Amazon’s Fight for the Grocery Aisle
Consumer Trend Thursdays
March 7th, 2019
By now, you’ve likely seen that Amazon is planning to open dozens of new grocery stores in select U.S. cities, starting with a location in L.A. before the end of this year.
It’s Another Step in Amazon’s Plans for Physical Retail Domination
—Amazon, of course, is already well entrenched in the grocery business, having spent $13.7 billion to acquire Whole Foods in 2017. This next round of stores, however, is meant to compete more directly with grocery chain operators like Kroger and Walmart rather than the more high-end Whole Foods. In fact, after briefly dropping prices of many items at Whole Foods to shed its “Whole Paycheck” nickname, prices at that chain have crept back up.
—Amazon also has earned attention for its automated convenience stores, called Amazon Go, where shoppers can walk in, pick out their items and leave without stopping at a register. Sensors automatically detect what customers leave with and charge their Amazon account. While it’s been suggested that Amazon aims to open 3,000 of these stores by 2021, currently it operates in just 10 locations.
—Amazon ran a year-long experiment with pop-up retail locations to sell its hardware products, like the Echo. It announced these 87 pop-up locations will close, likely as part of a strategy to invest more in its permanent retail locations. Those include its book stores and Amazon 4-star, which sells only items that earn a 4-star rating or higher on its ecommerce site. (You can find the nearest Amazon store near you here.)
The Must-Have Conversation
Amazon’s continued push into physical retail is challenging other retailers to quickly innovate to keep up with the operational might of Amazon and provide the streamlined shopping experiences customers want. That list includes Walmart, Kroger and 7-Eleven’s experiments with cashier-less checkout. Kroger, along with Amazon, is testing out grocery delivery robots. Grocery chains are also redesigning their stores to accommodate online ordering, like adding reserved parking and designated checkout lanes for pickup shoppers, or replacing shelves carrying last-second impulse buys typically situated by the register with racks for holding orders. You might also soon encounter smart shopping carts, that automatically scan and checkout your items, or robots wandering the aisles of your local store that track inventory, restock items and clean up spills.
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