Is Amazon Go a competitive threat to grocers?

  • Amazon Go stores have officially made their way into multiple markets, presenting customers with a cashierless, “just walk out” shopping experience for the first time. Early reports from experts analyzing shopper behavior at Amazon Go stores are showing strong results with high sales, repeat customers and lengthy visits.
  • A report from inMarket analyzed shopper trends at five stores in Seattle and Chicago over a 60-day period, and found that the average length of a shopper’s visit to Amazon Go is 27 minutes. About 44% of customers visited multiple times over the study period. inMarket also found that traffic was heavier on weekdays than weekends, though some stores were closed on weekends. Peak visit times aligned with breakfast and lunch customers, according to the results.
  • Brick Meets Click also conducted a report on Amazon Go shopper behavior at the first store launched in Seattle, and found that Amazon Go could generate an estimated $2,700 in annual sales per square foot, higher than any other retailer except Apple — and that number could increase. Based on its observations, Brick Meets Click also estimates that Amazon Go will generate about 50 inventory turns per year, which is four to five times more than other typical retailers.

Dive Insight:

While Amazon Go is showing significant early success, inMarket suggests that the store concept is not necessarily a threat to grocers. The firm says this is partially because shoppers are treating Amazon Go as more of a convenience store or restaurant, rather than a grocery store.

The other major reason inMarket says grocery stores shouldn’t see Amazon Go as competition, at least at this point, is because of the hours of operation. Of the six Amazon Go stores operating in San Francisco, Seattle and Chicago, four of them are closed on weekends — the prime time for foot traffic in traditional grocery stores.

Despite the closures, however, Business Insider reported that those four stores are marketed as more of a destination for meals and snacks, while the two Seattle stores open on the weekends are being promoted as grocery stores. If that is the case, grocers should indeed have their eye on Amazon Go as possible competition, especially if Amazon plans to expand its more grocery-focused stores throughout the U.S.

According to Brick Meets Click, Amazon has plans to open 3,000 Amazon Go stores nationwide in the next few years. This is highly ambitious, but it appears that the strong results so far are good indicators that there may be an appetite for more stores. Still, these stores are in large urban areas that are often at the forefront of tech trends, and there are only so many of these metro areas in the U.S. To ensure customer adoption in other types of markets — from small towns to suburbia — Amazon may need to consider some additional pilot locations and connect with a wider variety of customers to understand their preferences and shopping behaviors.

So far, much of the traffic to Amazon Go stores are from repeat customers likely seeking out convenient grab-and-go meals or quick grocery items. Analysis from inMarket also noted that the relatively long length of shopper visits could result from sheer curiosity as customers take in the novelty of the store. In time, it wouldn’t be surprising if the average visit dropped as customers become more familiar with Amazon Go — and as the technology helps shoppers become more efficient.

While Amazon Go is the original innovator of the cashierless system, other retailers may not be far behind in experimenting with this model. Sam’s Club has announced that its first Sam’s Club Now store will soon open in Dallas, and it will follow the cashierless concept using its Scan & Go technology. There’s little doubt that Sam’s Club Now will be a direct


Amazon’s latest cashier-less Go store opens in San Francisco today

Amazon’s latest experimental Go convenience store is opening today in San Francisco, adding the Bay Area city as the third after Chicago and Seattle in the company’s ongoing offline retail expansion. The store, located at the corners of California and Battery in the city’s financial district, is modeled much like the five existing locations. It largely serves prepared food, snacks, and drinks, with a focus on Amazon’s own line of sandwiches, salads, and meal kits. But the big innovation is its complete removal of the checkout process.

Instead of standing in line and paying a cashier, cameras and sensors track your movements through the store after you’ve scanned your Amazon account at the front. The system, which also uses computer vision and other artificial intelligence-assisted techniques, monitors when you take items off shelves. When you go to leave, you simply walk out, and you’re then charged for what you’ve taken and given a digital receipt through Amazon’s standalone Go app. I took a tour of the 2,300-square-foot location late last week, when its windows were covered and its existence largely a secret until the San Francisco Chronicle revealed the address on Thursday using property records.

The interior is that of a very nice convenience store, with some seating and microwaves up front for warming up frozen pre-made food and eating in if you so choose. As for checkout, everything worked as advertised. I used the Amazon Go app to walk through a set of automated doors near the front, and from there I picked up an Amazon-made chicken bánh mì sandwich and walked right back out without any hassle.

The store’s motto is “Good Food Fast,” and the app even tracks how long you spent during each visit as a kind of brag about the efficiency of the cashier-less model. Dilip Kumar, Amazon’s vice president of technology for Amazon Go, told me that the core focus of the Go model is to save people time. “How crowded [the store] is becomes no longer a function of how long it’s going to take,” Kumar told me. With Go stores, the company wants to eliminate the concept of a morning or lunch rush, as well as the notion that you have to restrict what you buy and where you eat based on how much time you have to wait in line, place an order, and wait for it to be prepared. The store’s hours are 7AM to 9PM local time, and it will be open Monday through Friday.

It’s clear from the layout of the store and its upscale presentation that, at least in San Francisco, Amazon is aggressively targeting delis, cafes, casual lunch spots, and drug stores with its Go model. Stocked at the California Street location is pretty much everything you’d find at a 7-Eleven, with a small and seemingly hand-picked selection of goods you might more readily find at, say, a Walgreens. For instance, you can head to the Go store to purchase a can of Pringles, or maybe some chapstick, and choose from a pretty basic selection of cold medicine. You can also buy bread, milk, and cheese.

The company has stocked the store with more expensive ready-to-cook kits from its Blue Apron-style meal service, which were restricted to online ordering until the launch of the first Go store in late 2016. Amazon has also partnered with local third-party restaurants, including bakery La Boulangerie and South Indian restaurant chain Dosa, to flesh out its inventory with pastries, yogurts, hummus, and other options. It even partnered with a local chocolate maker to make a San Francisco-centric brand of Amazon Go chocolate.

Ultimately, Amazon hopes its cashier-less model proves convenient enough, and its food and product selection appealing enough, to draw people away from the tried-and-true chains we’ve become accustomed to. The company is not necessarily trying to replace the 7-Elevens and Walgreens of the world, at least not yet. And a Go store is a far cry from a fast casual restaurant or a traditional restaurant with counter service. Rather, right now it seems like Go stores are an avenue for Amazon to establish a stronger foothold in offline retail, just like its physical bookstores in Seattle and New York City and its acquired Whole Foods locations give it a strategic footprint in groceries and paper books.

Of course, down the line, Amazon could use its Go model as a way to aggressively expand its brick-and-mortar operation if the stores prove especially successful and capable of handling high volumes of shoppers. Bloomberg reported in September that the company plans to open thousands of locations over the next three years in what would be a remarkable escalation of Amazon’s offline retail rivalry with Walmart, grocery chains, and even the traditional restaurant and fast food industries.

We’re not quite there yet. But Amazon is starting to move faster, and in the process its transforming from an e-commerce giant to a true, do-everything retail operation. The company has already planned its second San Francisco location at a site basically around the corner from its current one, at 98 Post Street. It will be slightly smaller than the first one, and it’s opening this winter, the company says. Meanwhile, in Chicago, Amazon is opening its third Go store at the Illinois Center in 2019. That will bring is total number of stores up to eight, with at least one location planned for New York City some time in the next year.


Tesco’s new Jack’s store

Tesco has unveiled its new discount chain called Jack’s that aims to tackle the rising threat posed by German rivals Aldi and Lidl.

The first store is in a mothballed former Tesco store in Chatteris, Cambridgeshire.

Another outlet in Immingham, Lincolnshire also opens on Thursday.

Between 10 and 15 stores are planned for new locations, next to existing Tesco stores, and a small number of converted Tesco stores.

Tesco is investing between £20m and £25m in Jack’s, which Mr Lewis described as “very, very modest”.

Although Jack’s is “part of the Tesco family”, Lawrence Harvey, the former Aldi UK executive in charge of Jack’s, said it will not issue or accept Clubcard points. Neither will there be any online operation.

As well as the discounters, Tesco faced being overtaken as the UK’s biggest supermarket chain by a combined Sainsbury’s and Asda.

The £15bn merger will be the subject of an in-depth competition investigation, the Competition and Markets Authority announced on Wednesday.

Mr Lewis said that beyond the initial 15 stores, more could follow, but that was “not a calculation we’re currently making”.

One Jack’s store will be set up next to a larger Tesco supermarket to see how consumers shop.

The Tesco boss said he was not worried about the new chain cannibalising sales from Tesco outlets.

Five will be rebranded Metro stores, which are larger than an Tesco Express but smaller than its supermarkets.

Only two will come from stores mothballed in 2014-15 when Mr Lewis took over as chief executive, while the remainder will be new.

Sedano’s Launching “Robotic Supermarket”

Hispanic grocer Sedano’s Supermarket and e-grocery solution Takeoff Technologies will launch an automated hyperlocal fulfillment center the companies call “the world’s first robotic supermarket.”

This retail technology is expected to launch in the upcoming month, bringing innovative automation and transforming eGrocery economics. Customer orders will be placed via an online app and carried out by Takeoff’s automated Micro-Fulfillment Center, with the support of Sedano’s employees. AI-enabled robots assemble full supermarket orders of up to 60 items in just a few minutes – a fraction of the speed and cost of current manual picking options.

The hyperlocal micro-fulfillment center will serve 14 Sedano’s Supermarkets locations throughout Miami and offer consumers pickup services.

“We are excited to partner with Takeoff at the forefront of this groundbreaking robotics solution,” said Javier Herran, CMO for Sedano’s. “This model gives us the ability to leap into the eGrocery industry, develop a new level of employment opportunities and continue meeting the needs of our valued consumers by offering an affordable and convenient online service.”

Takeoff’s objective is to develop hyperlocal fulfillment centers that have one-eighth the footprint of a typical supermarket thanks to innovative robotics and compact vertical spaces. The company is currently working with five regional and national retail chains in the US and have several sites in development to deploy in 2019.

Takeoff’s Micro Fulfillment Centers are set to be built throughout the U.S., in urban and suburban locations, resulting in convenient and hyperlocal solutions for grocery shoppers nationwide. Retailers can leverage underutilized real estate by turning existing stores into micro distribution centers with Takeoff’s technology.

As Takeoff continues to grow, James McCann (former CEO of Ahold USA) is joining as a member of Takeoff Advisory Board and as an investor. McCann is a prominent and experienced retail executive globally. His experience as the former CEO of multiple global grocery retailers and more recent involvement with startups focused on retail technology will be invaluable as Takeoff further transforms the eGrocery space. Additionally, the company has closed its Series B financing led by Forrestal Capital, taking the total capital raised to $46M.


Are big box retailers going too small with new store concepts?

Before the age of Amazon, “big box” stores were the category killers that created the destination locations to draw the masses. Today, the big retailers are focusing on shrinking stores. The downsizing trend begs the question:  How small is too small?   

Some of the recent trends toward small store footprints include:

  • Walmart is building 3,000 sq. ft. convenience stores called Walmart Fuel Stations.  Walmart has also tested 4,000 sq. ft. Walmart Pickup with Fuel formats. 
  • Target plans to have 130 smaller, urban format stores ranging in size from 20,000 to 40,000 sq. ft. by 2019.
  • IKEA’s typical stores are 300,000 sq. ft. but it’s opening smaller showroom locations – some under 10,000 square feet – in urban centers to reach city dwellers and supports online sales.
  • Nordstrom’s is piloting a 3,000 square feet location that carries no inventory for sale and focuses on service and engagement.
  • Finally, reports arrived last week that Amazon was setting a goal to open 3,000 AmazonGo locations – the first two have been 1,800 sq. ft. and 1,450 sq. ft. – by 2021.

Smaller stores are less expensive to open and fit in more neighborhoods while also more adaptive to customer’s varied omnichannel expectations particularly in the area of click and collect. 

  • Several key factors that make smaller stores possible and potentially more profitable:
  • Virtual shelf technology reduces the need for large inventory in store;
  • Click and collect also enables small stores to offer “unlimited” choices;
  • Convenient local locations foster click and collect customer traffic;
  • Small footprints reduce rents and enable more locations, particularly urban;
  • Small stores enable curating assortments to local consumers tastes and needs.

The most important trend in bricks and mortar retail right now is finding formats to “right size” the store platform to fit customer needs.

Walmart expands test of giant automated grocery kiosk

After a test in Oklahoma City last summer, Walmart is opening a second grocery pickup kiosk at a location in Sherman, Texas that enables customer to pick up orders without having to interact with a store associate.

Under the set up:

  • Orders are placed by customers who shop online or through their mobile browser at;
  • Walmart associates inside the store fill the orders;
  • The orders are organized in bins and placed in the massive kiosk located in the parking lot, which is equipped with refrigerators and freezers for perishable goods.
  • Customers pull up to the kiosk building, walk up to an interface station and scan the barcode they received with their “order ready” e-mail. The kiosk retrieves the order, delivering it to the customer in a process that takes a minute or less.

Customers are not charged extra but must spend at least $30 per order to use the service.

“Not only do customers not have to wait for an associate to bring them their order, but they also never need to set foot inside the store,” a Walmart spokesperson told Business Insider.

The Sherman kiosk, measuring 11-by-127-feet, is able to serve five customers at once, larger than the one in Oklahoma City that’s able to service two at a time.

Walmart has been investing heavily over the last year in a variety of pickup and delivery options. At the end of Q2, Walmart U.S. had more than 1,800 grocery pickup locations, more than 320 stores offering grocery delivery, and more than 325 pickup towers, which focus on general merchandise. Grocery delivery is expected to reach 40 percent of the U.S. population by year-end.

“Grocery pickup wait times continue to come down and our grocery delivery times are improving,” said Walmart CEO Doug McMillon. “We’re continuing to innovate with trials of self-driving cars in Arizona for our grocery pickup customers and automated picking capabilities for grocery pickup in our store in Salem, New Hampshire. Overall, our omni-channel initiatives are contributing to comp sales growth and providing customers with new levels of shopping convenience.”

Tesco could launch discount chain Jack’s next week

After plenty of speculation over a new brand in the works, Tesco is reportedly on the verge of launching its discount chain called Jack’s next week.

Named after Tesco founder Jack Cohen, Jack’s will focus on cut-price products as a clear competitor to Aldi and Lidl.

The first new store will be unveiled by Tesco chief executive Dave Lewis in Chatteris, Cambridgeshire next Wednesday, where journalists have been invited to a mysterious event at its previously shelved site.

Such is the secrecy around the launch that it’s believed Tesco has made staff and suppliers sign a non-disclosure agreement, and has said little officially in terms of its plans.

The news comes after Tesco was seen advertising for workers at new format stores in Wandsworth, Lincolnshire and Cambridgeshire.

One of the job ads for Tesco’s new stores reads: “The new retail format will be operated separately from the core Tesco business and as such benefits offered will be different from those offered at Tesco.”

Speaking to the Guardian, Shore Capital analyst Clive Black said he expected the Jack’s chain to consist of 100 stores, including around 60 of Tesco’s Metro format supermarkets.

It is believed that Tesco Metros in St Helens and Edge Hill, Liverpool are among those likely to be converted to the Jack’s brand.


Amazon Go store slated for New York City Inc. has set its sights on the Big Apple for one of its cashierless Amazon Go stores.

On Tuesday, Amazon confirmed plans to open an Amazon Go store in New York City. However, the company gave no timetable or details on the store and its location.

News of the planned store had surfaced when published reports said Amazon posted job listings related to an Amazon Go in New York.

Amazon now has five Amazon Go locations opened or in the works. Besides New York, the company has confirmed plans to open the high-tech convenience store concept in Chicago and San Francisco but, again, declined to provide details.

Three Amazon Go stores are already open in Amazon’s hometown of Seattle, and the third location — opening on Sept. 4, only about a week after the second — came as a bit of a surprise to retail industry observers.

The newest Amazon Go, at 300 Boren Ave. N. in Seattle, is the convenience retail banner’s largest so far at 2,100 square feet.

Offered at the store are ready-to-eat breakfast, lunch, dinner and snack options made by the retailer’s chefs as well as favorite local kitchens and bakeries. Customers also will find an assortment of grocery essentials, ranging from staple items like bread and milk to more indulgent fare like artisan cheeses and locally made chocolates.

And in line with the convenience focus, the store stocks an array of chef-designed Amazon Meal Kits, created to provide all the ingredients to prepare a home-cooked dinner for two in about 30 minutes.

As in the other Amazon Go stores, the e-tail giant’s “Just Walk Out” technology enables a checkout-free shopping experience. Shoppers use the Amazon Go mobile app to enter the store. Overhead cameras, weight sensors and deep learning technology detect merchandise that shoppers take from or return to shelves and keep track of the items selected in a virtual cart. When customers leave the store, the Just Walk Out technology automatically debits their Amazon account for the items they take and sends a receipt to the app.

All of the Seattle Amazon Go stores are corner locations. Amazon opened the first Amazon Go, an 1,800-square-foot unit at 7131 7th Avenue, to the public on Jan. 22. A 1,450-square-foot Amazon Go store opened its doors on Aug. 28 at 920 5th Avenue in downtown Seattle.


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.”