Amazon enacted a huge change in the way Whole Foods stores operate - and it could threaten food startups
In mid-September, The Wall Street Journal reported that Whole Foods will make another big move beginning next year: Local food makers will no longer be able to promote their items in the company's 470 stores, or check up on how their products are stocked and displayed.
Jamie Nessel, the VP of grocery for the San Francisco grocery delivery service Good Eggs, believes that the change will hurt local food systems nationwide. The startup works with regional food producers, some of whom sample their products in Whole Foods.
"Even though odds were stacked against them, small scale brands were still able to get a foot in the door at Whole Foods. Producers could pitch to regional buyers, build in-person relationships with customers in stores, and in turn, build their brands. With last week's news, it sounds as if those opportunities have all but disappeared," she wrote in a Medium post published September 25. "Small local producers don't even have that first shot."
Whole Foods has long maintained a practice of allowing local food purveyors to offer samples and educate customers about their products, usually at peak hours, in stores. As Nessel notes, the practice been a valuable way fo local brands to market themselves.
Another national grocery chain, Kroger, said that it will start working with more local food makers, following Whole Foods' decision.
Mike McDevitt, CEO of Baltimore-based meal-kit company Terra's Kitchen, recently told CNBC that he is not overly optimistic about either company's future relationship with local purveyors.
"Whole Foods once found a way for local brands to have a great American story come to life ... [they] allowed brands to come into aisles, to tell their stories," he said. "While it's great to hear that the doors of Kroger are being open [to local brands] now, they're probably going to be cracked open, not wide open."
The change is part of a larger effort by Amazon and Whole Foods to make stores more consistent, which could mean a larger de-emphasis on local products. Starting in 2018, individual stores also will not be allowed to choose whether they want to sell regional items. Instead, Whole Foods executives in its Austin, Texas headquarters will decide a higher percentage of the products stores sell.
A Whole Foods spokeswoman told The Wall Street Journal that having brand advocates in stores is distracting to employees and inefficient, and that the new system is intended to save money.
But as a result, local food makers may decide to sell their products elsewhere.