By Heather Haddon and Laura Stevens 

An executive exodus is under way at Whole Foods, as Amazon.com Inc. integrates the pioneering natural grocer into its retail empire.

More than a dozen executives and senior managers have left since Amazon acquired Whole Foods last year, according to former employees and recruiters steering them to new jobs. People who have left include leaders of the bakery, produce, sustainability and local-foods divisions.

Some veterans have left even though higher-ups asked them to stay. Others say they were pushed out after the deal was announced but before it closed, as Whole Foods sought to tighten command.

Executives from Amazon and Whole Foods said that the two companies share a customer focus, are fitting together well and have made great strides in the merger in a short time. But the exodus has raised concerns among employees and suppliers that the distinctive approach that made Whole Foods a natural and organic powerhouse won't endure under Amazon's ownership.

"Culturally it's been a rough start," said a procurement veteran who left Whole Foods earlier this year after nearly a decade.

Some of the grocer's top managers have bristled at reporting to younger Amazon executives, people who work with them say. Other employees say Amazon hasn't explained the specifics of its plans to integrate the grocer into its business.

Whole Foods chief executive and co-founder John Mackey and Steve Kessel, an Amazon senior vice president who oversees the grocer, said in separate statements that Whole Foods has thrived in the seven months since the e-commerce giant bought it for roughly $13.5 billion.

"We...have maintained our distinctive culture while embracing many of Amazon's leadership principles," Mr. Mackey said.

"We are off to a great start, and look forward to many years of future success together," Mr. Kessel said.

Executive departures are common after mergers. Amazon and Whole Foods have held town halls for store employees to discuss their concerns.

This week, executives invited top suppliers to Whole Foods' Austin headquarters to discuss their frustration with operational changes, including fee increases that predate the merger. Some suppliers said the additional cost could force them to raise prices or defect to other retailers.

The fee increases are overdue and the changes are providing more consistency for suppliers, a spokeswoman said. Whole Foods leaders at the meeting discussed new merchandising opportunities and growth plans with roughly 200 suppliers, she said.

Some Whole Foods executives are urging their colleagues to be patient. They say Amazon can help the grocer make technology improvements, and new ownership has relieved the company of shareholder pressure to reverse falling sales. Some Whole Foods department managers described Amazon executives as respectful and eager to learn from the grocer's decades of experience sourcing food and handling produce.

Some Whole Foods employees want Amazon executives to tackle the grocer's problems more aggressively. Already, Amazon executives have questioned an inventory-management system that has left many Whole Foods stores short of some products, according to a person familiar with the discussions.

But other Whole Foods veterans have been frustrated by what they see as Amazon's insular culture and penchant for secrecy, according to current and former employees. "There really hasn't been very much communication, " one former executive said.

Some cited the two organizations' fundamental differences on issues such as promoting and grooming talent, and whether to focus more on needs of customers or employees. They have noted pressure to put on a good face for Amazon executives, including among the rank and file during town hall meetings.

Some suppliers said new hires at Whole Foods have been slow to master the chain's techniques for sourcing and marketing healthful foods. Many executives who have left, meanwhile, are consulting for other natural-food companies and interviewing with other retailers, taking that knowledge to competitors.

"It makes it really difficult when you lose the institutional knowledge, " said Bill Caskey, co-founder of the food consultancy Pentallect Inc.

Amazon has lowered prices at Whole Foods stores and listed the chain's store-brand products on its website. Sales have grown, with Whole Foods' main distributor, United Natural Foods Inc., reporting a 19% year-over-year jump in business to the chain last quarter.

Surveys by research firm Field Agent show that some shoppers appreciate the lower prices and are shopping at Whole Foods more often. Others worry the chain's standards have slipped.

"There's a difference in the way that things look," said Melanie Haas, a retiree who recently stopped shopping at a Whole Foods in Charlottesville, Va. "There's not as much available."

Write to Heather Haddon at heather.haddon@wsj.com and Laura Stevens at laura.stevens@wsj.com

 

(END) Dow Jones Newswires

March 22, 2018 05:44 ET (09:44 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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