Whole Foods' crisis of empty shelves is hurting sales, analysts say

  • Barclays analysts say out-of-stock problems at Whole Foods are hurting the grocery chain's sales and making it less of a threat to other grocers.
  • "Until execution issues are resolved and broader price cuts are implemented — we believe traction on sales will stall, so for now the pressure on the industry has abated," analysts wrote in a research note.
  • Whole Foods employees have told Business Insider that the out-of-stocks are the result of a new inventory management system called order-to-shelf.


Whole Foods having problems keeping shelves stocked at stores across the US, and sales are likely suffering as a result, according to Barclays analysts.

"Until execution issues are resolved and broader price cuts are implemented — we believe traction on sales will stall, so for now the pressure on the industry has abated," analysts wrote in a note published Wednesday. 

10 grocery habits to master before turning 30:

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10 grocery habits to master before turning 30

1. Never buy a “single” thing! 

Yes, you may be the only occupant in your studio apartment but grocery items like yogurt, tissues, paper towels, ice tea, potatoes, and apples can be purchased in bags or multipacks. It almost never pays to buy singles, which can boost your cost by 40% or more. Put those dollars towards a happy hour!

2. Make your own snacks.

The price premium can be huge on snack-sized items. Instead, buy the largest size available (which is typically the best deal—always check unit prices and search for coupons and deals on Flipp!) and make your own snack sizes. For example, ounce per ounce, a regular container of Jif peanut butter costs 40% less than Jif To Go singles. Make your own singles with tiny plastic Tupperware. You can use the same method with yogurt, cottage cheese, and fruit cups. And use plastic baggies for chips, pretzels, candy, and other snacks that are often sold in single-serve packaging at a big premium.

3. Don’t ignore the clearance racks. 

Yes, even in supermarkets! They might look like a jumble of stuff you don’t need. But stores are always clearing out inventory to make room for new products and the markdowns can be 50% or more. Just be sure to check expiration dates and search for available coupons to save even more money.

4. Check circulars. 

If you don’t use the weekly local ads to plan your shopping trip, you’re shopping blind! The circulars can help you decide where to shop and what to buy—saving you hundreds of dollars a year. Make it easy by downloading a shopping app like Flipp, which puts all the weekly local ads at your fingertips so you can browse them all in one place. Even better, use Flipp’s Shopping List feature, which automatically shows you all the local deals for the items on your list.

5. Plan your meals. 

Meal planning itself can save you 50% on your weekly food bill. Not only does it help you save on your weekly food bills, it also keeps you from eating out as much, saving you even more money! Simply plan your meals for the week around the "loss leaders" which are the items on the front and back pages of your weekly circular. Eat what meat is on sale and produce that is in season, then plan what you are going to eat on each night. Pack leftovers for lunches and you have even more savings!

6. Ask for a rain check.

Always ask for a rain check if an item is on sale and out of stock. A rain check entitles you to the sale price when the item is back in stock. Most rain checks do come with time limits so read the fine print. If you had intended to buy multiple of the item, make sure that is noted on the rain check.

7. Don’t go coupon crazy.

Coupons can save you big bucks and you shouldn’t shop without them—if you use them for stuff you actually need. The problem is that while many of us make a list and try to stick to it, we also tend to indulge in “off-list purchases” triggered by coupons and other promotions. A study by NPD showed that 80% of unplanned supermarket purchases are due to promotions. One trick is to make a game out of limiting impulse spending. For example, you can set aside a “mad money budget” of, say, $5 a week for those sale items you just can’t resist.

8. Skip the prepackaged foods

Sure a prepackaged dinner saves you time when you’re exhausted and those pre-made treats make packing lunches easier, but prepackaged foods cost more money than their homemade counterparts. If you want to save money, make muffins from scratch or cook extra at dinner and freeze the leftovers. Skip the prepackaged items to save your budget and your waistline, too.

9. Go to the Grocery store ONE time per week. 

If you haven’t been planning your meals then chances are you have been making extra trips to the grocery store to get items you need for dinner. Those trips for “just a couple of things” always add up to more than you planned. They also add up to extra money you hadn’t planned to spend.

10. Use your store loyalty programs. 

Gather information about a store’s loyalty programs to see what kind of savings you might be able to unlock. Some stores will require a loyalty card in order to receive sale prices. Many also offer incentive programs like gas savings when you spend a certain amount on groceries. You want to be familiar with the perks of your grocery store loyalty program so you can maximize these savings. There may also be limited time promotions.

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Barclays analysts have been visiting various Whole Foods stores on a weekly basis since Amazon acquired the grocery chain last year for $13.7 billion.

The analysts' most recent store checks revealed "many noticeable out of stocks in the grocery category," they wrote.

"Specifically, within just one store, we observed major out of stocks in cookies, crackers, popcorn, canned beans, canned peaches, seltzer, and water," they added.  "In addition, we noticed employees utilizing facing to make shelves appear more stocked than they actually were — so, the out of stocks could have been more pervasive than we were able to notice. We also note that frozen seafood out of stocks have persisted for many weeks at one store we routinely check."

"Facing" is used when stores run out of a specific item, and replace the empty spot with another item. For example, if a store runs out of romaine lettuce, employees might fill the empty spot with spinach. 

Whole Foods employees have told Business Insider that the out-of-stocks are the result of a new inventory management system called order-to-shelf. The system allows for a very small amount of storage, so any unexpected increase in demand can result in out-of-stocks. 

Whole Foods has not responded to requests for comment on the new system.

NOW WATCH: Take a look inside Amazon's grocery store of the future — there are no cashiers, registers or lines

See Also:

SEE ALSO: 'Entire aisles are empty': Whole Foods employees reveal why stores are facing a crisis of food shortages

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