Experts Weigh In: Amazon’s grocery store expansion
Five grocery tech experts chimed in on the recent report that Amazon is planning a major move into the brick-and-mortar grocery store space, and see the potential for up to 2,000 branded grocery stores over the next 10 years.
Tripling in size the last five years and accounting for 50% of all retail growth in 2015, Amazon is looking to fresh grocery as a way to fuel its continued rapid growth. Most industry observers probably predicted that Amazon would move more into the sector, but what’s notable here is the speed with which the company is expanding.
Amazon has long been known for sacrificing short term profits for long term opportunity. It has been studying grocery for years and with this additional focus, Amazon’s ability to learn and willingness to invest could make them a national grocery player in a relatively short amount of time.
- Sterling Hawkins, operations and venture relations, CART
“Amazon’s plans to launch convenience stores to sell perishable items as well as a large number of physical grocery stores is certainly a bold move, but one that should be considered and executed carefully. Staying on top of perishable items can be an arduous task, even for the largest of retailers. Food waste is still an ongoing concern, but can be controlled through dynamic pricing initiatives that encourage shoppers to purchase those items before they spoil.”
- Paul Milner, marketing director, Displaydata
"It’s here. The moment that a lot of grocery chains have been dreading has arrived and although it’s a small start, the signs are ominous. Grocery chains that don't move now to usher in the new era of retail will be left behind in a few years. Leveraging customer data, improving personalization, mobile centricity and building efficiencies into in-store experiences are the only options for those who want to survive in this new reality.
This is just a warning shot from Amazon. Of course there are tens of thousands of supermarkets, and I don't mean to spell gloom and doom, but future is evident and early movers will be the only ones to prosper in this new tomorrow. Supermarkets who build deeper relationships with their communities, get smarter with their data and build strategic partnerships to stay in the technology game are sure to weather this change. Game on.”
- Shekar Raman, co-founder & CEO, Birdzi
"With 'Project Como' (reportedly the internal name for Amazon’s grocery venture), it's clear that Amazon is using grocery to help propel its push further into the physical retail space. A large percentage of consumers still prefer to pick their own produce in person, and Amazon is offering a new solution for those types of people. This just reinforces the need to have a full omnichannel experience that allows customers to shop anyway they want.
However, traditional grocers should take note of Amazon's move but not panic. Today's grocers have a head start, we think they should stay calm and focus on their own omnichannel experience and rely on the brand equity they have build with their local communities. This is an opportunity for traditional grocers to improve their omnichannel offering; a seamless digital and physical shopping experience that is personalized and flexible to customers who want to shop online, in-store, or everything in between."
- Dan Farmer, VP retail solutions, Unata
“Amazon has done its homework on the growth of ‘fresh,’ the desire of consumers to select produce and the driving home market. Amazon will have to differentiate to compete with C-stores such as 7-Eleven, Cumberland Farms and QuikTrip with their advantage of forecourt gas traffic generators and significant advances in fresh. Pay-at-the-pump technology and mobile order ahead will enable these C-stores to quickly test adding SKUs and trunk delivery while customers are filling up. To differentiate itself from C-stores and grocers, new entrants should look less at why consumers don't like buying produce online or why they claim they aren't using click and collect, and more at what consumers already are doing for dinner tonight and on the way home.
Our analysis at ThoughtWorks indicates that success in the U.S. market is not about choosing produce, competing with more recipes, or lots of SKUs. It’s about what’s for dinner tonight, choices that look more like restaurant menus than e-commerce retail sites, and how fast I can get a complete, delicious, healthy and fun dinner on the table after the drive home. This is why curbside restaurant take-out remains a main competitor for share of wallet.”
- Babs Ryan is grocery and retail customer behavioral expert, at ThoughtWorks Retail