Layoffs at Whole Foods Market Interrupt “Love Fest”

Today, Whole Foods Markets announced that the company will be instituting a global layoff. The net reduction is expected to be approximately 1,500 jobs, which represents 1.6 percent of its workforce.

The eliminated positions vary from region to region, but there are several broad themes. In many regions, marketing team leaders, payroll/HR specialists and in-store educators, are being moved from a store level role to that of a metro/regional role. Additionally, some employees report that associate store team leaders (who act as associate store managers) are being cut depending on the sales of the store. Finally, buyer and supervisor roles in many departments are reported to have been eliminated or consolidated into one job. While employees can apply for other jobs, for many, the roles available are often at lower pay grades.

In an SEC filing, Walter Robb, co-CEO of Whole Foods Market, said that the company has offered employees “…several options including transition pay, a generous severance, or the opportunity to apply for other jobs. In addition, we will pay these Team Members in full over the next eight weeks as they decide which option to choose.”

What this means for vendors and suppliers is yet to be seen. Earlier this year several Whole Foods regions reassigned many products to the Grocery department in order to streamline buying. For example, marinades and jerky went from the Meat department over to the Grocery team. Vendors have reported that the transition has not been seamless and frustration over losing the deep relationships that they’ve built with other team buyers. From employee statements, many of the buyer and supervisor cuts are reported to be in the grocery department. That could lead to a situation in which fewer team members will handle even more products.

The terminated employees have eight weeks to make a choice of accepting severance or to find another role (whether that be one of the consolidated roles or a lower, team member role). The timing means that the completed reduction in workforce has a good chance of falling during the busy Thanksgiving season for the retailer. Employees were surprised with the layoff news, in some regions, just hours after completing quarterly inventory.

In the SEC filing, Robb stated that the layoffs were because they were “An important step to evolve Whole Foods Market in a rapidly changing marketplace.” However, in an email to employees (which has been posted on several websites) he elaborated on what this new future looks like for the retailer. Robb wrote, “We agreed that we must invest in lowering our prices, marketing our value and standards, and upgrading our technology in order to better serve our customers.”

The retailer has increasingly struggled with a variety of issues, resulting in its stock dropping over the past six months. As part of its future plans, the company plans on launching a new “365” store concept that emphasizes lower prices, technology and smaller retail footprints in hopes of attracting new millennial consumers.

In a report published earlier in September, Karen Short, a research analyst with Deutsche Bank, said that to create shareholder value the retailer needed to focus on aggressive cost cutting and use this capital to “invest meaningfully” in price. The Austin-based chain has seen more and more conventional retailers offering products similar to those offered at Whole Foods at the same or lower prices, with some customers turning away from the store — sometimes called “Whole Paycheck” — to shop elsewhere.

At least one Whole Foods manager said deeper cuts had been feared. However, after the recent bad publicity the company received, the company chose to go lighter on this round of layoffs. If sales do not increase though, more cuts may be coming.

Ironically, the chain is currently in the middle of “Love Fest” — a celebration of the company and its love for its customers. However, in the North Atlantic region, layoffs didn’t impact the region’s annual golf classic, which involves much of store and regional leadership (the image below was soon removed from the store’s Instagram account).