Amazon opens second, smaller Go store format in Seattle

Amazon has announced plans to open a second Amazon Go convenience store in Seattle. The store will be slightly smaller than its first Amazon Go format — 1,450 square feet rather than 1,800 — and will feature a ready-to-eat breakfast, lunch, dinner and snack products, along with Amazon Meal Kits.

Go store format seems to be checking many of the demands on shopper wishlists: convenience, premium quality and tech-driven experience, to name a few. It remains to be seen, however, how the concept will play beyond the retail giant’s home base of Seattle.

Amazon’s smaller format should appeal to consumers who prefer to make need-based fill-in trips rather than the weekly stock-up visits that have traditionally characterized supermarket shopping, according to Nielsen. The firm finds that globally, 46% of consumers view grocery shopping as a chore and that 10% say they go shopping just for the meal they need on a given day. Large stores will continue to be relevant in specific markets, but the firm noted small stores in high-traffic areas that offer quick in-and-out shopping will continue to grow sales at a faster pace.

Customers also like the convenience of skipping the check-out line, and Amazon Go allows customers to place items in a cart and to be automatically charged — no cashier or self-checkout necessary — with charges reversed if the customer puts items back on the shelf. Similarly, Kroger’s Scan, Bag, Go lets shoppers use their mobile phones or special handheld devices to ring up items as they shop, skipping the front end altogether.



ALDI Wants To Keep It Simple

ALDI’s executives gave a tour of their newly remodeled St. Charles Illinois store which they say represents how they are spending $5.3 billion to remodel their existing 1,800+ stores and open 800 new ones.

Their plan is to use this investment to become the third largest grocer, by store count, with over 2,500 stores by 2022 putting them right behind Walmart and Kroger. Their strategy includes expansion in more suburban middle and upper middle class neighborhoods.

The new format, which is 12,000 square foot, and is 20 percent larger than their previous footprint, has just five aisles with an expanded produce, refrigerated and freezer sections. In fact, the company has expanded fresh food offerings by 40 percent. The company, known for its low prices and award winning private label foods and beverages for the past 40 plus years, seems to have a new focus which is to expand beyond their core price-conscious customer to a much broader, and dare I say, more foodie oriented shopper by touting their award winning wines, their Specially Selected brand of more upscale foods, “fresh never frozen” seafood, organic meats, a Never Any! brand of chicken (that has no antibiotics, hormones, animal by-products, steroids, or salt and are fed a 100% vegetarian diet) and, of course, their Earth Grown kale veggie burgers.

CEO Jason Hart who said that by the end of their 5-year plan, they want to serve 100 million people led the store tour. ALDI is a very close-to-the-vest company, and is privately held. When asked, he would not share specifics on the number of SKUs in the store, how store sales have increased with the new format or it’s daily transactions. Scott Patton and Joan Kavanaugh, both who have the title of VP of Corporate Buying led our small group throughout the store showcasing innovations in fresh, organic, and trendy offerings. Patton used their olive oil offerings as an example of just how they satisfy just about every customer. Ten years ago, they didn’t even carry olive oil. Today they have four. One basic olive oil that is the lowest price, one extra virgin, one organic and their Specially Selected olive oil, which is imported from a specific area in Sicily for the demanding palate.

ALDI’s assortment is made up of approximately 90 percent of their exclusive brands, SimplyNature, Earth Grown, Specially Selected, Never Any!, LiveGFree (gluten free) and little JOURNEY (baby products) which according to their test kitchen director undergoes over 50,000 well controlled tests to insure their recipes and ingredients are strictly adhered to by their suppliers. There is little doubt they are a demanding and strict buyer – but they relish their long-term relationships with suppliers and think of them as partners for the long-term.

Patton shared that their produce section, which by the way is very impressive both in quality and in price, is growing twice as fast as any other category in the store (although he too would share any financial metrics). The department also includes a “Produce Picks” section that has a limited number of items, yesterday the display was all about blueberries and strawberries offered at super low prices. An interesting note is that unlike most grocers, their produce department is located in the back of the store, rather than up front which is a tool most food retailers use to shout “fresh” and set the stage for a more enjoyable shopping trip with a vast array of colors and aromas.

ALDI Finds are 30-50 foods and beverages that are spot buys that they try to time seasonally that are in the store for just about one week, they have another 30-50 products that are household and non-food items that yesterday offered products like carpets and drawers for student dorm rooms as they head back to college.

The ALDI execs reinforced over and over how they “keep it simple.” Simple for the customer by not inundating them with too many choices (after all, Kavanaugh said, does a shopper really need dozens of choices of peanut butters?) and simple for their store and internal operations. When asked why they don’t do in-store sampling the response was that it just adds cost to the system and they “want to keep it simple.”


Grocery e-commerce startup Boxed plans to expand footprint with new funding

Huang told the New York Times that suitors weren’t interested in his company until Amazon purchased Whole Foods last year. That deal quickly increased retailer’s appetite for online shopping and automation — Boxed’s bread and butter — but the Costco competitor hasn’t gotten any convincing takeover offers. This includes a bid from Kroger earlier this year, which valued Boxed at around $400 million.

Now, Boxed has $111 million more to focus on scaling quickly, potentially threatening bulk competitors such as Costco, and perhaps even Amazon and Walmart.

The company has made the most of growing demand for bulk goods online, including snacks and groceries. Boxed also effectively differentiates itself from the likes of Costco, which has expanded its online shopping, with an endearingly quirky approach. This includes slipping handwritten notes into shipments and sending “selfies” of orders to customers when they ship.

Other retailers may benefit, too, as Boxed looks to license its technology. Such an opportunity, which is similar to Kroger’s establishment of Sunrise Technologies in March, could help level the digital playing field against deep-pocketed Amazon as it continues to feel its way in the grocery space.

Helping others could be an especially lucrative opportunity, since companies across retail are looking to upgrade their systems and their store experience, but don’t have the capability in-house. Boxed and Kroger are taking two similar approaches in outsourcing their technologies, but their own models are otherwise not too similar. Boxed sells about 1,600 products, mostly bulk. Huang also expects its business-to-businesscustomer base to surpass its consumer-based business.

Further, Boxed claims to be “one of the very few commerce companies in the world that writes its own software, runs its own fulfillment centers and builds its own automation robotics in-house.” This could provide an advantage over other retailers, including Kroger, as well as Target and Walmart, all of which have recently gobbled up startups to chase the tech savvy and speed of Amazon.

The opportunity is significant for all of these companies developing a brick and click balance. In a recent Forbes interview Huang marveled that a huge driver such as consumer packaged goods accounts for only 1.5% online. Boxed’s opportunity is perhaps even more substantial as the three warehouse club retailers collectively account for $200 billion, yet none of that is coming from mobile, Huang told the Times.

Online grocery sales are expected to double over the next four years, reaching $334 billion by 2022. This trajectory means that retailers need to think beyond their core grocery competencies and start to think of themselves as technology companies as well. Boxed has always done this and may have a bit of a head start here.


A Look at the Customer Experience at Target’s Next-Gen Stores

Target is in the midst of remodeling more than 1,000 of its retail stores across the U.S. to meet growing shopper demand for an evolved customer experience, but no two stores will look alike. However, the retailer has developed a bucket of next-gen features to pull from and one distinctive attribute will remain. Stores with dual entrances will boast one entry point designed around “ease” and the other around “inspiration.” As Target seeks to cater to convenience, “ease” entrances boast Drive Up parking spaces, online Order Pickup counters, self-checkout lanes and grab-and-go grocery and essentials.

The retailer expects to be finished by the end of 2020 and complete more than 300 this year. So far Target has completed 56 remodels in its first quarter of 2018 and has already launched well over 100 more that will be completed in the second quarter. In Q1 Target completed more than double the number of remodels it delivered a year ago and the company continues to see incremental 2% to 4% sales lifts in stores following the completion of a remodel.

Some of Target’s modernized stores will feature a renovated Starbucks near the entrance for convenient coffee grabs. Other changes to the retail experience include brighter lighting and a more modern feel.

“We add concrete floors and wood-plank walls to some stores, incorporate materials like steel and glass and a pop of Target red into the décor, and use pendant and circular lighting treatments with energy-saving LED lights,” said Perdew. “And those are just a few examples—all to create a warm and inviting experience that’s hip and cool.”

Enhanced merchandise displays will create ‘shops’ throughout the store. Some stores will get a center aisle treatment that winds through the middle of the store with displays at varying heights to make them more eye-catching. The beauty department looks more like a specialty shop and in the home department products will be displayed in lifestyle settings to help shoppers imagine what they would look like in their own homes.

In conjunction with the remodels, Target has dedicated hundreds of “thousands of payroll hours” to train employees in specialized roles and develop their expertise to better serve shoppers. Since stores are staying open during the remodel process Contrucci said Target teams are going through special trainings to help keep disruption to a minimum while the work is underway.