What do Whole Foods’ Operational Changes Mean for its Future?

Amid reports that Whole Foods Market has not fared as well as other grocers in a pandemic that has favored one-stop-shop traditional supermarkets over specialty stores, the Austin-based retailer has issued a statement on its corporate website and a letter to its employees outlining past and future growth while, at the same time, announcing a consolidation of operations.

Reflecting on learnings from the pandemic, core values and a strengthened “purpose to nourish people and the planet,” Whole Foods’ statement said in part, “Throughout this challenging time, we continued to invest in hiring and supporting our team members, expanding our reach and introducing new customer offerings, and we’ll continue to do so moving forward.”

While parent company Amazon reported strong fiscal first quarter sales overall last month, its brick-and-mortar grocery stores have performed less well. Sales at the Seattle-based company’s physical grocery stores—which is comprised mainly of some 500 Whole Foods Market locations but does not include sales originating online and fulfilled from them, like Prime delivery—decreased by 16% to $3.9 billion in the quarter. 

But Whole Foods’ statement and letter to its employees May 13 cites the company’s “tremendous growth in recent years,” adding that it continues to grow across all channels, including delivery, pickup and in-store. It further reports online sales tripled between March and December 2020 as compared to the same timeframe in 2019.

Part of this growth came from new store openings in 2020, which Whole Foods said allowed the company to reach about 1.4 million additional people within a 10-mile radius of its U.S. stores. In 2020, Whole Foods introduced and expanded new concepts, including Ideal Market Denver and its first online-only store in Brooklyn, N.Y. An additional nearly 40 new stores are currently “in the pipeline,” the company added.

In the statement, Whole Foods notes that it created more than 10,000 new jobs in 2020 and now has more than 105,000 team members. Whole Foods said it is actively hiring, with about 10,000 open positions currently posted companywide.

“To sustain this growth, we announced today changes to our corporate merchandising and operations, team member services and technology teams. These changes will not impact any store or distribution center-based roles,” the company said. “All changes are limited in scope to global and regional office roles. These changes are designed to improve support for our stores and distribution centers as we remain committed to delivering an exceptional customer experience in stores and online.”

The letter to Whole Foods team members conveyed similar information and further noted that the company is also making changes to its Allegro organization, but did not specify details.

“Impacted team members in global and regional support roles will receive more information about these changes today; in the spirit of transparency, we want to share this information with all team members,” the letter said.

Just how team members will be “impacted” is not explicitly stated in either the statement nor the letter to its employees. Whole Foods did not respond to WGB’s request for clarification regarding potential job losses.

According to the letter to team members, Whole Foods is merging its global and regional merchandising teams into a single team that will support purchasing across the entire company. Dedicated operations teams in the regions will focus on merchandising execution and in-store operations, including e-commerce and store support. The company is also creating new leadership roles focused on local products and supplier relationships.

Fostering local suppliers and introducing their wares to Whole Foods stores has been a longtime focal point for the grocer, which introduced more than 950 new local brands in 2020. The company introduced more than 10,000 new local items and more than 650 new Whole Foods Market Exclusive Brands items in 2020.

The changes, Whole Foods said, are designed to allow regional operations to focus exclusively on running stores and delivering an exceptional team member and customer experience; helping the company to continue to sell the highest quality natural, organic and local products; and providing team members with better-defined roles, new growth opportunities and clear paths for advancement within operations and merchandising.

Whole Foods said it will “realign” its current team member services organization to enable more consistent, strategic support across all regions in key areas such as recruiting, training, compensation and benefits, and career development.

Additionally, Whole Foods said it intends to fully leverage the capabilities of platforms such as Workday, allowing its team member services organization to focus more on supporting the growth of our team members and achieving business objectives.

On the technology front, Whole Foods has announced plans to transition its technology organization to focus more on skills required for software engineering and technical product and program manager roles—a shift the company said will allow it to build new internal capabilities, further differentiate its customer offerings, and rapidly develop tools for its business and customers at the speed of retail.

“We have many reasons to be optimistic about what’s ahead as we emerge from the pandemic,” said the team member letter in closing. “We look forward to welcoming our customers back to our stores, reinvigorating our prepared foods operations, having more face-to-face interactions among team members, and delivering that exceptional experience that can only be found at Whole Foods Market.

“Looking to the rest of 2021 and beyond, we are excited to continue serving more communities, leading the way in shaping the future of grocery retail, and advancing our mission to nourish people and the planet for many years to come,” the company said.