As part of its strategy to reduce expenses by USD 300 million (EUR 275 million) by the end of fiscal year 2017, Whole Foods Market is combining its meat and seafood teams in lower-volume stores.
John Mackey, CEO of the Austin, Texas-based chain of 462 stores, discussed that change, along with other cuts, in the company’s recent earnings call. At the same time, Mackey said Whole Foods does not plan to become a low-price competitor, likely signaling continued healthy retail prices for its fresh and frozen seafood.
In addition to combining meat and seafood teams at some stores, Whole Foods has cut back on the number of buyers the chain employs – presumably in its fresh meat and seafood departments, along with other departments. It also moved marketing and human resources functions from the store level to metropolitan areas.
“Many of these efforts allow us to focus our store labor investments where they are most needed, ensuring product availability, maintaining high standards and serving our customers,” Mackey said on the call.
Meanwhile, Mackey announced priorities for 2017 that will likely impact seafood suppliers. Whole Foods is “evolving our purchasing structure to a hybrid model, with global teams leading our category management efforts and regional teams focused on local products,” Mackey said on the call.
And, in a move that could benefit some seafood suppliers, the chain is “leveraging our new culinary team’s leadership and expertise to offer a full spectrum of highest quality ready-made meal solutions, in-store or delivered to your door, including a pilot for curated meal kits,” Mackey said.
Despite the budget cuts and acknowledging competition from other supermarkets, natural food chains and home meal-kit services, Mackey essentially said that Whole Foods is not planning to become a low-price competitor. Instead, Mackey said that the retailer will be "leading a race to the top in terms of a differentiated customer experience, continuing to raise the bar in our quality standards and selection. We believe we have the right strategies in place to position the company to produce strong results and returns for our shareholders over the long term," according to a CNBC report.
While the lower-priced 365 store format is performing well for Whole Foods, the retailer is making some changes to avoid cannibalization of its existing stores. Three 365 stores are open in the U.S., and 19 additional stores are under development.
Whole Foods opened five new stores in the fiscal fourth quarter ending 25 September, and 12 new stores in its third quarter.
