Why is Whole Foods cutting 1,500 jobs?
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Corey Fedde Staff
Whole Foods Market Inc. is planning a cut of 1,500 employees (1.6 percent of their workforce). The cuts will mostly affect "back line" workers and not staff that interact with customers.聽
For Whole Foods, layoffs are anything but the norm. The chain has been an innovator in labor models that incentivize productivity, and 聽the grocery chain traditionally has had below . Many employees benefit from the Whole Food treatment, receiving , stock options, and health care benefits.
鈥淭his is a very difficult decision, and we are committed to treating affected Team Members in a caring and respectful manner,鈥� Whole Foods co-CEO Walter Robb said in a statement on the company鈥檚 .
The layoffs are part of an active attempt from Whole Foods to lower prices and shed its 鈥渨hole paycheck鈥� reputation. In May, the Austin, Texas-based company, 聽plans for a sister chain called 365 by Whole Foods, which will focus on affordability. The move comes as Whole Foods faces growing competition from mainstream grocers, like Kruger鈥檚 and Wal-Mart, who have emerged as competitiors in the organic food market.
The company is doubling down on brand rehabilitation after recent accusations of overpricing. Over the summer, New York City officials alleged that Whole Food locations in the city were mislabeling the weight on prepackaged food, thereby overcharging customers. The company faced a fine the previous summer (2014) for overpricing in California.
The result of high prices, overpricing scandals, and increased competition has been聽a stock drop of more than 40 percent over the past six months and dismal quarterly reports. In July, report came in below Wall Street expectations.聽 The company hopes the layoffs and restructuring will turn this trend around.
聽鈥淲e believe this is an important step to evolve Whole Foods Market in a rapidly changing marketplace,鈥� Mr. Robb聽said in a written statement.
According to the company, the employees facing layoffs will be offered 鈥渢ransition pay, a generous severance, or the opportunity to apply for other jobs." Whole Foods will also be paying the affected employees in full for the next eight weeks.
The company's聽 says that it "anticipates many of the reductions to be managed through natural attrition and expects a significant percentage of affected Team Members will find other jobs from the nearly 2,000 open positions across the company鈥�.鈥�
