Can Amazon Fresh make it?

The Lempert Report
November 21, 2023

Amazon Fresh stores were supposedly an innovative concept from tech giant Amazon, representing a significant evolution in the retail grocery sector. The journey of Amazon Fresh stores is remarkable, combining cutting-edge technology with traditional retail to redefine the shopping experience. But neither Amazon nor the industry nor shoppers have been bowled over by its success. Let’s take a step backward. Amazon Fresh began as an online grocery delivery service in 2007, initially available in Seattle. This move marked Amazon's entry into the fresh grocery segment, complementing its existing vast range of products. In 2020, Amazon opened its first physical Amazon Fresh store in Los Angeles. This move was seen as a bold foray into brick-and-mortar retail, a sector traditionally dominated by established supermarket chains. I was there, wrote about it then - and frankly while there were some interesting and cool features - was overall - underwhelmed and pointed out its flaws. 

Today, the 44 Amazon Fresh stores are distinguished by their integration of advanced technologies. Notably, the "Dash Cart" – one that I think has huge potential - it’s a smart shopping cart equipped with sensors and a touchscreen – allows customers to avoid checkout lines. These carts automatically scan items as customers add them to their carts and enable a seamless checkout process. and allows retailers to get rid of the dreaded shelf checkouts. Then there’s the Amazon Go technology and the Ask Alexa enabled kiosks. Amazon Fresh has faced challenges. The high costs associated with technology implementation and concerns over data privacy and job security in an increasingly automated retail environment have been points of debate. No one questions the integration of AI and machine learning could further streamline shopping experiences, and Amazon's continuous investment in logistics and supply chain efficiency is key to achieving those. But Amazon forgot one thing the human shopper. So, according to Claire Peters, VP of retail and a veteran of Woolworth’s supermarkets in Australia, Amazon Fresh is getting back to supermarket basics – better and warmer in-store aesthetic, more colorful signage, better lighting, more in-store displays, more prepared foods, more baked goods – in fact they have added over 3,000 SKUs to what she says rounds out the shopping trips – adding more snacks and HBA. Of note – is that they are downplaying the Amazon logo which in the Woodland Hills store I first visited was glaringly prominent – in fact shouted AMAZON, much to the chagrin of many shoppers I’ve spoken to.

Amazon means efficiency, tech and low prices – not necessarily the winning formula for a retailer. Those stores that have created and environment that underscores a retailer/shopper relationship – like Wegmans, Publix, Hy-Vee, Raley’s, Gelsons, Schnucks to name just a few, are the ones that the Amazon Fresh team need to be visiting and emulating.  Amazon originally projected thousands of Amazon Fresh stores across the nation in a decade. Three years in, its doubtful they can achieve that goal, but getting back to basic supermarket merchandising and trying to understand the human shopper needs, in an era where people are seeking a relationship with their local stores, is a good step in the right direction.

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