Whole Foods Market has begun charging brands more money for prime shelf space and introducing new fees, and has initiated other reforms that are squeezing smaller purveyors, according to a new report from Business Insider.
Austin, Texas-based Whole Foods, which operates 477 stores, is also asking for more money for in-store product demonstrations and taste tests, and has stopped paying shipping fees for some products and dropped minimum-order requirements, according to the article.
In addition, suppliers selling Whole Foods more than USD 300,000 (EUR 240,000) of goods annually must discount their products by three to five percent, according to the article. And the average USD 25,000 (EUR 20,000) fee vendors were paying to be featured in the stores’ most visible areas is rising, according to a Wall Street Journal article.
The changes – part of a category management program the chain has been implementing for the past two years – are designed to streamline suppliers’ selling process, a Whole Foods Market spokesperson confirmed to SeafoodSouurce. Dry grocery suppliers with products in a few different regions of Whole Foods now have only one global contact at Whole Foods’ headquarters, instead of several contacts at various regional offices.
The benefit is that suppliers can conduct national promotions and work with Whole Foods’ global team – making it easier for brands that want to grow distribution of their products across Whole Foods’ entire network of stores, the spokesperson said.
The spokesperson did not address the issue of increased fees for prime retail shelf space, but confirmed that suppliers selling more than USD 300,000 worth of goods to Whole Foods annually would be asked to discount their products by three percent.
Whole Foods has also started a new optional program for large suppliers would cost USD 300,000 for several weeks of prime shelf space along with heightened marketing initiatives, according to the Wall Street Journal.
The Whole Foods’ spokesperson offered more detail about the company’s new, “consistent” demo program, which now will charge suppliers a USD 10 (EUR 8) demo fee per store. In the past, some suppliers paid a fee, while some were not charged a fee at all. The spokesperson said the standardized program was implemented so Whole Foods could ensure it has enough products on-hand to prepare for each supplier’s demo, and to better organize and schedule demos so that competing products are not being demoed at the same time.
The spokesperson countered a claim made in the Business Insider article that brands are now required to pay fees to Daymon Worldwide, a retail consulting firm, for in-store product demonstrations. If suppliers choose to pay an outside firm – particularly, the Whole Foods-approved Daymon Worldwide – to conduct their demos, they would pay a higher fee, but that demo program is optional, the spokesperson said.
Jaqueline Claudia, CEO and co-founder of LoveTheWild, which distributes its frozen farmed seafood meal kits in numerous Whole Foods stores, said her company’s experience with the chain has been a positive one.
“We can only speak to our own experience, and working with Whole Foods has been great for us,” Claudia said. “We started out selling to four regions, and then had the opportunity to present to the national seafood team. We were accepted as a national brand in late 2017, and have loved working with the global team. For us, they have made ordering, fulfillment, promotions, and marketing seamless.”
