By Heather Haddon and Laura Stevens
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 23, 2018).
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 23, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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