Getting products into Whole Foods just got more expensive, as the national supermarket chain is raising prices for suppliers.
It’s been nine years since the national supermarket chain last changed their rates. The average fee suppliers were paying to be in the store’s busiest areas had been an average of $25,000.
But in December, Whole Foods sent a letter to some suppliers announcing that vendors selling $300,000 in products annually will have to pay a fee whenever their products are reorganized in stores or added to new locations. Grocery suppliers will also pay a fee of 3 percent of the cost of goods delivered, while beauty suppliers will pay 5 percent. The new fees will go into effect in April.
Whole Foods went on to explain that it has hired a separate company to stock shelves “to provide a much more effective result.” The letter continued: “To successfully run this program, we need your financial support.”
The premium shelf space will also include additional in-store marketing for featured products. With that in mind, Whole Foods is asking its suppliers to offer bigger and better promotions on their products. Currently, a high-visibility nationwide promotion must include prices that are lowered by at least 25 percent.
For their part, Whole Foods will be utilizing strategies with a goal to boost profitability, tighten control over inventory and partner with a national contractor to perform in-store sampling and demonstrations.
After being acquired by Amazon, Whole Foods saw an increase in foot traffic of 25 percent, proof that “this marriage made in heaven between Amazon and Whole Foods is working,” said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University.