Whole Foods Market is placing new limits on how products are sold in its stores and asking suppliers to help pay for the changes, riling some mom-and-pop vendors that have long depended on the grocer for visibility and shelf space, according to a report by The Washington Post.
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 Foods’s new owner, Amazon.com, pushes to reduce prices at the chain’s 473 stores. (Jeffrey P. Bezos, the founder and chief executive of Amazon, also owns The Washington Post.)
Previously, Whole Foods allowed suppliers to oversee their own merchandise or hire local firms to do so. But under the new rules, Whole Foods is requiring suppliers to work exclusively with Daymon, a Stamford, CT-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,” Don Clark, general vice president of purchasing for nonperishables, said in a statement.
“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.”
In an email obtained by The Washington Post, 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. (Vendors can also continue to host demonstrations themselves, as long as they pay a scheduling fee of between $10 and $30.) Daymon did not respond to requests for comment.
“To successfully run this program, we need your financial support,” Clark wrote.
Some suppliers said the new policies put them at a disadvantage because they rely on regular, previously free three-hour demonstrations and tastings to introduce products that might be unfamiliar to shoppers.