Amazon signals it's finally fed up with Whole Foods' sluggish sales - and is making sweeping, controversial changes
Whole Foods is known for its organic produce and health and environment-conscious clientele.
When the company was bought by Amazon in 2017, loyal shoppers and employees feared the retail giant would strip away its culture and values.
Eight years on, those fears appear to be coming true, as some claim the 'Amazonification' of the chain has begun.
Stores in major US cities are trialing new concepts where Amazon Grocery products — including Pepsi and Doritos — are sold alongside the signature organic vegetables and prepared foods.
At one Pennsylvania location, alongside the usual Whole Foods produce, customers can open the Amazon app in store and request name-brand items from robots working in the back room.
The move comes as Amazon's grocery business, including Whole Foods, is struggling to gain traction, accounting for less than 4 percent of the market share.
This is according to market-research firm Numerator, which counts food and beverage sales but not alcohol and nonfood items. Walmart, meanwhile, makes up 21 percent.
The company now aims to widen its reach and increase the number of items going into shoppers' baskets.
While the corporate identity of Whole Foods was kept intact initially following the sale, that is beginning to change, The Wall Street Journal reported.
Whole Foods is known for its organic produce and focus on healthy offerings
Corporate staff — though not store employees — will soon be moved onto Amazon's payroll.
A round of layoffs also hit Whole Foods late last month, with chief executive Jason Buechel blaming Amazon's efforts to consolidate its grocery operations.
'These changes are necessary to simplify the way we run the business across our grocery brands and allow us to invest more in delivering the best customer experience,' Buechel wrote in an internal memo, the outlet reported.
Whole Foods reports that sales have grown by more than 40 percent since Amazon took over, which is around 5 percent a year on average.
However, this is much less than in the early 2010s, when sales consistently grew in the double digits.
In 2023, the chain opened eight stores, while competitor Sprouts Farmers Market opened 30.
The company said that even excluding Whole Foods Market and Amazon Fresh, Amazon is one of the largest grocers in the nation, with over $100 billion in gross sales.
It also said that the integration of corporate employees will not affect the shopping experience for customers.
But in suburban Philadelphia, a store is experimenting with a new layout.
CEO Jason Buechel blamed layoffs last month on the company's efforts to consolidate its grocery operations
Workers and loyalist customers have expressed their concern about the 'Amazonification' of Whole Foods (Pictured: A store in San Francisco)
Spin-offs such as Amazon Fresh and Amazon Go have struggled to gain traction
If a shopper does not find what they want among the Whole Foods produce, they can simply open the Amazon app and request an item from so-called 'ShopBots' in the back room.
These robots are designed to procure items beyond Whole Foods' usual organic offerings, and will have a soda or packet of chips ready to be picked up in minutes.
In Chicago, meanwhile, the city's flagship location now has a 3,800-square-foot Amazon Grocery storefront located below the store.
Here, shoppers can find everyday essentials that are not typically available in a Whole Foods store.
The company has not announced whether it plans to roll out these experiments more widely.
'Whole Foods Market has never wavered in its purpose: to nourish people and the planet by offering the highest quality natural and organic foods,' Buechel told the Journal.
The company said it would 'continue to iterate' on concepts that would allow customers to shop for organic Whole Foods products and everyday essentials.
However, some workers and suppliers are concerned that this increased integration could damage the Whole Foods brand, which has been established over the last 45 years.
Whole Foods worker David Matthis and co-founder David Mackey at a store opening in Houston in 1984
Amazon Go offers less healthy snacks that Whole Foods would not traditionally sell
The first Whole Foods market opened in Austin, Texas, in 1980
'Whole Foods has great brand equity. It's been built up over decades,' said John Foraker, CEO of Once Upon a Farm, which sells organic baby food and snack bars at Whole Foods. 'If they were asking me, I'd say, "Be super, super careful."'
Whole Foods was established in 1980 in Austin, Texas, by co-founder and longtime CEO John Mackey.
Mackey, who retired in 2022, said the company felt pressured to sell to Amazon because an activist investor was threatening to take over the board and remove him and other executives.
'We didn't want to sell to Amazon. It's just that Amazon was the best solution to a problem we had,' he told the Habits and Hustle podcast last month.
Since the sale, Whole Foods has implemented various changes, including laying off graphic artists who had given each location a unique aesthetic, offering discounts to Prime members and requiring corporate workers to come into the office five days a week.
When corporate workers join the Amazon payroll in the following months, they will no longer receive bonuses based on Whole Foods' performance; instead, they will receive Amazon stock.
They will also lose their 20 percent in-store discount after a year, according to the Journal.
'People are very aware of the Amazonification at Whole Foods,' Ben Lovett, who works at a location in Philadelphia and is spearheading a unionization push, told the outlet.
'It's become numbers-based. Amazon has immense turnover. It seems to be part of their business strategy.' Whole Foods said turnover across the company is lower than it has been in years.
Whole Foods says sales have grown by more than 40 percent since Amazon took over, which is around 5 percent a year on average
Co-founders Craig Weller, Renee Lawson Hardy and Mackey
When asked about how he feels about complaints that quality is dwindling at Whole Foods, Mackey did not mince his words.
'It's not my problem any longer,' he said. 'I married my daughter off to the richest man in the world.'
'I have said it before and I will say it again: despite the pictures of perfect produce that often wafted around on social media, Whole Foods was not some kind of great retailer before Amazon bought it,' said Neil Saunders, managing director of GlobalData Retail.
'The chain was poor value, had mediocre service (there was a certain uppityness among some associates), ran a lot of stores that looked grubby and shabby, and was rated badly in areas like the taste of products.'
Despite having national coverage, it was a niche retailer that was irrelevant to the vast majority of Americans, he said, and its financials were 'far from great.'
'Amazon has not run Whole Foods perfectly, and there is a lot of room for improvement, but neither have they completely ruined it,' he added.
