Amazon, running among aisles and shelves

Michele Caprini
13 Nov 2019

Amazon has confirmed the opening of a new grocery store in Woodland Hills, Los Angeles, in 2020. The CNET website was the first to report the news after the company posted job opportunities for it.

Neither Whole Foods nor Amazon Go

The new store will not be part of the Whole Foods supermarket chain, taken over in 2017 and whose stores offer a high-end selection of natural and organic food. Unlike Whole Foods, the positioning of the offer will be set at a lower price range than the organic supermarket chain.

The format will also different significantly from Amazon Go cashless stores. Therefore, it will not have the integrated product scanning system nor automatic online payment.

Small-scale automated supermarkets work well with processed food, whereas the Californian new store will focus on fresh or loose fruit, vegetables and other foodstuffs.

The decision was, in fact, recently anticipated by authoritative sources, such as the Wall Street Journal. The new physical store is indeed consistent with Amazon's growth plans in the U.S. food market, whose value is close to $800 billion.

 

Delivery, strategic evaluation node

Several are the reasons that direct Amazon’s strategy to a greater presence throughout the country. Grocery market is already crowded, consumers have proven purchasing habits and trying to enhance the brand value is far from trivial.

The online food’s sale is, in fact, strongly suffering of the irregularity of the market itself. As a consequence, planning the organization of fresh products becomes challenging, as the downsizing of the AmazonFresh service for certain post codes attest.

Delivery, nevertheless, remains fundamental throughout the decision process, confirming itself as methodological key.

AmazonFresh and Prime Now match against services such as Instacart, delivering fresh and non-perishable items in few hours. The company has rapidly expanded its offer, aiming to deliver food within two hours. It has also begun to include free service with the subscription to Prime service.

Most consumers, however, prefer to shop themselves, apart from few categories of highly repetitive purchases. Moreover, pick-up in store services for fresh products is preferable to many customers instead of home delivery typical of online commerce. The store is considered a safer and better alternative to the home delivery model, which raises many concerns among consumer.

Open game

The expansion in the offline market strengthens Amazon against Walmart, the largest national retailer and the largest food seller.

The different positioning of a new Amazon-branded grocery store distinct from Whole Foods Market would allow the group to face in many ways the competition not only with Walmart, but also other major brands of mainstream retail, such as Kroger and Target who have lately achieved successful and significant innovations.

 

Read also: "Do I carry your groceries home? No, move the store"