Amazon’s first large grocery store using the cashier-free, automated checkout model opened in … [+]
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Amazon’s push to open more brick-and-mortar grocery stores has some thinking it’s out to eat Walmart’s lunch but it’s Amazon’s voracious appetite for data that can’t be sated.
That’s precisely why the company tinkers with various store designs, from its compact Amazon Go that resembles a convenience store to its larger format Go Grocery with a broader assortment like a supermarket. Both concepts feature what Amazon calls “Just Walk Out Shopping” technology that processes purchases through a mobile app thus eliminating need for conventional checkout lanes. Such “cashierless” shopping is attractive in these days of Covid-19 and social distancing.
While technology allows shoppers to get in and out of stores faster, it also feeds Amazon’s massive data banks with information about what items consumers buy, and how that varies by geographic market, time of day and any metric Amazon chooses to analyze. Amazon also gains insights about products consumers consider buying but ultimately reject in favor of another product because in-store sensors and cameras record which items shoppers handle but return to the shelf without buying.
This competitive intelligence gold provides Amazon crucial strategic guidance as it tests and refines new concepts, product assortment and services, expands its physical store presence and leverages the scale of its Prime loyalty program. Just this week, news broke that Walmart plans to launch a subscription service called Walmart+ to compete with Amazon Prime, which boasts more than 150 million paying members.
It’s clear Amazon will open more Go Grocery cashierless stores while also expanding a third, as-yet-to-be-named grocery store format with traditional checklanes manned by cashiers, as reported by The Seattle Times and Grocery Dive. What’s less certain is how many of each format will open, when and where. Probable locations are near Amazon’s Seattle headquarters, in California, Washington, D.C., and suburban Chicago.
Grocery is a gateway for Amazon to claim more “share of wallet,” as retail industry-watchers like to say.
“Grocery is an essential stepping stone to becoming a dominant supplier in the last mile for a broad range of products,” Bill Bishop told me yesterday. As cofounder and chief architect at Brick Meets Click, Bishop authors research about the evolving food sector and Amazon’s strategy, particularly the role of its Prime program.
James Thomson, partner at Amazon consultancy Buy Box Experts and former business head of Amazon Services, agrees.
“Grocery stores owned by Amazon are not designed to just sell you groceries,” Thomson says. These stores will sell Amazon private label merchandise and Amazon’s own devices such as its Fire tablets, Kindle and Echo smart speakers.
“All this will be in Amazon’s larger stores,” he adds, “because Amazon has to get their claws into consumers every which way to make sure it’s not just Amazon products being considered but more importantly, it’s the channels that Amazon controls that have to be ‘top of mind’ or ‘near top of mind’ for consumers.”
Equipped with massive amounts of data and teams of analysts, Amazon can identify future store locations in communities that mirror the demographics of its targeted Prime customer and curate assortment to meet their needs.
“By having these three different formats—the Go and the Grocery Go and the much larger format that has yet to be named—gives Amazon flexibility to open different types of venues and be relevant to everyone’s grocery shopping in the neighborhoods they want to be in,” Thomson says. “So, Amazon uses the data to figure out where to be and then figures out what kind of store they can put in those locations.”