Will centralized buying make Whole Foods a more formidable competitor?
Whole Foods is accelerating its shift to more centralized buying under Amazon.com’s ownership while also eliminating brand representatives from selling on store floors, according to reports.
In May, the Omaha World-Herald was already reporting that Whole Foods had “shifted many of its purchasing decisions to its national office, taking some power out of the hands of its regional offices.”
But Amazon’s August acquisition is expediting the shift, according to a report last week in the Wall Street Journal. A spokesperson told the paper that consolidating more of the buying at its Austin headquarters would help ensure a balanced mix of major and niche brands across stores, and yet the company emphasized that local suppliers and products would remain “crucial” to Whole Foods’ mix.
Further, beginning next April, brand representatives will no longer be allowed to set up displays and promote products in stores, according to the Journal’s report. The reps, who also educate in-store staff and check stocks and displays, distracted staff and proved ineffective in driving sales, said the spokesperson. Handling such tasks internally is also expected to save money.
Allowing brands to sell to individual stores or regions was often touted as the way Whole Foods discovered and supported emerging and local brands. The third-party brand reps are also seen as helping local brands build a following.
Standardizing operations is considered to be an important factor in helping Whole Foods reduce prices to be competitive with conventional grocers, but such moves may come at the expense of its eclectic mix.
Kurt Jetta, CEO at TABS Analytics, a consultancy to packaged food companies, told the Omaha World-Herald, “It’s really this tricky balance that nobody’s really quite mastered — trying to be local but trying to take advantage of scale and consistency.”
- Amazon Puts Whole Foods on Fast Track to Conventional Supermarket – The Wall Street Journal
- Changes at Whole Foods could mean fewer local products on the shelves – Omaha World-Herald
- A Bunch of Local Brands Are About to Disappear From Whole Foods – Time
- Whole Foods Saying ‘No Thanks’ To Local Growers – Southeast Produce Weekly
- Retail Is Whole Foods Getting Traditional Under Amazon? – PYMNTS
DISCUSSION QUESTIONS: Is centralizing buying a smart strategy for Whole Foods? Will the move affect its ability to differentiate from grocery rivals in local markets? What do you think of the company’s decision to ban brand representatives from stores?