retail news in context, analysis with attitude

A column from Matt Newberg of HNGRY that has been posted on Medium suggests that when it opens, the new, as-yet-officially-unnamed Amazon grocery store in the Woodland Hills section of Los Angeles will feature "a small-scale, robot-powered version of its retail store that surrounds a hidden perimeter of the store. The permits state hours of operation from 6am until 2am, which would imply on-demand delivery, enabling Amazon to leverage its best in class data about what consumers crave to deliver it with unprecedented speed and efficiency."

The story goes on:

"The concept, known within the industry as micro-fulfillment, is the latest advancement within the e-grocery space, which FMI and Nielsen project to quadruple from ~$26 billion today to $113 billion in just two years … These centers can be located on the backs of existing retail stores or housed in dedicated facilities, including parking garages … Instead of operating a single industrial warehouse outside of a metropolitan city, Amazon can now leverage this technology to open dozens of smaller neighborhood stores closer to customers."

And:

"HNGRY has now confirmed that Amazon is working with Dematic to provide this very technology inside of its new stores, which will ultimately enable faster than average last-mile delivery and in-store pickup. The company has carefully designed this 7,200 sq. ft. area to house room-temperature robotic-picked storage aisles that will house everything from alcohol to packaged food, occupying about 21% of its 33,574 sq. ft. total footprint."

One expert tells HNGRY that "Amazon will be able to offer 1 hour delivery/pickup windows, but it’s possible that this progresses towards a matter of minutes as more purchasing data feeds the robotic shelves, ultimately driving down picking times."

You can read the entire story here.

KC's View:

I've been saying since the moment this store's existence was reported that it only made sense for Amazon to do something like this if it brings once of its secret sauces to the table, whether making it Prime only, or building in a Subscribe & Save replenishment function, or using Amazon Go-type checkout-free technology.

If this report is accurate, it means that I was generally right - Amazon is bringing its unique approach to logistics to the table - though I was looking in the wrong place for the applicable differentiator.

I'll be curious to know the degree to which this technology can be employed in every one of these stores that Amazon plans to build.  If it can, it'll truly be a game changer, making Amazon more efficient and effective as it challenges traditional retailers.

And, it is yet another example of what Scott Moses of PJ Solomon talks about - how Amazon's size and access to cheap capital gives it an enormous advantage in the marketplace.