Is Whole Foods Treating Vendors Like Tony Soprano Treats His Working Girls?

NBN is hearing more and more stories about manufacturer dealings with Whole Foods corporate and frankly we’re wondering if the revolutionary retailer is acting more like a desperate Mafioso.  One who is in need of lots of cash to keep from getting ‘hit’ by a mob called Wall Street.

For years folks have wondered if WFM will start copying its conventional counterparts and start charging slotting fees.  So far the chain has required free fills in new stores and for some new products as well as other incentives (translated:  you pay us we’ll take care of you, capiche?). While not slotting fees, these add up.  Given the expense of say, providing a shelf set of high priced products in the personal care aisle the cost is significant, especially for smaller niche manufacturers seeking entry into nearly 200 Whole Foods  Markets.

Used to be that we only heard stories of Austin’s unreasonable demands from just these smaller players but word is that these days, even category leaders are feeling the heat.

While once upon a time Whole Foods store managers were given great freedom in decisions regarding store shelf sets, organizational control has shifted to corporate.  as the retailer shifts towards greater centralization

For example more and more private label products are being thrust onto the shelves and from what we understand, some of them are moving at the speed of a dehydrated donkey in the desert.  And, if a manager doesn’t want to stock WFM pancake syrups in a rainbow of flavors, they of course, dont have a choice.

While centralized purchasing requiring stores to meet Austin’s approval will likely increase up-front dollars NBN believes both the short and long-term impacts will be negative.

If stock price is any indication WFM’s magic has already worn thin? While this might be an impetus towards greater corporate control and the up-front dollars this creates, NBN believes WFM should keep the focus on what made them great.  Stores not shaped with corporate cookie cutters, catering to customers, not to corporate accountants.

Furthermore partnering with vendors in creating exciting and interesting shelf sets was and is the foundation towards growing a strong business in premium retail.  Keeping those relationships strong will benefit Austin and everyone from Janet Soccer Mom to Joe Manufacturer.

In other words if Austin starts believing in its own greatness independent of vendor partners NBN says Wake Up.  And furthermore if they think extorting nickels, dimes and dollars will improve the buy rating from Bear Stearns, NBN strongly disagrees.


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