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Amazon Plans To Eventually 'Go Big' On Physical Grocery Stores (engadget.com) 34

Posted by BeauHD from the expanding-its-empire dept.
Amazon CEO Andy Jassy told the Financial Times that the company intends to "go big" on its brick-and-mortar grocery store business. Engadget reports: Amazon bought Whole Foods in 2017 for $13.7 billion, but the company is far from dominating the grocery market like it has so many other sectors. The company's physical store division accounts for 3.4 percent of overall business and has grown only around 10 percent since the Whole Foods acquisition. "We're just still in the early stages," Jassy told the Financial Times. "We're hopeful that in 2023, we have a format that we want to go big on, on the physical side. We have a history of doing a lot of experimentation and doing it quickly. And then, when we find something that we like, doubling down on it, which is what we intend to do."

Many of the layoffs Amazon recently announced were in its grocery division. It has closed several of its Fresh supermarkets and put plans to open new ones on hold as it tries to find a format and formula that works. Jassy noted that many Fresh locations opened in the midst of the COVID-19 pandemic and as such Amazon hasn't "had a lot of normalcy." The physical retail business has struggled on other fronts. Almost a year ago, Amazon said it was closing all of its bookstores, 4-star shops and pop-up locations across the US and UK. The aim at the time was to focus more on the grocery side of things as well as physical clothing stores. However, Amazon took a $720 million hit last quarter due to slowing down its grocery expansion plans.
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Amazon Plans To Eventually 'Go Big' On Physical Grocery Stores More

Amazon Plans To Eventually 'Go Big' On Physical Grocery Stores

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  • I think ALDI and LIDL are showing us where grocery is going towards, but they haven't announced what I expect will be their next big step. Both have accelerated profit by reducing staff and reducing selection. The obvious next step is for their stores to have even fewer employees yet, and I expect what we'll see for that will be grocery stores essentially reduced to giant vending machines. Customers will place orders (often online) and all the picking will be done by the very small staff of employees ins

    • I've seen some absolutely enormous Aldi stores in Germany. I know they tend to be smaller in the US, at least all the ones I've seen, but I think that's because they aren't trying to compete with Kroger.

      That being said, they are building my areas first Amazon grocery store about two miles down the road from me. It's going to be *large* for a grocery store. And, there's a Whole Foods not that far away, that's also right next to a Kroger.

    • Sounds like the Service Merchandise model applied to a grocery store. Should cut down on shoplifting, as well as the public in general touching your food.

      • What I find interesting about this is that this is a return to the old model of store operation. You can watch some really old westerns, for example. They used to keep most things behind the counter, and you would have to ask for them.

        As an aside, I actually once worked for Service Merchandise.

        • What I find interesting about this is that this is a return to the old model of store operation.

          Very true. If I recall correctly it was Piggly Wiggly that first brought the model of the consumer picking out groceries in an aisle of food (at least in the USA).

          The difference though is that the old method still involved employees handing food to customers. I expect the next model will drop that as well. ALDI 3.0 will just have lockers or something of the sort, customers will drive to the store but they will have already paid before they arrived and they'll just pick up their food and go. One inter

    • Lots of people do like ALDI, but many of us do prefer larger stores with more options, like the Krogers of this world. In Texas, the most popular chain is HEB, which thrives on larger store concepts with quality groceries at reasonable prices. HEB and Kroger customers aren't going to ALDI in droves. That chain mainly caters to the extremely budget-sensitive crowd.

    • While this model might work fine for processed foods I certainly wouldnt want my fresh produce picked for me. Even nice grocery stores don't always have the best produce for every single thing they carry and I have no interest in spending my hard earned money on rotting vegetables and fruit.

      • With Amazon Fresh you don't even get to pick your packaged food. If the worker can't find your exact item in less than a few seconds they swap it for one the first alternative that they think is close enough. Maybe that's fine for most people, but if you have a food allergy it's really not.

        • Re: (Score:2)

          by skam240 ( 789197 )

          Count me out then. Even without food allergies that's not acceptable to me as product differs between brands and I frequently buy specific brands of items due to quality of flavor or ingredients.

        • Re: (Score:2)

          by kriston ( 7886 )

          You get a text message that the substitution is being offered and have the option to decline the substitution.

      • There's an Amazon Fresh store near me, with the Big Brother no-checkout-needed setup - you scan a QR code from their app when you enter and when you leave. You can pick your own produce, but everything is sold by the piece, so it's hard to compare prices to those in normal supermarkets that sell produce by the pound. Items that are not in their weekly ad are mostly not cheap, and they change prices of many items on the shelves every week. One thing that I do buy there is milk: a half gallon of the store bra

    • Re: (Score:2)

      by Sloppy ( 14984 )

      That doesn't sound like the kind of place where I would buy groceries (unless all its competition has been destroyed). "Reduced selection" is a real deal-killer.

      When I started buying books from Amazon, it was because I could get pretty much anything I want from them (whereas the local bookstore would sometimes have to order it, making it essentially equivalent to online shopping). Reduce selection and you reduce my reasons for Amazoning.

  • Amazon doesn't seem to care if you get cheated on Amazon. They don't care of the vendors rip you off. Perhaps the new stores will kill some people.

  • Ever since Covid caused Walmart to abandon their 24 hour schedule, I loathe having to go shopping when the daywalkers are out. I'd love it if Amazon opened one of their completely automated grocery stores near me.

    However, if they're just talking about another "Whole Paycheck" store, sorry, hard pass on that one. It's a tough economy and even Aldi prices (when I do manage to make it there before they close) are stretching my budget.

  • They’ve got no first mover advantage here (Score:3)

    by hdyoung ( 5182939 ) on Tuesday February 14, 2023 @08:47PM (#63293897)
    There was recently an article here that Amazon is charging vendors a 100% overhead rate for their online marketplace. Because they can. That’s great and all, but they’re still posting losses with that overhead rate? Not exactly lean and mean.

    And they think they can compete in the SUPERMARKET business? That‘s a 1-3% profit margin business. Sort of like gas stations. That’s as lowest-common-denominator constantly-near-starvation as a business can possibly get.

    And the space is absolutely FILLED with competitors. This isn’t going to go well. I don’t know what’s more foolish, this or Zuckerberg’s multi-meta-cyber-online-cyberpunk-verse-thingy project.

  • Right now Walmart has gone to war with Amazon on the grocery delivery front. Most all Walmarts now offer grocery delivery using a 3rd party delivery service called Spark (which pretty much like all the other services such as Grubhub, Doordash, Uber eats, etc). I know of people delivering Walmart in my small town, and Walmart is paying really good to do these deliveries. It's clearly a loss-leader to try to take over this segment of online ordering before Amazon can enter it.

    Walmart is leveraging its massive

    • Walmart has given up trying to be the cheapest and threw away all of their variety. Absolutely no reason to patronize them anymore. Exploiting that is where Amazon can prosper. Walmart is used to being able to stomp out the littler guys

  • with a vision that everything should be available online, starting with a bookshop.
    The search clutter and delivery scams on Amazon are getting so worse that I'd rather go to a store anyway.

  • I wish they'd do the latter. Amazon has far too much power as it is; a major bricks 'n' mortar presence on their part might have the potential to turn whole regions, and perhaps even countries, into something resembling company towns.

    Corporatocracy is a cancer, and Amazon is an apex cancer.

  • The Whole Paycheck Foods never has good prices

  • The article does not give a lot of information. The CEO has simultaneously laid off lots of workers and also claimed to be âoegoing bigâ at the same time.

    If this is anything more than an attempt to move the market on Amazon stock, then weâ(TM)ll see it when (and if) it happens.

    There are claims made that Amazon AWS subsidizes its Prime service. Itâ(TM)s unclear how much the AWF business affects this balance. Itâ(TM)s also almost impossible to get big tech growth in brick and mortar.

    T

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