I think this is a bad move. The “brands” that matter to the Whole Foods shopper are “local” and “organic.” Eliminating one of those just leaves room for smaller competitors.

I’m not crazy about eliminating brand reps, but eliminating local is a really bad idea. It may achieve mass, but it loses differentiation.

This is going to hurt the Whole Foods value proposition. While it’s critical to bring down prices to reach a wider audience, regionalized assortments were one of the things that allowed Whole Foods to compete in each region. They are one of the few “national” players that compete region by region. A centralized buying experience marginalizes regional players and alienates local players.

One play that Whole Foods has to make this work — possibly — is to have Amazon promote top local players and allow other regions to take advantage of click and collect. That would help to drive a better online experience.

I agree with Kurt that it is a difficult balance but something seems very wrong here. Centralized buying does not seem to fit the theme of local sources including farmers, brewers, etc. Stopping the practice of brand reps in-store that allow these smaller players to promote their products also flies in the face of what Whole Foods is supposed to be. I guess it is too early to tell, but I don’t like some of the decisions being made and am starting to feel that the Whole Foods we knew and loved (except for some of the prices) will eventually be gone.

While centralized purchasing will certainly help drive economies of scale from a price perspective it will be a challenge to create and maintain a local community presence. Introducing small independent local foods provide a unique sense of place and ownership in the broader Whole Foods brand. This is one aspect that creates part of the Whole Foods charm and experience. Centralized buying will make this more difficult.

Centralized buying will bring economies of scale that allow Whole Foods to compete more effectively on price and on execution. But competitors (Kroger, I believe, is one example) are already opening the door to local vendors in response to the Whole Foods move.

Let’s not forget, however, that Amazon is the master of data science when it comes to retail management. Just because they are tightening the screws on the buying process doesn’t mean that they will ignore local preferences. In fact, they are likely to do a better job of allocating space and replenishing goods to meet individual stores’ tastes than Whole Foods ever dreamed of.

Talk about being brand tone deaf! Local supply — or the illusion of local supply — is a clear selling point to many, many Whole Foods shoppers. Amazon can say it will work toward balance between large and small suppliers, but centralized buying gives bigger, well-capitalized national firms a clear advantage over local and even regional competitors. And as for the ban on brand representatives I think that’s also wrong-headed. Just last night I purchased a bottle of one of the most delicious — and very hot — hot sauces I’ve tasted in years (Spags Vintage from Eastpointe, MI for anyone that’s interested) because one of the company’s owners was sampling it in my local supermarket. Demos work — just ask Costco — but they also reinforce the idea that the store supports both the community and local businesses. This will create a market for someone — or several someones — to sell against Whole Foods as an authentic, community-based retailer who supports locally sourced, good food made and sold by local producers. It isn’t… Read more »

This is totally misguided. We shop Whole Foods at least twice a week and quickly saw a change in produce quality when centralized buying was implemented. It has been worse in the last month and based on this, I can only expect further quality degradation. Produce can’t stay in the supply chain too long and is best from (smaller) regional sources.

The results of this policy are going to make Whole Foods less desirable to the core shopper that grew the company. That shopper is already more price agnostic than typical supermarket shoppers, so the long-tail looks more like repositioning as a more of a middle of the road supermarket and beating up competitors with Amazon money subsidizing costs. No matter whose endless wallet is backing a brand, changing the brand’s promise is a big mistake. Quality produce/perishables and unique brands were the essence of Whole Foods.

It smacks of a highly successful logistics company missing the forest for the trees.

It’s a delicate balance that needs to be maintained. On one hand consumers identify and like the fact that the store supports local businesses. These local brands are — in fact — differentiators. On the other hand, local buying is difficult to control and all the reasons such as distraction of the store staff, pricing inequalities and spending are real too. If Whole Foods found its success in local differentiation, this will hurt. If the company can find the right formula for what to keep local and what to purchase centrally, good for them!

The attraction of centralized buying is obvious. However, that decision along with the elimination of emphasizing new local brands and using displays appears to significantly change the Whole Foods brand. It is not a surprise that Amazon’s ownership would result in changes, but eliminating some of the brand’s differentiating features may have a negative long-term impact on Whole Foods by making it more like other grocery stores.

Whole Foods’ point of differentiation has always been organic and local. Therefore the key to this strategy is to maintain this differential advantage while bringing greater efficiencies and effectiveness to the Whole Foods banner. This is the perennial challenge under such acquisitions. The most successful mergers result in the above noted efficiencies without changing what the customer sees or expects. Everyone can learn a lesson from the Safeway acquisition of an iconic regional supermarket, Genuardi’s Family Markets in 2000. In a short period of time, Genuardi’s was Safewayized in the form of a number of customer wrenching perspectives from changing the brand of meats and cheeses in the deli, to changing private label options, to even reducing the quality of the shopping bags. The net result is that Safeway sold the last Genuardi’s less than 15 years after the acquisition. People often say “history repeats itself.” In fact, the full quote is “Those who do not learn history are doomed to repeat it.” The quote is most likely due to George Santayana, and in its… Read more »

I’m of two minds. Centralized buying looks smart strategically — it indicates Whole Foods embracing its strengths as the dominant national chain in the category. And while I understand the importance of locality to competitors, Whole Foods’ prior efforts have seemed like knee-jerk responses to local competition rather than smart leverage of their strengths. BUT … Remove brand reps from the stores? That I don’t like. Whole Foods carries products that can only be communicated by representatives of brands (or by advertising from those brands). I’m skeptical of Whole Foods’ claim they haven’t seen sales as a result. I’ve seen retailer teams skew numbers around on issues like these to show whatever they want — so I’ll bet there’s far more impact than Whole Foods wants to admit today (for internal political reasons most likely). Or if there’s a genuine problem, the issue is that the program has been badly administered. That said, these points indicate what I believed when the Amazon acquisition was announced: Amazon wants Whole Foods for its brick-and-mortar business. And these… Read more »

I don’t like it as a consumer, as an advocate for smaller brands or in considering the future of Whole Foods as a differentiated offering. Whole Foods was famous for giving small startup brands a leg up with local store distribution and eventually expanding to regional and national distribution. Whole Foods even had a financing capability to help these brands fund their growth and ensure they could meet their purchase orders. With centralized purchasing, consumers and stores alike will lose this entrepreneurial touch, and the sense of discovery that came with wandering into a Whole Foods store. It seems like a fast track to commoditization.

Best of luck buying perishables on a national basis. Regarding all the local brands that whole foods has found and mutually prospered with — it was somewhat of that “treasure hunt” in a food store — shame to lose out on that aspect. You think running brick and mortar will be a learning experience here?

Kroger’s reaction to Whole Foods’ centralized buying is the latest salvo in the grocery wars. According to a report in the Wall Street Journal, Kroger is launching a website allowing local suppliers to pitch niche products directly to buyers at the grocer’s 2,800 stores, a response to rival Whole Foods Market’s moves to be more conventional.

DEAR WHOLE FOODS, It’s only because I still love you, Whole Foods, that I tell you you’re making a big mistake. I know, I know. Amazon probably called these most recent shots. But, you gotta admit, you’ve been limping a little. You needed a shot in the arm. But you got a shot in the foot. This all gets down to supporting small brands and allowing your buyers autonomy in local markets. That’s been unusual in the industry, and it has helped you with competitive differentiation. It also made us feel all warm and fuzzy about you. So imagine my dismay when I opened The Wall Street Journal on Sept. 22 and saw the headline: “Amazon Puts Whole Foods on Fast Track to Conventional Supermarket.” And below that, “Specialty grocer will no longer allow ‘brand advocates’ in stores, a potential blow to local sellers.” The Journal also said, basically, that local autonomy for your buyers is going to hell in a handbasket. Most decisions on products now will be made at your headquarters in Austin,… Read more »

I can see the value of centralizing buying on canned or dry goods that are available nationwide, but it could be a big mistake to limit the availability local products as a means to save money.  Whole Foods has to be careful in how much they modify its product strategy, as they don’t want to alienate their loyal customer base.
 
It appears that Amazon’s influence on Whole Foods, is to attract shoppers that wouldn’t normally shop at Whole Foods by appealing to a broader demographics of customer by lowering some of their prices. Maybe they can introduce a larger customer base to try Whole Foods and inspire them to choose more healthy products.

However, democratizing Whole Foods could be a risky strategy.

In theory yes, it should. However, Whole Foods must remember that local offerings and products are very appealing for much of its customer base. It must not throw the baby out with the bathwater in the quest for efficiency and savings.

The Whole Foods shopper is evolving and Amazon is betting on that. For the current Whole Foods shopper this will be upsetting as they will lose out on those niche brands they brag to their friends about. But if Whole Foods is trying to gain a new shopper demographic and entice Amazon Prime members to start shopping at Whole Foods then switching to a centralized buying method to provide more competitive pricing is a great place to start.