Amazon Will Open a Grocery Store Not Named Whole Foods
By George Anderson
When The Wall Street Journal reported in March that Amazon.com planned to open dozens of grocery stores in cities around the U.S., including Chicago, Philadelphia, San Francisco, Seattle and Washington, D.C., the e-tail giant remained mum on the subject. That has changed, however, with a new report confirmed by Amazon that it will open a grocery store in the Woodland Hills neighborhood of Los Angeles next year.
CNET, the first to break the news, discovered four job postings for the location that billed it as “Amazon’s first grocery store.” The posting suggests that the store will operate under a banner other than Whole Foods. The store, Amazon confirmed, will not make use of the self-checkout technology used in its Go convenience store locations.
Amazon, as its recent announcement of free two-hour home delivery for Prime members shopping at Whole Foods exemplifies, is intent on gaining a greater share of the U.S. grocery market. Doing so will help drive its top line performance as consumers tend to shop more frequently and locally for groceries.
While speculation has centered around Amazon offering more of a mainstream supermarket to compete with the likes of Kroger, Safeway and other chains, management has not confirmed what type of grocery store it intends to operate. CNET reports that the new store will be located in a 35,000-square-foot space that was previously home to Toys “R” Us.
“When it comes to grocery shopping, we know customers love choice, and this new store offers another grocery option that’s distinct from Whole Foods Market, which continues to grow and remain the leader in quality natural and organic food,” an Amazon spokesperson told CNET.
If you were in charge of the decision at Amazon, what type of grocery store would you open? Has Amazon learned what needs since acquiring Whole Foods to launch and scale a grocery chain with a completely different marketing model?
Comments from the RetailWire BrainTrust:
Grocery is a tough and highly competitive business and building out new a grocery chain from scratch is a very tall order even for the mighty Amazon. Given Whole Foods’ relatively small size and niche in the massive grocery market it’s understandable that Amazon is looking to expand, but I’m not sure why Amazon wouldn’t acquire an existing grocery player instead of building from scratch – it’s curious.
Mark Ryski, Founder, CEO & Author, HeadCount Corporation
Opening grocery stores to complete with traditional players is no surprise. The keys to success will be shopping efficiency and creative store design. The wild card will be private label.
John Karolefski, Editor-in-Chief, CPGmatters
In my view, the brick-and-mortar version of Amazon should contain the same essential elements of the Amazon online presence. This includes shopper-centric features such as convenience, easy access to frequently purchased items and an overall store design with shopper efficiency in mind. The store should refrain from having a selling area larger than 35,000 square feet. In terms of selection, it should offer a very thoughtful inclusion of categories and items that are aimed at creating sufficient variety that attracts the shopper who wants some additional options beyond their shopping list, but does not want to engage in an arduous, time intensive “treasure hunt” in order to find fulfill their mission. Extended variety should be readily accessible via kiosk where items not stocked on the shelves can be ordered for same-day delivery or in some cases brought to the front of the store from an attached or nearby warehouse at a prescribed time for shopper pick up. Unlike Whole Foods, the in-store variety and pricing should be more amenable to a mainstream, middle income shopper. Finally, this store should offer an array of payment options, including a regular checkout line staffed with humans, self-checkout, and scan and pay as you go. Over time, these options can be adjusted commensurate with shopper adaptation.
Mark Heckman, Principal, Mark Heckman Consulting
Of course Amazon is opening grocery stores. The selection at Whole Foods is too limited for some consumers (like me) and the grocery market is too lucrative for Amazon to pass up. Hey, if you’re going to compete with Walmart, compete with Walmart.
It’s said to be a low cost grocery format so I am not surprised that Amazon won’t be using Amazon Go checkout technology. As a store planner, I am looking forward to seeing what Amazon comes up with for store design.
Georganne Bender, Consumer Anthropologist, KIZER & BENDER Speaking
I see Amazon grocery stores as simply Amazon’s next step on their way to building out their ability to deliver groceries same-day. They are already leveraging Whole Foods and using them as distribution centers for two-hour delivery in select marketplaces. This isn’t going to be just another traditional grocery store. Amazon will use it to go above and beyond the competition.
Liz Adamson, Founder | Lead Consultant, Egility