Amazon is integrating Whole Foods more deeply into its core business, in a major reorganization that it hopes will reinvigorate its grocery business under new leadership.
In an internal memo last week, Whole Foods CEO and Amazon VP of Worldwide Grocery Jason Buechel explained how the restructuring will bring the two companies closer together.
The plan includes a new leadership team and a change that will bring Whole Foods corporate staff under Amazon’s employee programs, including performance reviews and pay structure. The changes will happen over the next 12 months, but won’t affect Whole Foods frontline warehouse and in-store workers, according to the memo, a copy of which was obtained by Business Insider.
The previous structure failed to leverage “the breadth of talent, resources, and knowledge” across Amazon’s grocery ecosystem and Whole Foods, Buechel wrote. The new approach, he added, is meant to streamline operations.
“Too frequently we are duplicating efforts and missing easy opportunities for efficiency,” Buechel explained in the memo. “We have a big opportunity to work smarter across teams and simplify how we approach shared needs.”
This is Amazon’s latest effort to recalibrate its grocery strategy and revive momentum at Whole Foods, which it largely kept independent since buying the company for $13.7 billion in 2017. Amazon and Whole Foods have struggled to align on a unified growth strategy, leading to repeated reorganizations and strategic shifts over the years, BI previously reported.
Under CEO Andy Jassy, Amazon has taken similar steps to more closely align other subsidiaries, such as One Medical and Audible, with its broader corporate culture.
In an email to BI, Amazon spokesperson Lauren Snyder confirmed the changes, adding that the company has a “successful and growing grocery business.” Since the 2017 acquisition, Whole Foods has seen over 40% sales growth and, with Amazon Fresh, generated “tens of billions” of dollars in sales last year, Snyder added.
“These changes reflect our long-term commitment to making grocery shopping easier, faster, and more affordable for customers,” Snyder said.
‘Think and work differently’
This is also Buechel’s first major shake-up since stepping into his role as Amazon’s grocery chief earlier this year. Buechel was named Whole Foods CEO in 2022 and was promoted to oversee all of Amazon’s grocery business in January following the sudden departure of predecessor, Tony Hoggett.
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The new leader has work to do because Amazon remains a relatively minor player in the US grocery market. As of March, Amazon and Whole Foods had 1.4% and 1.6% of the market, respectively, well behind Walmart’s 21.2% and Kroger’s 8.6%, according to research firm Numerator. Amazon’s share has even slipped from 1.6% in 2022.
Amazon doesn’t break out grocery sales. Instead, it reports sales from its “physical stores” segment, which has experienced single-digit growth in recent years. In the first quarter, Amazon posted $5.5 billion in revenue from physical store sales. Emarketer estimates Amazon’s online grocery sales, excluding in-store sales, grew 10.1% last year, down from 20.6% the year before.
“One Grocery”
In the memo, Buechel said the changes are based on feedback he received during his first 100 days as Amazon’s grocery leader. A “unified employee experience,” he said, can help drive faster growth as the previous team structure created friction, ranging from inconsistent tools and policies to incompatible technologies.
As part of the transition, Amazon will review Whole Foods’s employee compensation, benefits, levels, and titles. While employees will now adopt Amazon’s compensation model, combining base salary with stock awards, their overall pay is expected to remain largely the same. Some roles and reporting structures may change, too, according to the memo.
Amazon’s grocery division recently implemented similar changes with its tech staff and was encouraged by the results, the memo added. Whole Foods employees are now urged to use their Amazon work emails to receive important announcements, though their Whole Foods accounts will remain active.
Buechel described the broader initiative to streamline operations and enhance connectivity across teams at Whole Foods, Amazon Fresh, and Amazon Go as “One Grocery.”
“This next chapter in our journey will challenge us to think and work differently before we truly see the long-term benefits, and I know we will rise to the occasion,” Buechel wrote.
A mix of Amazon and Whole Foods leaders
Buechel also introduced a new leadership team that brings together seasoned executives from Whole Foods and Amazon, including:
Anand Varadarajan, VP of product and technology, who will lead Worldwide Grocery Technology and Supply ChainBill Jordan, EVP of Operations, who will lead Worldwide Grocery Store OperationsChristina Minardi, EVP of Growth and Development, who will lead Worldwide Grocery Real Estate Growth and DevelopmentGanesh Rao, VP of Amazon Fresh International, who will lead Amazon Fresh International and Grocery PartnershipsKaren Christensen, SVP of merchandising, who will lead North America Amazon Fresh and Amazon GoSonya Gafsi Oblisk, Whole Foods’s chief merchandising and marketing officer, who will lead Worldwide Grocery Marketing & Private Brands and Whole Foods Market BusinessVishy Subramanian, VP of Amazon Grocery Logistics, who will lead Amazon Grocery LogisticsAstu Patel will be the Business Operations ManagerKim Wells will lead strategic retail initiatives
Two former Tesco executives who joined Amazon under Haggott — Claire Peters, VP of Amazon Fresh, and Peter Bowrey, VP of Fresh Operations — are absent from this new leadership list in the memo.
Buechel added in the memo that new teams run by these leaders will “define and refine” the company’s new structure over the next few months.
Major changes in the past
Amazon’s grocery business has undergone major changes in recent years. Last year, the company scaled back its Just Walk Out cashierless technology while rolling out a new mini-store format for Whole Foods. It also temporarily paused expansion of its Amazon Fresh stores in 2022 to reassess their financial viability, and wrote off $720 million tied to its Fresh and Go locations that year.
Despite these changes, Jassy remains firmly committed to Amazon’s grocery ambitions. During a recent Amazon shareholder meeting, he expressed optimism, saying he’s “very bullish” on the sector. Whole Foods is “growing meaningfully faster” than the broader industry with a “really good profitability trajectory,” he added.
Still, Whole Foods is looking to cut costs where possible. The internal memo, noted that the company has not committed to maintaining employee discounts.
“Nothing changes today,” the memo said. “If there are any modifications to the discount program as we work through this transition, we will communicate that along with details on other benefits.”
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