Bloomberg reports that Amazon plans to once again start opening new supermarkets while at the same time rolling out a new grocery delivery service for people who are not Prime members.
The story characterizes the moves as a “grocery reboot” consistent with CEOAndy Jassy’s stated goal to get grocery right before investing in new stores and services.
According to Bloomberg, ” Shoppers will be eligible for the offering anywhere the company operates its Amazon Fresh service. Non-Prime members will be charged $4.95 to $13.95 for delivery, while members now pay $6.95 to $9.95, with free deliveries over $100.” The company says that it expects to expand the program to areas served by its Whole Foods stores as well.
Claire Peters, worldwide vice president of Amazon Fresh, tells Bloomberg that “the company plans to resume opening new Fresh stores in 2024, after a pause of more than a year. Amazon also has redesigned five locations, including three in the Los Angeles area that wrapped up renovations recently.”
The story notes that “grocery chief Tony Hoggett, a former Tesco Plc executive, halted store openings last year while Amazon revised its fresh-food strategy. Hoggett and his lieutenants ultimately opted to redesign stores to increase selection and add things like hot coffee and donuts, emphasizing traditional retail touches rather than the cashierless technology the company has touted for years.”
“We will have a good pipeline for next year,” Peters tells Bloomberg. “What we won’t do is open stores aimlessly.”
Amazon also announced another Prime enhancement yesterday – saying that members can get a $100 discount off the membership fee of its One Medical healthcare service, a move that essentially halves the annual fee.
Amazon bought One Medical for $3.9 billion, and describes the service as “reinventing the health care experience to make it easier for people to get the health care they need—from preventive care, to addressing immediate concerns, to managing chronic conditions like diabetes.” As part of the package, nationwide on-demand virtual care 24/7 at no additional cost.
KC’s View:
I’m sure there will be a number of landlords who will be pleased that Amazon is going to start operating stores in shopping centers where the real estate has sitting fallow. Even if Amazon has been paying rent, a big empty store is not a good look, and it hurts other stores in a shopping center.
As for whether this redesigned Amazon Fresh experience is effective, I’m holding off on making a judgement until I see one in operation. Somehow, coffee and doughnuts don’t strike me as game changers; Amazon Fresh stores generally have felt like dark stores into which customers are allowed, and they have to figure out ways to transcend that old reality.
It is interesting that part of the grocery strategy is keyed into “traditional retail touches” – which sounds suspiciously like doing things the way they’ve always been done. Which doesn’t exactly sound like Amazon.
As for grocery delivery to non-Prime members, let’s be clear – this is one more effort to get people to sign up for Prime membership. Which is smart.
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