Amazon’s new venture into opening full-scale grocery stores will force a change in the way fresh seafood and other items are sold, analysts say.
On 1 March, The Wall Street Journal reported Amazon is planning to open dozens of grocery stores in several major United States cities, including Los Angeles, California.
The stores would not be the smaller, 1,800-square-foot Amazon Go concept stores that Amazon began testing last year, but rather, they will be 35,000-square-feet mainstream grocery stores. The larger size will allow Amazon to offer more variety of products – and likely lower-priced items – than Whole Foods Market stores, the Journal reported.
Existing grocery chains should be concerned by Amazon’s entrance into the market, analysts said in the article. Stock prices for Walmart, Kroger, Target, BJs, Costco, and others all sank on Friday, 1 March.
“Amazon has become one of the world’s largest retailers by driving cost out of the marketplace. Food retailers the ilk of HEB, Publix, Kroger, and Albertsons will have the most to lose as they continue to fight for dollars from the ‘middle,’” Steven Johnson, grocerant guru at consulting firm Foodservice Solutions, told SeafoodSource.
Meanwhile, value grocery chains such as Lidl, Aldi, and WinCo will likely have more growth as Amazon enters the market, according Johnson.
Amazon will likely excel at retailing fresh food – especially pre-packaged items – and can feature many other items it carries online in the large space it’s planning, Johnson predicted.
“Fifty percent-plus of consumers in the U.S. can currently receive 3,000 products from Amazon Prime in one hour. When we talk about consumer-focused cross-channel integration, think about a grocery store focused on those 3,000 items plus drug store items, consumer electronics, and [using] a portion of the space for Prime delivery,” he said.
Johnson predicted that fresh food will be available in mix-and-match meal portions, so shoppers can “select any component that they want from fresh crab, clams, salmon, chicken, or steak in single-service to make a customized family meal quickly.”
To compete, other seafood retailers should consider carrying more grab-and-go, pre-packaged meal components and “look at regional and nation fresh meal-kit companies and meal-positioning marketing companies to drive awareness and sales,” Johnson said.
The first Amazon grocery store could open later this year in Los Angeles, while Amazon is in talks to open stores in shopping centers in San Francisco, California; Seattle, Washington; Chicago, Illinois; and Philadelphia, Pennsylvania in 2020, according to WSJ.
Amazon currently has 10 Amazon Go stores in operation.
Meanwhile, Amazon is also taking a different approach with its newly-acquired property, Whole Foods. Whole Foods Market will convert all its existing value-based, smaller-format Whole Foods 365 stores into regular Whole Foods stores by the end of this year, Yahoo Finance reported.
