End of an Era: Amazon Officially Absorbs Whole Foods Into "One Grocery" Strategy
Amazon restructures grocery leadership under "One Grocery" strategy, merging Whole Foods employees into Amazon systems. Is this long-overdue efficiency or cultural destruction? Expert debate on what this means for grocery competition and Whole Foods' future. Sponsored by A&M Consumer and Retail Group, Mirakl, Simbe, Infios Clear Demand, and Ocampo Capital.
For the full episode, head here: https://youtu.be/vjOmUkH_Vhw?si=9f8KlsQw8yUdPqan
#grocery #amazon #wholefoods
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Transcript
Amazon has restructured its grocery leadership.
Speaker A:According to GroceryDive, Amazon has named a restructured leadership team for its worldwide grocery division that includes top executives from Whole Foods Market.
Speaker A:The latest moves are part of an initiative Amazon is calling quote One Grocery.
Speaker A:Wow.
Speaker A: g as CEO of Whole Foods since: Speaker A:One grocery is just so creative, don't you think?
Speaker A:And in addition, Whole Foods Market's corporate employees will migrate to the same system as Amazon employees for benefits, compensation structure and other aspects of their jobs.
Speaker A:And Amazon spokesperson confirmed to Grocery Dive Bryson, what should we make of Amazon's One Grocery strategy?
Speaker A:Restructuring?
Speaker A:Or is it just more sound and fury ultimately signifying nothing?
Speaker B:Yeah, no, it's a great question.
Speaker B:And so I, I don't think it's the latter.
Speaker B:I think, you know, they're don't.
Speaker A:Okay, interesting.
Speaker B:I don't think it's the latter and I think quite honestly it's, it's long overdue.
Speaker B:Right?
Speaker B: on of Whole Foods was back in: Speaker B: You know, now fast forward to: Speaker B:So for, you know, Amazon to be able to, you know, effectively break down the silos that have existed between Whole Foods, Amazon Fresh and Amazon Go, I think the benefits are going to be exponential with respect to, you know, bringing together both the physical as well as the digital insights for consumer trends, being able to cross pollinate ideas amongst the different retail banners and then leveraging and really bridging that gap from a true omnichannel standpoint in grocery.
Speaker B:So I, I do think that there are long term benefits, are there immediate benefits as well as long term benefits that they're going to unlock through this?
Speaker B:I think, you know, it does send a long term signal to the employee, internal employees as well, you know, giving them greater access to assets that maybe weren't available to them in the past.
Speaker B:Unifying on one platform, simplifying processes.
Speaker B:So I think the efficiencies, the insights as well as the reach are really going to be what set this move apart and really set Amazon up for long term success under the one grocery platform.
Speaker A:Wow, okay, so I'm, I'm a little surprised by that take right at the get go.
Speaker A:So let me ask you a follow up question there.
Speaker A:So, so no concern at all then about, you know, moving the Whole Foods employees onto the full Amazon compensation package benefits, no concerns at all about what that does to the culture of Whole Foods?
Speaker B:You know, I think it's a good point and a good, a good risk.
Speaker B:I know that, you know, just comparatively, other retailers have been very cautious about merging online and physical.
Speaker B:But I think, you know, the Runway has been long enough to where, you know, those cultural norms I think are established.
Speaker B:And I think, you know, and I am maybe going on a limb here and giving Amazon credit for, you know, not disrupting the boat too much in preserving some of that integrity.
Speaker B:But I think the, you know, benefits of being able to, you know, break down the redundancies, drive efficiencies, I think is only going to result in, you know, improving the employee dynamic, dynamic amongst the members at Whole Foods and the like.
Speaker B:So I do think there is upside in it.
Speaker B:I think, you know, you did bring up a point, point about maintaining the delicate balance of the culture.
Speaker B:But there, I think just given the access, the elimination redundancies and overall efficiencies, I think that would outweigh the risks.
Speaker A:Interesting, Interesting.
Speaker A:I'm not sure I'm buying into the argument of reducing efficiencies is what, what Whole Foods needs to continue to be great.
Speaker A:But I'll save that for now.
Speaker A:I want to hear what Brooks has to say.
Speaker A:Brooks, do you agree with your colleague here or are you going to take a different slant?
Speaker C:Well, look, I'm going to go on record as never disagreeing with Bryson on the topic of grocery.
Speaker A:I know, right?
Speaker A:That's why I feel like danger Will Robinson.
Speaker A:Danger Will Robinson already, but let's go.
Speaker C:So I'm going to take the proverbial wait and see on this one.
Speaker C:I mean, it's hard to believe it's been eight years since the acquisition.
Speaker C:And I think all of us expected this to be a major industry disruptor, but I think we're just still waiting for that, right?
Speaker C:I mean, groceries, what a trillion dollar market in the U.S.
Speaker C:amazon has 3, 4 or 5% share.
Speaker C:I mean, I think a lot of us were expecting more and maybe this is the answer.
Speaker C:I'm not sure.
Speaker A:Right, okay.
Speaker A:So you're taking a little more cautious approach.
Speaker A:Okay.
Speaker A:And what do you think here?
Speaker D:I mean, I think that it makes total sense if I'm Bryson and I'm coming in and I'm looking at how do I streamline operations, how do I continue to make Amazon's grocery success best possible?
Speaker D:Like all of the things that Bryson just said have to happen.
Speaker D:I do, however, I agree with that.
Speaker D:Think that just based on what we heard time and time again last week.
Speaker D:Chris, from the grocery retailers, we talked to a consumer goods forum last week.
Speaker D:They Were all talking about having this sense of purpose in their roles of the, the corporation being not only about making sure that people get food, but providing feeding the world with the most affordable and healthiest food possible.
Speaker D:And what worries me is the line in this press release of, and other aspects of their job.
Speaker D:Like, I think from a, like that's the part for me that I do think is going to really impact how successful this is in terms of the current workforce and the current culture and the current consumer expectations of the Whole Food customer.
Speaker D:Because I think if you go too far into automating and Amazoning a grocery store like Whole Foods, I, I don't know that you still have that edge that that Whole Foods has had in the market.
Speaker A:So yeah, I, I, I, that's where I'm, I'm at that point too.
Speaker A:And like I said, you know, from the people we've talked to that have worked at Amazon, like the vision I have of working there is like their systems are like, there's like clocks everywhere that you're what that are, are watching.
Speaker D:You and counting down, like how quickly.
Speaker A:You respond to emails and how quickly you get your job done and all that kind of stuff.
Speaker A:And if I'm a Whole Foods like lifer, I'm like, forget that.
Speaker A:I don't want that.
Speaker A:And so like, I don't know how that, you know, makes that, that stifles my creativity somewhat, which is what Whole Foods was so good at.
Speaker A:But I mean, to go on my point now, I think, to me, I think it's, it's the move you expect 100%.
Speaker A:I agree with that.
Speaker A:I don't know what else you do, honestly, but I think going back to the question, I think it actually does signify nothing in the long run.
Speaker A:And I'll go even farther to say that in 10 years, I think Whole Foods is going to be a shelve its former self and be relegated to the dustbin of nostalgia if this plays out the way I think things are going to play out.
Speaker A:Because like, look, Tony Hoggett's gone.
Speaker A:Claire Peters is now gone, which I didn't realize until this announcement came out.
Speaker A:Both are seasoned grocery executives and they've, they're gone after countless other executives in Amazon Grocery have gone before them.
Speaker A:And so now you're putting Amazon Whole Foods on the Amazon incentive structure.
Speaker A:I just don't think that bodes well.
Speaker A:But the biggest tell for me in this is what does Amazon have to go on strategically here?
Speaker A:And the biggest tell for me is like, there's this weird Metric that they're quoting about the Amazon Fresh remodels where they're saying like that the average monthly store spend of a consumer has increased 20%.
Speaker A:I've never heard that statistic before.
Speaker A:Like, shouldn't that just be like the average store is up 20%?
Speaker A:Like what are you telling me with that statistic?
Speaker A:Like, I don't get it.
Speaker A:So like it seems like they're reaching as well for this.
Speaker A:And so I just don't know strategically, why, what is it?
Speaker A:Why does Amazon have a right to win in grocery at this point compared to the competition?
Speaker A:I just don't understand that.
Speaker A:But I don't know.
Speaker A:I'll give one.
Speaker A:Do any of you guys want the last word to retort on that?
Speaker B:Sure, I'll take that one.
Speaker B:So, you know, I think why do they have the right to win?
Speaker B:You know, and I think it really is, I think this is probably one of the best use cases for, you know, the divergence of the physical and the digital.
Speaker B:Right.
Speaker B:And I think Amazon's been reserved in that approach.
Speaker B:Right, but we're starting to see it, we're starting to see the digital encroach on Whole Foods, right?
Speaker B:In the last time that I placed an order on Amazon, you know, I'm loaded to it.
Speaker B:You know, anything else window where it prompts me to fulfill, you know, traditional food staples, right?
Speaker B:Perishables, arguably coming from Whole Foods, you know, when you're facilitating returns for Amazon, you know, you have the convenience of dropping into Whole Foods for that.
Speaker B:So I think what's going to set them apart is really that 360 degree access into insights.
Speaker B:So I think, you know, you bring up a point.
Speaker B:It is incredibly imperative to protect the core and understand the core consumers.
Speaker B:But I think the robust insights and analytics that can be brought in from the digital as well as the other banners that Amazon operates does bring meaningful insights into the consumers so provided there to the Whole Foods consumer, so provided they are able to preserve, you know, what's made them successful to date, but also augment that with those additional opportunities to spot, identify and react to trends in a much more meaningful and faster manner, presents a value proposition for the Whole Foods consumer.
Speaker A:Okay, okay, well, I guess we'll, I think we'll agree to disagree on this one.
Speaker A:We'll see where we go with the rest of the show.
