This past quarter Whole Foods Market's total sales increased 8 percent to a record $3.6 billion; however, the final two weeks saw dramatic reduction in store sales growth as a result of reports that it knowingly overcharging customers via improper price labeling. Despite the slowdown co-Chief Executive Officer Walter Robb was optimistic about store sales, but investors didn't seem to share his outlook, as the company's stock fell 11 percent on Wednesday, July 29, and its shares are down 19 percent so far this year.
"In this rapidly changing marketplace, we believe we are taking the necessary steps to position ourselves for the longer term,” said Robb. “We remain focused on innovating and evolving to best serve our customers’ diverse purchasing preferences. From the unique experience of our Whole Foods Market stores, to our growing online channel for home delivery, to the exciting launch of our 365 by Whole Foods Market stores, we are making investments to extend our reach to both new and existing customers.”
The company also announced the first locations for 365 — its value-oriented banner.
The company disclosed leases for 365 by Whole Foods Market locations in Bellevue, WA, Houston, Portland, OR, and Santa Monica, CA, and also announced that the first 365 store will be located in the Silver Lake neighborhood of Los Angeles.
Whole Foods Market currently operates 24 locations in the Los Angeles area. The company made the strategic decision to renegotiate the lease in development for the Silver Lake location, converting it from a Whole Foods Market to a 365 by Whole Foods Market store. In doing so, the new store will be able to open its doors more quickly, capitalizing on the operational efficiencies and talented team member base already available in the area.
“We are really excited about the progress we have made with securing real estate in markets where there is high demand for both quality food and value in a convenient format,” Jeff Turnas, president of 365 by Whole Foods Market, said in a press release. “We think the Silver Lake area of Los Angeles is an ideal community to plant our first 365 store flag and bring a modern shopping experience that draws from the best innovations of Whole Foods Market stores and gives them a new expression. With a fresh format and a unique product assortment, we think 365 will offer convenience and value while providing the quality standards and transparency that consumers love and expect.”
The first store locations are slated to open in the second half of 2016. The company plans to double the number of 365 by Whole Foods Market store openings in 2017.
Designed to complement the Whole Foods Market brand by bringing fresh, healthy food to a broader audience with a streamlined, quality-meets-value shopping experience, 365 by Whole Foods Market stores will feature a curated mix of products that adhere to the company’s industry-leading quality standards in an environment that’s fun and convenient for shoppers.
Metro has launched a program to support local growers by distributing their organic vegetable baskets. Each week, 31 Metro stores and one Super C store across Quebec will play host to family growers belonging to the Équiterre network, which comprises more than 100 farms and feeds some 35,000 people every year.
This unique partnership between Équiterre and Metro, now in its fourth edition, was set up to provide easier access to locally grown organic food by creating drop-off points at locations that are already being frequented by consumers who enjoy local organic products. It also provides merchants with an opportunity to provide a complementary service to their clientele, made possible thanks to the growing number of Quebec farms that have opted for a drop-off point at Metro — growing from 14 in 2013 to 32 in 2015.
This collaborative effort, keeping with the spirit of the Local Purchasing Policy that Metro announced in May of 2013, allows Metro to broaden the scope of its efforts aimed at supporting Quebec suppliers by directly linking the consumer to a farmer in their region. Sharing recipe ideas with growers or discussing future harvests also contributes to improving the human and friendly aspect of this community program.
The agreement also fits in with Équiterre's goal of contributing to the support and growth of local organic farming. In fact, Équiterre's network of family growers provides the population with an opportunity to support a local farm by buying vegetable baskets that are certified organic or in the process of becoming certified.
Technology has arrived in virtually all segments of the U.S. experience, and that includes the foodservice sector. It might have lagged behind several other sectors, but it is starting to catch up rapidly.
At the PMA Foodservice Conference in Monterey, CA, in late July, this topic was explored by two entrepreneurs wearing the young techie moniker. Justin Mass, founder and president of Food Genius, and Matthew Ward, director of business intelligence and analytics for Advantage Waypoint, had a casual conversation as presenters in a seminar devoted to tech trends in the foodservice business.
Massa said food technology is exploding both in terms of investment and innovation. He pointed to several new online companies that are attempting to bring the restaurant dining experience to the home through the Internet. Several companies are delivering all the fixings to prepare a restaurant-quality meal at home, and one New York restaurant (Maple) is attempting to deliver restaurant food to the home within 15 minutes of the order being placed online.
Technology is also being used in both the front of the house and the back of the house to enhance the dining experience. Category management, long a staple of the retail food industry, has come to foodservice fueled by “Big Data.” The concept is apparently foreign to many restaurant operators and suppliers and not being embraced. Ward urged them to join the revolution by starting small and using data to answer simple questions that can be researchers. For example, data is available and can be used to find if you are calling on the biggest operators in your market. The information is there to quantify who’s who.
Data can also be used to inform restaurant operators about potential sales gains. For example, Ward said data shows that the use of pesto over-index’s in the San Francisco market by a huge margin. Suppliers can presumably use this information to elevate sales in like markets or to make sure a customer in that market is up to speed on this trend. He said using data to target usage opportunities is a great way to start utilizing this technology.
Massa said “category management” is becoming the “new normal as more and more operators are using trackable data to drive decisions. He said one thing the data is showing is that trends or cycles last longer than their exposure in the media. For example, he said the kale media explosion is pretty much over as food writers look for the next new thing. But the growth of kale menu items continues on its upward trajectory. Even after the buzz dies down, restaurant menu writers are still coming up with new recipes.
One downside to the information and data explosion, according to Ward, is that the operator is much more knowledgeable than he once was and he does not rely on the supplier as much as he did. “Consequently, the conversation gets to price very quickly,” as one of the few points of differentiation.
Both Ward and Massa discussed a technology trend that they aren’t fond of and that is the use of iPads for ordering. Some restaurants have iPads or other digital tablets at the table to allow ordering without a member of the wait staff being engaged. Ward said restaurants are about the experience and he does not believe it is a good trend to eliminate interactions between the staff and the customer. Though Massa said allowing the customer to pay when he is ready to leave rather than having to wait for the check might be a very good idea.
One bit of a data that has come out because of the digital ordering of customers is that they tend to customize their orders to a much higher degree when they have the chance. This has become a problem for some restaurants as the cook staff can’t prepare these custom meals as quickly as they are being ordered. However, this data also points to the customer’s desire to go beyond what’s on the menu.
Ahold USA has joined the Coalition of Immokalee Workers’ Fair Food Program, a partnership to improve the lives of U.S. farmworkers.
As part of this partnership, Ahold USA’s companies will only purchase Florida tomatoes from growers who participate in the CIW’s Fair Food Program and expand the Fair Food Program’s standards to farms of participating growers in other states. Ahold will pay a premium on tomatoes purchased from participating growers that growers will pass on to field workers, and it will provide additional financial support for the Fair Food Standards Council, CIW’s partner in monitoring compliance by participating growers with the Fair Food Program standards.
Ahold USA is the parent company of Stop & Shop, Giant Food of Landover, Giant Food Stores of Carlisle, Martin’s and online grocer Peapod. With nearly 780 supermarkets across 14 states and the District of Columbia and 50 million customers each month, Ahold USA companies together represent one of the largest food retailing groups in the country.
Additionally the company will work with the CIW to ensure timely, periodic inspections and audits of the participating farms that supply Ahold USA’s companies, and Ahold will support the Fair Food Program with expanded marketing and advertising, including in-store displays, online visibility and education materials for associates at Ahold USA companies.
The CIW was awarded a Presidential Medal earlier this year for its groundbreaking work in social responsibility, and its Fair Food Program — called “one of the great human rights success stories of our day” in the Washington Post — protects the rights of tens of thousands of workers on farms across the east coast, from Florida to New Jersey.
This announcement builds on the work that the CIW as well as Ahold USA and its suppliers have done to deliver responsibly sourced tomatoes to customers and to help improve conditions for farmworkers in Florida. Ninety percent of tomatoes produced in the United States from November to May are grown in the state. Ahold USA’s support for the Fair Food Program will extend the retailer’s long track record on responsible product sourcing and strengthen the reach, impact and visibility of the CIW’s social responsibility efforts. Ahold USA’s participation in the program will increase the number of U.S. grocery stores carrying Fair Food tomatoes by approximately 75 percent.
“We are truly proud to welcome Ahold USA into the Fair Food Program and excited about the opportunity to work with an industry leader like Ahold,” Gerardo Reyes of the CIW said in a press release. “Ahold USA is the first of the country’s major grocers to join the program and, as such, not only will its partnership help propel to new heights our efforts to protect farmworkers’ rights, but we believe its market leadership will send an invaluable message to the rest of the grocery industry that social responsibility is greatly strengthened when workers, suppliers and retailers work together toward a more modern, more humane agricultural industry.”
“Ahold USA’s companies are deeply committed to responsible practices throughout their operations and to providing customers with great products at great prices from suppliers who share our dedication to strong ethical standards and fair treatment for workers," James McCann, chief operating officer of Ahold USA, said in the release. "The cornerstone of this commitment is the Ahold Standards of Engagement, which commit our companies’ suppliers to these values. The Fair Food Program is a time-tested leader in improving the lives of agricultural workers, and we have observed the program’s success over the past several years. Our companies and our customers care about the welfare of workers in our supply chain, and we believe now is the right time to begin an important new chapter in our partnership with the CIW.”
Four years of cyclosporiasis cases led the Food & Drug Administration to issue an import alert that has stopped all fresh cilantro shipments from the state of Puebla, Mexico, until companies can verify food-safety measures and get on FDA’s Green List.
The Centers for Disease Control & Prevention recorded cyclosporiasis cases in 2012, 2013 and 2014 likely tied to fresh cilantro from Puebla, and the same product appears to be causing a current outbreak identified by Wisconsin health officials, says the alert.
“FDA believes it is extremely unlikely that these outbreaks of cyclosporiasis are due to isolated contamination events because of their recurring nature, both in the timing with which they occur (typically April-August each year) and the repeated association of illnesses with cilantro from the state of Puebla,” the alert says. “No single supplier (including retail outlets or distribution centers), packing date, shipping date, or lot code can explain all the illnesses. FDA believes the source of C. cayetanensis contamination is likely attributable to a broader source of contamination.”
Contamination sources may include fecal contamination of growing areas, irrigation of fields with water contaminated with sewage, cleaning or cooling produce with contaminated water, and/or poor hygienic practices of workers that harvest and process the produce, and lack of adequate cleaning and sanitizing of equipment that comes in contact with the product, the alert says.
The latest FDA action is causing hardship for produce companies, since this state is a major supplier of fresh cilantro, an industry source said. All shipments from that region have halted at this point.
Under the alert, FDA may detain fresh cilantro, whether it is intact or has been cut or chopped, from Puebla sold April 1 through Aug. 31 every year unless the product is listed on the Green List.
To get on the list, Mexican farms will need to prove compliance with food-safety measures verified by inspection and certification by SENASICA under its System for Reduction of Risk from Contamination Program, the Mexico food safety agency. Companies not participating in the SRRC Program can petition FDA directly, and FDA may conduct a limited number of on-site inspections of the growing/processing areas to audit company measures.
“FDA, however, encourages firms growing, harvesting and holding cilantro to participate in the SENASICA’s SRRC program,” and packers should gain approval of COFERPRIS for compliance with Good Production Practices, the agency said.