Amazon’s New Grocery Chain to Open by Year’s End?
Amazon has reportedly signed more than a dozen leases on store locations in the Los Angeles area, a likely signal that it intends to open a new chain of grocery stores.
Initial locations are expected in the densely populated areas of Woodland Hills and Studio City, as well as Irvine in Orange County, according to WSJ. Other locations are expected to open in Chicago and Philadelphia.
Speculation began earlier this year that Amazon would launch a new brick-and-mortar venture separate from its Austin, Texas-based Whole Foods Market chain as well as its 16 cashierless Amazon Go store locations.
What is Amazon's next retail concept likely to look like? An industry expert offered his thoughts on the matter.
“There are two main aspects to what Amazon will do," predicted Kevin Sterneckert, chief marketing officer at Dallas-based Symphony RetailAI, a global provider of artificial intelligence-enabled decision platforms, solutions and customer-centric insights. "First, I believe they will extend additional benefits and privileges to Prime members that will encourage and reward shopping behavior at their grocery locations. Secondly, Amazon will push the envelope on grocery delivery, accelerating convenience as they’ve done with online shopping experiences. I expect Amazon to offer delivery of goods in less than two hours, which is typically much faster than most grocers can commit to today."
Continued Sterneckert: "Beyond that, Amazon could potentially extend its marketplace to introduce additional vendors into physical stores, extending the breadth of assortment. What you’ll find in an Amazon grocery store will most likely differ in assortment from what’s already established in Whole Foods, but we’ll certainly see more of Amazon’s private label products made available to consumers via this channel. And because early reports point to the build-out of kitchens in the spaces Amazon has leased, we’ll see Amazon offer fresh and ready-made meal options prepared on-site, which presents some uncharted territory for the ecommerce giant. Where I think today’s grocers have a slight advantage to Amazon at the moment is in the intricacies of the grocery supply chain, fulfillment and distribution infrastructure, and the unique ability to understand consumer demand between fresh and the center store. With that in mind, Amazon will need seasoned experts to pull this off – I also expect to see Amazon looking for seasoned executives in the industry with the right experience, picking off talent across the business as they go.”
Under its Whole Food Market banner, Seattle-based Amazon is 10th on Progressive Grocer’s Super 50 list of top grocers in the United States.