Profit share hard wired at Whole Foods

Walter Robb, co-CEO of Whole Foods, provides good insight into its success secrets in an interview with Fortune, just published, that retailers should read.

In a company with 78,000 staff members, it says voluntary staff turnover is 9 per cent compared to an industry average of 100 per cent plus. At departmental manager level it is 3 per cent.

What makes this possible?

"Everyone belongs to a team. Labour is a fixed cost not a variable cost. If a team can generate revenue that exceeds a budgeted margin between the revenue and the labour cost, they share in the gain. Every 30 days it is in their paycheck. If they build sales or save costs, the productivity they create is shared with them. On average in the last year it was over $1 an hour in their paychecks from gain sharing, which they created through their own efforts," Robb told Fortune's Geoff Colvin.

There is an important principle in here that you can use in your business. You need to operate with discipline but what you get in return is the power of the creative energy of your staff being unleashed - the people closest to the shopper.

If you are doing something similar, let me know. I would love to discuss how you structure it.

For more, see Better Retailing.

Comments

Three secrets of great merchandising

Look at the ceiling and top wall of this McDonalds restaurant. There is a picture of two good looking healthy people having fun and some bright primary colours. Ask yourself what is the purpose of this picture? In the latest issue of Retail Newsagent in a feature on merchandising, Andrew Knight of RI tells its independent readers that they need to think about using sharp pictures of non-packaged products linked to people consuming goods. Perhaps this has been taken to the next level by the fast food chain - that is selling the feeling of being happy and healthy rather than the products. A second, related tip from the same feature is made by most contributors - it is vital to keep windows clean and clear of clutter. "I believe that less is more," says Roli Ranger, a retailer from Ascot, Berkshire. He has posters for promotions in between the windows that are regularly updated and discreet signs in the windows. Third, a highly visible well-stocked promotion at the entranc

Overcoming a price disadvantage

Planning for his speech at the Independent Achievers Academy last week, Theo Paphitis asked an assistant to buy a basket of six essentials from a Tesco, a Londis (independent operator in a symbol group) and a One Stop (Tesco's CTN/convenience chain). Tesco was cheapest by a big margin. Second came Londis. The most expensive was One Stop. Mr Paphitis understands the power of the supermarkets and he says the way to counter them is to focus on how to make the experience of shopping with you more relevant to shoppers or more enjoyable for them. John Heynan, sales director of Molson Coors, told Retail Newsagent at about the same time that occasional beer buyers will pay 13 per cent more for their beer in an independent convenience store, provided the retailer targets them appropriately. Tesco has carved itself out this 13 per cent head start. Looking at pricing, if Tesco is 100, then Tesco Express is 108, One Stop is 112, a good symbol group is 115 and non-affiliated independents

A sign of retail stress perhaps

It must have been four months since this window was broken in the Tesco Express on Pentonville Road and I simply cannot believe that it has not been fixed. This is the sort of lack of focus that independent shops usually get criticised for. The only purpose in sharing this image is to encourage those independents with high standards who are finding the going tough that they can do better than this.

nickshanagher

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