Amazon fine tunes grocery stores playbook ahead of major roll-out
Amazon is moving ahead with its grocery bricks and mortar roll-out programme, albeit very slowly.
Yesterday saw the launch of a second UK Amazon Fresh store.
If Amazon is to compete seriously in the grocery market, it likely needs at least 2,000 stores (Kroger has 2,800, Albertson 2,252, and Aldi 2,000), bearing in mind the density and volume needed to get the margins required to make it worthwhile.
Yet, for all Amazon’s voracious appetite for expansion, only 11 stores have been opened with 28 planned to follow.
So, why the seemingly laid back approach? It’s due to a mix of capital requirements, getting the formula right and good, old fashioned patience, according to Rick Watson, CEO and Founder, RMW Commerce Consulting.
“Opening new stores is risky and they are harder to close once opened, especially compared to shutting off a feature on a website,” he says.
“Also, If I were Amazon, I would want to ensure that the satisfaction is super high prior to scaling the model.”
He adds: “My sense is Amazon is fine being misunderstood until their playbook is set. Remember, if they started from here on out doubling the number of stores every year, it would only take another five years to reach 2,000 stores.”
“In the grand scheme of these, that's not that long. And it's something that should give grocery retailers pause before declaring that Amazon is too far behind to catch up.”
And then there were two
The aforementioned UK store is situated at Wembley Park, London.
It’s the second such convenience store to offer Just Walk Out Shopping tech in the UK, which was pioneered at the Amazon Go offering in the States.
It follows the 4th March launch of Amazon Fresh, the e-commerce giant’s first physical shop and first grocery store outside of the US, in Ealing, London.
