Whole Foods Changes the Merchandising Rules
Under the ownership of Amazon, Whole Foods Market has named a sole company to manage all supplier displays and other merchandising services in its stores.
As reported by The Washington Post (which is owned by Amazon chief executive officer Jeff Bezos), the new rules require suppliers to work exclusively with Stamford, CN-based retail strategy firm Daymon, and its subsidiary, SAS Retail Services, to schedule in-store tastings, check inventory on shelves and create displays.
The Wall Street Journal foreshadowed the change last fall when it reported that the grocer would be centralizing operations and kicking out brand representatives.
Working with Daymon means increased costs for small suppliers, which can no longer oversee their own merchandise nor hire local firms to do so. As Whole Foods makes room for more national brands, some small-businesses owners told the Post they already are facing shrinking shelf space and removal of their promotional signage — to the detriment of the local and personal touch the grocer is known for.
General vice president of purchasing for nonperishables Don Clark in a statement to the Post instead positioned the changes as a way to create a "consistent, high-quality experience that benefits both our suppliers and our customers."
Large suppliers are affected as well, according to an email from Clark to suppliers obtained by the Post, with those that sell more than $300,000 of goods annually to Whole Foods now required to discount their products by 3% and 5% for groceries and health/beauty products, respectively. Vendors can continue to host sampling demonstrations themselves, but now must pay Daymon a scheduling fee of between $10 and $30. Or they can pay the firm to handle a four-hour session at a cost of $110 for local suppliers or $165 for national suppliers.
Intended to centralize operations and save on costs, the new rules come as Amazon pushes to reduce prices at Whole Foods' stores.
Competitor Walmart instituted a similar policy last year, narrowing the number of companies able to manage in-store merchandising services to five partners.