What Could Buechel Do As Head Of Amazon Grocery?

There’s no doubt the grocery landscape is changing. The line between natural and conventional shoppers has virtually disappeared while the gap that defined those respective channels has narrowed.

This week, the line blurred even more when Whole Foods CEO Jason Buechel (who has been at the helm since co-founder John Mackey retired in 2022) added a new title to his resume: VP of Amazon Worldwide Grocery Stores. What does this mean for Amazon’s grocery aspirations and the future of Whole Foods?

Buechel will remain in charge at Whole Foods, adding oversight of Amazon Fresh and Amazon Go stores to his daily docket and reporting to Worldwide Amazon Stores CEO Doug Herrington. Considering Amazon Fresh’s brick-and-mortar approach has been touch-and-go, could it finally be primed for profitability with Buechel at the helm? Let’s take a quick look at his track record for a clearer picture.

Grocery expert and former Whole Foods exec Errol Schweizer highlighted Buechel’s hand in some of the natural grocer’s “less savory changes” since his start in 2013, including layoffs of over 3,000 employees, price cuts and stock price bumps that eventually enabled Amazon to buy the chain “at a fraction of its former valuation.”

Skewing from Whole Foods’ reputation for conscious capitalism, Buechel leans more in line with an “Amazon whisperer,” Schweizer said. He brought “no operations or merchandising experience” along with him, and has a propensity for cutting labor while favoring automation and algorithms. Those efforts keep inventory expenditures and stock levels just as low as the customer experience.

“Whole Foods ad rates and supplier spend have since skyrocketed and the company remains one of the priciest and least profitable retail partners for brands,” Schweizer explained. “The company has since kept retail prices on store brands low but is still very expensive to customers on national and local brands, as well as perimeter departments.”

Considering Buechel’s alignment with Amazon’s corporate aspirations, this appointment shouldn’t come as a shock, he emphasized. Whole Foods’ sales growth has been strong, per UNFI data, Schweizer added, but there could be long-term reputational costs to the margin points he’s made up.

As Buechel announced his new title, a Whole Foods location in Philly voted to unionize – a first for the natural retailer who, at one time, built its commitment to employees into its business model. Leaders of the effort made clear they hope this move will spark a movement across Whole Foods’ network.

For now, however, the bigger issue for Whole Foods’ partners might lie more in its distribution alignment than its corporate ownership. As UNFI has applied a 2% blanket fee on suppliers, the outcry from brands has also been palpable. Indie nut butter brand Big Spoon Roasters said late last week it is breaking up with Whole Foods and UNFI after a decade-long relationship (they say that the system is no longer built for small players). Plenty of others have also taken issue with the tight relationship between the natural chain and its distribution partner of choice.

Many emerging brands no longer look to Whole Foods to take their first steps onto shelves, instead making initial moves with other chains, such as Sprouts or Erewhon, who they say have been more supportive of early-stage efforts. The dynamic between Whole Foods and UNFI has squeezed small brands’ margins, leaving them with little to no path to grow within the retailers’ network.

Once known for its support for upstart emerging brands, Whole Foods today seems at times to be trying to bridge the gap of acting like a mass chain retailer while keeping its crunchy roots in place. Let’s not forget the ongoing test to “bolt-on” Amazon warehouses to Whole Foods locations for a more “complete” shopping experience.

While regulators may have had their minds on the monopolistic potential of a Kroger-Albertsons merger in recent years, it may be time to look at the shape some fully-formed relationships have begun to take.

How else has the natural channel dynamic shifted for CPG brands of all sizes? And what can Jason Buechel do to improve the supplier relationship with Whole Foods? Send me all of your thoughts at adeluca@bevnet.com.