Whole Foods goes all-in on centralized buying
Whole Foods Market announced last week an organizational realignment that includes fully centralizing product buying.
“We are merging our global and regional Merchandising teams into a single team that will support purchasing across the entire company,” the company said in a statement.
The move, according to an employee memo, will “help us continue to sell the highest quality natural and organic products, including elevating our selection of local products, exclusive and emerging brands, and new innovations.”
The retailer is creating leadership roles that will be focused on local products and supplier relationships. In 2020, Whole Foods said it introduced more than 950 local brands, over 10,000 local items and more than 650 exclusive brands.
The move, according to the company, will allow regional operations to “focus exclusively” on running their businesses, including e-commerce and store support. Changes were also made to reinforce recruiting and career development consistency at the regional level and to expand hiring in software engineering and program manager roles.
Allowing brands to sell to individual stores or regions was often touted as the way Whole Foods discovered and supported emerging and local brands.
Reports began soon after Amazon.com’s 2017 acquisition of Whole Foods that the grocer was accelerating a shift already underway to centralize buying in order to ensure a balanced mix of major and niche brands across stores. Becoming more price competitive against conventional grocers that are already centralizing their buying was believed to be another factor behind the move.
Amazon’s brick-and-mortar sales, supported mainly by Whole Foods, have declined for the last four quarters, including a 15.5 percent first-quarter drop. The declines could have been offset by online sales, however, which tripled at Whole Foods between March and December 2020.
According to last week’s statement, Whole Foods “continues to grow across all channels, including delivery, pickup, and in-store.” Plans call for opening nearly 40 more stores and hiring an additional 10,000 people.
“As shown over the past year, Whole Foods Market’s industry leadership is a result of our ability to remain nimble, be responsive, and continuously innovate,” read the statement. “As a company rooted in our higher purpose, we are confident these changes will position us to better support our stores and serve our customers as we continue to grow.”
- Positioning Whole Foods Market for Continued Growth – Whole Foods Market
- Will centralized buying make Whole Foods a more formidable competitor? – RetailWire
DISCUSSION QUESTIONS: Does shifting to centralized buying offer more benefits or risks for Whole Foods? What do you think is behind the reorganization?