Whole Foods’ small vendors upset by new limits, charges
Whole Foods Markets is placing new limits on how products are sold in its stores and asking suppliers to help pay for the changes, riling some mom-andpop vendors that have long depended on the grocer for visibility and shelf space.
The changes, outlined in an email recently sent to the company’s suppliers, are intended to save on costs and centralize operations. They come as Whole Food’s new owner, Amazon, pushes to reduce prices at the chain’s 473 stores.
Some small-business owners said they are already feeling the effect.
Valerie Gray, for instance, began selling her pasta sauce, Italian Heart’s Gourmet Foods, to the Whole Foods store in Reno, Nev., four years ago. For years, she said, the grocer allowed her to display 108 bottles of pasta sauce at a time. A professional photograph of Gray and her husband hung from the ceiling, alongside a sign that read “Made Locally.”
But in the past month, that photo has come down, Gray said, and the shelves now accommodate just 36 bottles of sauce as the store makes room for national brands. Sales of Gray’s pasta sauce have dropped by 75 percent in the past month, she said.
“It feels like that local, personal touch is going away,” she said, adding that Whole Foods accounts for half of the company’s sales.
Previously, Whole Foods allowed suppliers like Gray to oversee their own merchandise or hire local firms to do so. But under the new rules, Whole Foods is requiring suppliers to work with Daymon, a Stamford, Conn.-based retail strategy firm, and its subsidiary, SAS Retail Services, to schedule in-store tastings, check inventory on shelves and create displays on their behalf.
“For the last two years, we have been working to streamline our processes to ensure all our suppliers are supported and set up for success,” said Don Clark, general vice president of purchasing for nonperishables. “The changes to our in-store execution and demo programs are creating a consistent, high-quality experience that benefits both our suppliers and our customers.”
Clark advised suppliers that they would be required to help fund the effort.
Suppliers that sell more than $300,000 of goods annually to Whole Foods will be required to discount their products by 3 percent (for groceries) or 5 percent (for health and beauty products) to fund the new program. Local suppliers will also have to pay $110 for each four-hour product demonstration by Daymon, while national suppliers will have to pay $165.