1.70. It is not uncommon for the bagged, cheaper onions to not be in stock.”
They had no onions at all.
Let them eat cake!
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