Shelf Talk: 3000 Amazon supermarkets, Wegmans in Brooklyn, Walmart grocery delivery, and He-Man's tiger
Amazon and Grocery Retail
When Amazon bought Whole Foods two years ago, it seemed to most that Whole Foods' 500 stores would be Amazon's path into brick & mortar retail. But Amazon has ambitions to open 2,000-3,000 supermarkets under the Amazon name, supplementing the 500 Whole Foods stores. A chain of this size would rival Kroger's footprint.
Site of the forthcoming LA Amazon grocery store, presumably in the former Toys R Us space (Google Maps)
In October, WSJ reported Amazon signed leases for at least 12 grocery stores in LA. An initial lease is for a relatively snug 35K sf with a “substantial kitchen,” presumably for prepared foods. Amazon is expected to sign more leases in Chicago, Philadelphia, and NY metro. This will expand their physical presence from its current set of 38 stores split among 3 formats: Amazon Go, Amazon 4-Star, and Amazon Books. (WSJ $)
Job postings just showed up for a store in LA's Woodland Hills neighborhood. From the job posting: "Join us as we launch Amazon’s first grocery store in Woodland Hills. We are passionate about creating a shopping experience that customers will love. If you are customer-obsessed, like learning new things, and want to contribute to end-to-end store operations for a new business, this is the place for you!" (Amazon)
Amazon hasn't discussed many details. What we do know: The store will have traditional checkouts, not the cashierless system used at Amazon Go. (LA Times)
Despite being very interesting, Amazon's cashierless Amazon Go stores ("just walk out") have very modest sales. Their goal was to hit $2M in annual revenue per store, and I wonder if they have even hit that goal. By comparison, Walmart's U.S. stores average just under $70M/year and Whole Foods stores just over $30M/year. (The Information reg. req.)
One bit of evidence points to meal kits not performing well at Amazon Go. I'm guessing that Amazon had an emphasis on meal kits in part because they're relatively expensive, which could help increase dollars spent per transaction. But the Amazon Go stores I've visited act more like fancy 7-Elevens than supermarkets, and there might be a mismatch. (The Spoon)
The news of these new stores comes just after Amazon announced it was eliminating its $15/month fee for AmazonFresh, making its two-hour delivery for orders over $35 free with a Prime membership. (Verge)
One big question: UNFI still supplies a large portion of Whole Foods' inventory, despite Amazon having a large and complex fulfillment center network. Amazon has purchase obligations with UNFI running through 2025. What role with UNFI play in the new Amazon supermarket chain, if any? (CNBC)
So, what is Amazon's play? By buying Whole Foods, Amazon got into the supermarket business. And with two years of that experience under its belt, they are now adding demand for the services they provide to supermarkets -- by opening more supermarkets. This follows Amazon's strategy of developing services for which it can become its own best customer. (Stratechery)
Elsewhere in Grocery Retail
Wegmans opened a 74K sf store in Brooklyn’s Navy Yard, expanding its upstate New York footprint into New York City for the first time. It received 10,000 job applications and hired 540 new employees. Incidentally, that ratio matches Harvard's undergraduate acceptance rate. (Shelby Report)
Walmart has been expanding its grocery offerings with a "Delivery Unlimited" grocery delivery subscription. It's $98/year and will reach more than 50% of the U.S. by year-end. (Techcrunch, Walmart)
And Walmart will be able to deliver groceries directly inside your home when you're not there via its InHome delivery service. "Smart entry technology" will make it possible. And maybe a little unsettling. But awfully convenient. And maybe they'll figure out how to make more space in my fridge. (Fortune, Verge)
Trader Joe’s is hot on Instagram. There are a dozen accounts with large followings, with several of them making at least some "fun money" doing it. (Vox)
🎲 Unrelated and probably interesting only to Gen Xers
You might remember the cartoon and set of action figures, He-Man & the Masters of the Universe if you were in elementary school in the 1980s like me.
1. “The reason why He-Man got a cartoon is that one of the creators of the toys lied about there being a cartoon on the way in a meeting with a retailer and then they had to actually make a cartoon to cover their tracks”. I totally believe this. All kinds of promises get made in retailer meetings.
2. I forgot that He-Man rode a giant tiger, Battlecat. They wanted a vehicle for He-Man but ran out of tooling money. So they repurposed existing tooling for a tiger from another character series, Big Jim, but it was way too big to be proportional to He-Man.
Tony: "It's as big as a horse!"
Paul: "I don't give a f---... put a f--ing saddle on it! ... And that became Battlecat."
This clip has an excerpt from Netflix's The Toys That Made Us. It made me laugh. It struck me as a very realistic portrayal of how things come to be. Hope it makes you laugh, too. Caution: Lots of cursing.
(Twitter clip, Netflix series Season 1, Episode 3) (found via @benedictevans)
Until next time,