Amazon tries another tack and plans to open its own grocery stores
According to the Wall Street Journal, Amazon is planning to start a brand new grocery store chain that would be a better vehicle for its ambition to transform retail shopping. Amazon plans to open the first store in Los Angeles and has signed two additional leases although Amazon may not go ahead with these new stores. Amazon has tried other in-store strategies including buying a grocery chain with their Whole Foods acquisition, creating cashier-less AmazonGo stores and opening bookstores. The strategy for these new (yet-to-be-named) Amazon grocery stores would allow Amazon to expand their digital marketing, increase availability of lower cost in-store products and focus on customer pick-up and delivery.
Amazon has not transformed the experience of grocery shopping overnight, even with their Whole Foods acquisition and AmazonGo stores. Sales at Amazon’s physical stores, including Whole Foods, Amazon Go and their bookstores, declined 3% in the fourth quarter from a year earlier.
Amazon follows a familiar tack in its approach to the grocery industry: introduce lots of of products then seeing what will stick. Just as Amazon is releasing a slew of Alexa-enabled small electronics from microwaves to wall clocks, with the notion that even if only some of these ideas catch on with consumers, it will set them up to be the leading home computing operating system. Amazon is playing the long game in the grocery industry and is adding weapons to its arsenal. Stock prices of its grocery competitors tumbled after the WSJ article was published. But this also indicates that disrupting traditional industries like grocery or payments is not as easy as it seems, even for a company with vast resources.