Amazon has slowly been taking steps into the world of food, making many wonder if the grocery business is the next industry the global company is hoping to conquer.
Amazon already operates Amazon Fresh (a grocery delivery service), Whole Foods (which it purchased in 2017), and Amazon Go stores (compact stores that are set up inside other businesses and sell food), and the company is looking to expand in each of these areas.
So what’s next on their list? Amazon is reportedly planning on opening grocery stores in several major U.S. cities and has already signed leases in some locations. While the branding for these new stores has not yet been announced, it is known that the branding will not be the same as Whole Foods. These new Amazon stores could potentially have lower prices than Whole Foods, which would be another distinction between the two chains.
The anticipated size of these new stores is said to be approximately 35,000 square feet – a little over half the size of a typical grocery store. The selection of products it carries will reportedly be larger than that of Whole Foods, which does not carry products that contain artificial flavors, sweeteners, or preservatives. Because Amazon does not want any restrictions on what it sells, there could be some limitations on where it can open new grocery stores – some leases for shopping centers forbid tenants from selling certain products to prevent competition among each other.
A growing trend among stores these days is to not have cashiers on staff, making it the responsibility of customers to manage the process of purchasing and bagging their own food. While Amazon could choose to go in that direction, it has been reported that customer service will be a top priority.
Through buying existing grocery store chains that will already have many of the grocery store essentials in place, such as shelving, plumbing, and electricity, Amazon should be able to get its stores up and going pretty quickly, albeit installing its own technology for managing the stores.
By having two chains of grocery stores offering products at different price points, one being more affordable than the other, Amazon may have found yet another way to attract even more customers to its brand and of course upsell to them as well.
How could Amazon’s grocery stores influence the grocery store industry? It’s likely that not just the grocery store chains themselves will be affected, but those industries that supply the products that fill the grocery shelves could also be impacted, as Amazon will most certainly be focused on selling its own private label goods and Prime memberships.