September 21, 2017

HMM: Amazon Puts Whole Foods on Fast Track to Conventional Supermarket.

Under the changes planned to begin in April, Whole Foods’ 470 locations will no longer allow brand representatives to promote their products or check to make sure they are stocked and displayed correctly.

Whole Foods also is centralizing much of its decision-making regarding the assortment of products across the country. Instead of allowing brands to frequently pitch their products to individual stores or regions, Whole Foods executives in its Austin, Texas headquarters will choose a higher percentage of the items stores carry.

The move had slowly gotten under way in recent months, but Amazon.com Inc.’s AMZN 0.35% merger with the chain in August provided additional incentive for Whole Foods to move away from its decentralized model and become more efficient.

“This is another step in the conventionalizing of Whole Foods as we know it,” said Jim Cusson, of Charlotte, N.C.-based Theory House, a brand consultancy.

Amazon is hoping to boost sales at the struggling grocer, in part, by standardizing operations and prices. Market reports show traffic improvement since the deal closed last month, likely because the chain lowered prices on key items like eggs and milk.

“Conventional” for grocery stores also means “low margins,” which would be new for Whole Foods. But Amazon has always been happy with low (or nonexistent) profits, so long as cash flow remained high and competitors were brought low.

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