Whole Foods Layoffs: What It Means For The Company

29 Sep 2015 | Author: | No comments yet »

Whole Foods Says It’s Cutting Jobs to Help Bring Down Prices.

Something curious was buried in Whole Foods’ latest regulatory filing: The high-end supermarket is letting go of about 1.6% of its workforce in the coming months. Whole Foods Market, otherwise known as “Whole Paycheck,” is hoping lower prices on its health-conscious, artisanal fare will boost its reputation with disgruntled customers. If the store is truly concerned about the number of customers it’s losing, perhaps it should cut straight to the chase: We are all sick of the exceedingly high prices we have to pay there. It anticipates workers whose jobs are cut will find other jobs from the almost 2,000 open positions across the company or from new jobs that will be created by more than 100 new stores in development. Whole Foods says the reductions are part of the company’s “ongoing commitment to lower prices for its customers” as well as to “invest in technology upgrades while improving its cost structure.” Whole Foods employs approximately 91,000 people companywide.

Whole Foods showed disappointing sales numbers last quarter, in part because of lingering bad press: Earlier this year, city officials found that the company was overcharging customers in New York. New York City’s Department of Consumer Affairs said that Whole Foods stores were overstating the weight of some pre-packaged products, like chicken tenders and a vegetable platter. Whole Foods has said that it is taking steps to prevent overcharging, including training for workers and a pledge to give away products if customers discover they were overcharged. Whole Foods is also gearing up to debut its new, lower-cost 365 chain next year , which the company has been pitching to the public as a grocery store skewed toward millennials.

Per the department’s preliminary findings, 89 percent of packages it tested “did not meet the federal standard for the maximum amount that an individual package can deviate from the actual weight.” Whole Foods execs quickly issued a public apology, but it didn’t look good. They normally look for areas that are underserved by other major grocery stores but also closely examine the demographic and economic makeup of the neighborhood to make sure the spending power is there to support the cost of building and maintaining a new store. The first location is set to open next year in Los Angeles, and leases have been signed for additional locations in Bellevue, Washington; Houston; Portland, Oregon; and Santa Monica, California. Meanwhile, growing competition from other organic grocers has put pressure on the company to prove its value (which ridiculous products like these have failed to do).

When Whole Foods does deem a neighborhood worthy and opens shop, residents are normally so grateful, they swamp the place with activity as soon as the doors open. The quest to erase “whole paycheck” from the company’s image can seem never-ending, and is far from over despite a “values matter” branding campaign that rolled out almost a year ago now, some cuts to prices, and the announcement this summer of “365 by Whole Foods,” a new, supposedly cheaper store concept designed to appeal to younger shoppers. In those heady early days, customers are willing to tolerate preferred parking spaces for eco-friendly cars and the tacit admonishment for non-Prius owners everywhere that we are somehow less welcome, less worthy. If I have to drive four or five miles round trip in my ecologically insufficient, 26 mile-per-gallon mini-SUV to pay half the price for a peach or a loaf of bread, I’ll do it. The Wall Street Journal pretty much articulated such concerns in reporting today’s job cuts: “Whole Foods has been working for more than two years to cut prices and repair its reputation for high prices, but tactics like more deals have yet to boost sales to the extent hoped.

Customers are voting with their pocket books and letting this company know that they won’t be coming back unless the price changes are made loud and clear and permanent. Firing your workers to boost your profit-to-loss ratio isn’t a long-term strategy for success if the thing that makes you money — your once-enthusiastic customer base — is walking out on you.

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