Whole Foods to Hold Meeting with Key Vendors

Tensions between Whole Foods Market and some of the important brands that it sells will come to a head on March 19, according to sources familiar with the matter.

Whole Foods is set to hold a summit with its key vendors on the 19th to settle simmering tensions

Whole Foods gave notice to certain vendors about the summit by email last Saturday. They are set to congregate on the aforementioned summit that is expected to reassure the brands of relations with Whole Foods after the latter's sale to Amazon.

This follows the turbulent recent months for the grocer, which has been struggling to shift from local orientation to a national one. It wants to preserve the selections and relations that set it apart from larger rivals like Kroger and Albertsons.

 Some of the efforts took place prior to Amazon’s takeover. However, any kind of change that the grocer plans to implement inevitably draws more criticism amid the lingering uncertainty following Amazon’s acquisition of the grocer.

According to the sources, a major point of debate for larger vendors is the new servicing fee, which was proposed in the last past months. The said fee will charge vendors for Whole Foods’ efforts to centralize its merchandising.

Traditionally, food companies could pay brokers to help manage everything that happens from the grocery stock room to the shelves.

These brokers generally accomplish a number of tasks, though their key function is to make sure that the products are displayed well. Brokers also reportedly use the connections they have to make their case for more shelf-space.

Now, Whole Foods attempts to control that process, and plans to charge companies around 3 to 5 percent of sales for the service.

Vendors’ opinions are generally negative regarding this proposal. Some of them say that the fee is too high, while others claim that being forced to use Whole Foods’ systems dents their relationship with their broker, where they rely for the rest of their grocery business. If they pay Whole Foods to do the merchandising, these vendors claim that they will have less money and fewer products to give to their brokers.

Whole Foods has not stated its reason for pivoting to this model. However, one key advantage that it could give is data. Brokers represent various brands and are working with a number of retailers. Removing them out of the picture will enable Whole Foods to limit the number of people who know matters in its stores and who can divulge the information with others.

Amazon, Whole Foods’ parent, is considered the master of data management. Meanwhile, Whole Foods has confirmed that it would hold a supplier meeting on the 19^th, but said that it has nothing more to confirm or disclose at present.

The changes come amid the industry’s ongoing transformation.

For instance, organic products are now available in almost 20, 000 natural food stores and nearly 3 out of 4 conventional grocery stores, based on the data from the US Department of Agriculture. This implies that Whole Foods is competing in one of the tightest competitive retail environments.

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