Whole Foods calls supplier summit amid Amazon angst
LOS ANGELES/NEW YORK (Reuters) - Whole Foods will host a summit beginning Tuesday for up to 200 of its suppliers in its hometown of Austin, Texas, amid anxiety and speculation about how its ongoing business revamp will play out under new owner Amazon.com.
A man walks past an advert for Amazon Locker outside a Whole Foods Market store in Santa Monica, California, U.S. March 19, 2018. REUTERS/Lucy Nicholson
Amazon’s $13.7 billion purchase of Whole Foods last summer shook up the grocery industry and spawned worries that the online retailing giant would disrupt the grocery business in the same way it upended books, toys and electronics.
As part of a restructuring effort underway before the acquisition, Whole Foods earlier this year began requiring suppliers to use a firm of its choosing to restock shelves and run promotions. As first reported in the Washington Post, it is charging some suppliers the equivalent of 3 to 5 percent of sales to cover the cost of those services.
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Whole Foods also adopted a Costo Wholesale Corp styled model for in-store sampling and has added charges for that service, to the chagrin of some small, local brands that were a draw for some shoppers.
Those changes have caused significant heartburn for upstart brands and shoppers who were drawn to Whole Foods because it offered a unique mix of products.
“The changes we’ve been making across the company directly address the feedback our supplier partners have shared over the years about the challenges of our decentralized purchasing structure and inconsistent practices across regions and stores,” Whole Foods spokeswoman Robin Rehfield Kelly said in a statement.
Kelly said Whole Foods has worked for the last two years to streamline its processes across global and regional purchasing teams to ensure all its suppliers are supported under a consistent company-wide set of protocols.