retail news in context, analysis with attitude

The New York Times has a story this morning about how, two years after Amazon bought Whole Foods for $13.4 billion, the deal seems to have “only whetted” Amazon’s appetite for further incursions into the industry.

Certainly, the Times writes, “the marriage has made clear the difficulties of selling fresh food inexpensively, either in a physical store or through delivery. Bananas are not the same as books. But the combination has also shown glimmers of success, particularly in delivery. And that has provided some fuel to Amazon executives pushing to add another food-selling option — one built from the ground up.”

Which is why “the company is now quietly exploring an ambitious new chain, probably separate from Whole Foods, that … would be built for in-store shopping as well as pickup and delivery.” The Times suggests that an old internal memo from early 2017 could frame the parameters of what Amazon has in mind:

“The new stores, the document envisioned, would have robust produce, fresh food and prepared meals sections. Nonperishable products, like paper towels or canned beans, would be stored on a separate floor, away from customers. Shoppers could order those items with an app, and while they shopped for fresh food, the other products would be brought down in time for check out. There would also be an area to pick up groceries ordered online and to manage packages for delivery drivers.”

The Times suggests something that ought to get the attention of all Amazon competitors: “To be a major grocery player, Amazon would need a little more than 2,000 stores, the old memo estimated. That’s far fewer than the 5,000 run by Walmart, the country’s top grocery seller, but more than the roughly 1,200 operated by Publix. Whole Foods got Amazon about a quarter of the way there.”
KC's View:
It always is important to remember - and I remind myself of this all the time when commenting on these stories - that nobody outside Amazon really knows very much about what the company is planning. A few people may have pieces of information, but most of us are just trying to make educated guesses.

That said, my guess - though, truth be told, this may be more like wishful thinking - is that Amazon will look for ways to use its various secret sauces in this new store format. Open only to Amazon Prime members? Specials under the Amazon Fresh name? Checkout-free shopping? Selection based on local shoppers’ previous purchases? A way to do automatic replenishment?

I mean, why do it if you’re not going to make it differentiated?