For some time, I’ve been a HUGE fan of Whole Foods Market. With their headquarters in Austin, I eat lunch in their awesome cafe three or four times a week. That being said, I rarely do my grocery shopping at Whole Foods, simply because it is so much less expensive to go to a competing grocery store. Today, I decided that I’d change pace and do my weekly shopping at Whole Foods.
Wow! The Whole Foods Market in Austin has a digital pricing system. Every single product in the store has a digital display below it on its shelf (similar to a calculator face) that gives the product’s current price. At first glance, you might assume that this is Whole Foods way of simplifying the rather tedious process of replacing price labels on a daily basis. But, I think these digital price displays are a little smarter than first look might render.
While walking up and down the herbal tea isle, looking for “my brand” I noticed that several of the price displays changed as I looked at them. WHAT!? Yes, the price of three herbal teas dropped as I walked past them. This got me thinking, how complex is the pricing system that Whole Foods is using? Are product prices rising and falling as I shop? If I stand around the store long enough, will I end up saving money, or is it possible that I take an item off the shelf at one price, but find it to be a completely different price upon checkout? Or was this just a glitch in the system, that I happened to experience first hand?
Regardless, I think that Whole Foods has a winner on its hands. I would imagine that these displays are intrinsically linked to a much more advanced system that logs consumer behavior. Being that Whole Food prides itself on selling only the freshest of fresh, I’ll assume that shelf life goes into the end price that is displayed digitally. The longer a product is on the shelf, the more of a discount is given off the retail price. This allows them to move products off the shelf that will expire soon. But, I wonder if they don’t also consider consumer buying habits? If a particular brand of herbal tea is selling really well, will Whole Foods lower the price, or make it higher? Will I save more money shopping on a Wednesday than shopping on a Sunday? These are all questions that I’d like to learn the answers to in regards to this digital pricing system.
Whatever the answers, I love Whole Foods. Their Animal Compassion and Whole Planet Foundations alone are reason enough to enjoy Whole Foods. But, let’s face it, they just offer a superior shopping experience and I think these digital displays are designed to heighten that experience. Whole Foods is basically taking consumer tracking techniques from the internet and applying them to real life, like many other retailers are doing. So, go visit a Whole Foods, enjoy the experience (impossible not to) and let me know whether you think those digital displays are designed to help increase your shopping experience, increase Whole Foods bottom line, or a pleasant blend of both?
Is your company’s pricing system designed to fluctuate from day-to-day or month-to-month, depending on market conditions? Do you give incentives to frequent clients or consumers? How are you making your customer’s shopping experience more efficient and pleasant? What are people saying about the new technology that you’ve recently implemented?
{ 11 comments… read them below or add one }
Wow, this is weird :) As we dutch would say: only in America ;)
We don’t even have such large shops as you guys over there :)
Although the biggest Albert Heijn’s (supermarket) do have a self-scanning system that saves you time because you don’t have to wait in line to pay :)
I guess every country has it’s own ‘weird’ things :D
JG adds…But are you really feeling comfortable walking through the store without being asked for your permission to be tracked? Did you give the company this level of digital permission? How hard would it be for Whole Foods to ask all its store customers for this level of permission? Would this/could this blow up in their face if it got out what exactly they were doing with the data behind the scenes. Who they are sharing it with or worse selling it too. Yesterday Apple got in deep do do over its pricing policies on the IPhone and do you/we really feel comfortable that you could be paying a higher price than your colleague behind you because your household income is higher than you buddy in the other isle?
The only thing close to what you are describing I can think of here in Canada is gas prices. They go up at midnight for the morning rush, down from about 11 until 3 then back up again for the afternoon rush then down until midnight. Maybe not daily but close enough!
Interesting point, Jeff. I, personally, have grown to be very comfortable with corporate entities tracking my spending habits. Amazon.com provides, in my opinion, one of the best shopping experiences your can have and it’s because they know every book I’ve purchased, clicked on or spent more than 30 seconds reading reviews about.
Does this make me uncomfortable? Well, if I thought that they were selling all of that information off to other vendors, I might be a little wary, but ultimately, I’d love to have more shopping experiences like Amazon.com gives me and I think Whole Foods is trying to step in that direction, not abandon their loyal customers by selling off data.
As for Apple (another company I love), I know there were people upset of the price drop in the iPhone. But, welcome to the world of technology, there’s always an early adopter tax to be the first guy on the block with something cool like the iPhone. I think Steve Jobs handled it perfectly, by writing a letter to iPhone owners and offering them a $100 rebate for anyone who bought the iPhone at the original rate. Steve’s just a good guy!
I don’t think it’s as big-brother-ish as some people feel.
Whole Foods makes money and they are good at doing that. At the same time, they bring healthy food to us. And over-priced toilet paper.
Jon … the smart thing about these LCD price tags is the RFID technology. Instead of tediously having to change price tags when items are on sale or when the price changes, all Whole Foods has to do is enter the price change on a computer and the LCD price displays will change.
The dumb thing about these LCD price tags is the poor readability. I have trouble reading the small LCD screen due to glare and the screen being flat on the shelf. To read the price tags, I need to bend down and then the black type on gray background still makes it hard to read. If the screen was tilted, then the glare would be reduced and readability increased.
I’ve talked with a few Whole Foods team members (employees) and while they like the LCD price tags, they say customers are having a hard time reading them.
I’m not sure Whole Foods is doing the flexible pricing dealio that you suggest. They could. But I doubt they are tracking and reacting to customer spending habits in the way you suggest.
@paul - Yes, but every time you wipe, you know you’re saving the planet. :)
@john - I definitely agree with the readability issue and the LCDs seem like a great way for quick sale pricing, but I can’t imagine that Whole Foods isn’t taking advantage of this system in any other way. The store prides itself on giving you fresh, healthy food. Why wouldn’t they lower pricing to get things that have been on the shelves too long out of the store? I’ll do some more investigating on this. Thanks!
Jon … think about it, the departments where WFM’s products have short expiry/freshness dates are in perishables, meats, seafood, dairy, and prepared foods. Nearly all of those departments do not use the LCD pricing display. These electronic signs are almost exclusively in the packaged goods section of the store. Most packaged goods have a long shelf-life.
COST SAVINGS is the biggest advantage to using these LCD pricing displays. It simply takes less labor time to change prices with the LCD displays.
As a former director of National Marketing for Whole Foods Market, I can attest to the company being too busy operating its stores than to mine customer data from these LCD pricing displays.
@john - So, it sounds like I might have been completely off with my LCD displays being used to monitor buying habits theory. If what you say is true, I am. I was merely throwing it out as a theory for someone like you to shed some light on the truth. So, thank you for that. If you’ll put me into contact with someone over at Whole Foods, I’ll write a retraction with the proper story. Thanks!
I have enjoyed reading these comments. I work for the company who installed the Electronic Shelf Lables in Whole Foods Market. We have installed our system in many of their Southwest regeon stores and continue to do so.
Your experience was not an example of consumer stalking but merely a coincidence. They processed a batch of pricing changes at that moment you walked by. Electronic pricing allows them to change pricing with a drag and drop of the mouse.
As for johnmoore’s comments… he is slightly misguided We DO NOT use RFID technology. Also, WFM uses the price lables in ALL departments except produce and on “by weight” items.
@jrf - Thanks for the clarification! That’s a great technology you guys are installing.