Under changes planned for April 2018, leading North American natural and organic grocer Whole Foods Market will change the way companies can sell and promote their products in its stores and do away with allowing representatives of lesser-known products into the stores to promote product offerings, that WFM said is inefficient, is distracting to employees and has led to declining sales.
The move is a push to operate more like a traditional supermarket following the Amazon takeover in August, while changes were already underway before Amazon.com Inc.'s deal for the chain and its acquisition has added incentive for Whole Foods to shift from its decentralized model and become more efficient.
Under the changes planned for April, Whole Foods’ 470 locations will no longer allow brand representatives or promotional people check their products to make sure they are stocked and displayed correctly. That may hit local and regional food product companies, according to reports in The Wall Street Journal and Dow Jones Newswires.
Whole Foods also is centralizing much of its decision-making regarding the assortment of products across the chain. Instead of allowing brands to frequently pitch their products to individual stores or regions, Whole Foods executives in its Austin, Texas, headquarters will choose a higher percentage of the inventory, The Wall Street Journal said.
"This is another step in the conventionalizing of Whole Foods as we know it," said Jim Cusson, of Theory House, a brand consultancy based in Charlotte, N.C. He expects the education and hence knowledge, of in-store associates, will diminish over time.
A Whole Foods spokeswoman said the chain remains committed to offering local brands across its stores, and their streamlining of purchasing will help ensure a mix of small and big products. "Local suppliers and products are crucial to the success of the company," she said.
Amazon is hoping to boost sales at the struggling grocer, in part, by standardizing operations and prices. Market reports show traffic and sales improvements since the deal closed because the chain lowered prices on key items like eggs and milk.
The changes are among those expected to be discussed late September by top executives and managers at the chain's quarterly meeting in Seattle, a regional hub for Whole Foods and Amazon's home base.
Some suppliers and natural-food consultants say sales of specialty products could suffer because lesser-known items such as chia-soaked seeds require some explanation and more marketing.
"This is a major inflection point," said Jay Jacobowitz, president of Retail Insights, a Vermont-based natural-products industry consultancy that works with independent retailers. "The product mix at Whole Foods will shrink and niche lines will trickle out to other grocers."
Other suppliers said they welcome the change, with Whole Foods expected to begin offering brand advocacy themselves for a similar fee to what they pay the third-party providers, which could produce better results.
Following the news that Amazon and Whole Foods Market had entered into a definitive merger agreement under which Amazon would acquire WFM for around US$13.7 billion, negatives and positives were raised in August, including how the move will impact on organic and natural product suppliers' higher standards and production costs, prices and profits, and that Amazon's online reach may benefit smaller and emerging organic suppliers.