Will Amazon’s new grocery stores feature more of its private brands?

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Will Amazon’s new grocery stores feature more of its private brands?

10/02/2019
Amazon will soon be opening more grocery stores in addition to Amazon Go convenience stores.

With the recent news that Amazon has reportedly signed more than a dozen leases to open a new chain of grocery stores in the Los Angeles area that are not Whole Foods Market locations, Kevin Sterneckert of Symphony RetailAI said he expects the new stores will likely differ in assortment from what’s already established in Whole Foods and will include more of Amazon’s private branded products.

On its website, Amazon currently offers several private label consumer packaged goods (CPG) lines including Wickedly Prime, Happy Belly, Solimo and Presto. According to the Wall Street Journal, the new stores will apparently be ready for launch by the end of this year. Initial locations are expected in the densely populated areas of Woodland Hills and Studio City, as well as Irvine in Orange County. Other locations are expected to open in Chicago and Philadelphia.

Sterneckert, chief marketing officer for Symphony RetailAI, which offers artificial intelligence-enabled solutions for fast moving consumer goods retailers and CPG manufacturers, also expects Amazon to extend additional benefits and privileges to Prime members that will encourage and reward shopping behavior at the new grocery locations.

“Amazon will [also] push the envelope on grocery delivery, accelerating convenience as they’ve done with online shopping experiences,” Sterneckert added. “I expect Amazon to offer delivery of goods in less than two hours, which is typically much faster than most grocers can commit to today.”

Sylvain Perrier, president and CEO of Mercatus, a Toronto-based company that offers digital solutions for grocery retailers, said other grocery retailers have been waiting to see when Amazon would launch its own branded stores since the Seattle-based mega-retailer acquired Whole Foods more than two years ago.

“That day is finally arriving,” Perrier said. “As Amazon plans to open a new line of grocery stores, starting in L.A., it will become an even more formidable omnichannel competitor for traditional brick-and-mortar grocers. Amazon has shown clear commitment to optimizing its entire omnichannel experience.”

Perrier said he expects Amazon’s physical grocery stores to use expansive shopper data to merge the in-store and online grocery experience and use its valuable insights into shopper behavior to deliver impactful shopping experiences.

“Given Amazon’s history of making certain strategies industry practice, grocers could find themselves further behind the eight ball,” he added. “Traditional grocers can no longer rely on their physical footprint alone to differentiate themselves from digital natives like Amazon and, increasingly so, Walmart.”

Perrier added he believes it’s time for Amazon to shutter the Whole Foods brand and call it by a different name, such as Amazon Foods.

Sterneckert said Amazon could potentially extend its marketplace to introduce additional vendors into physical stores, extending the breadth of assortment.

“And because early reports point to the build-out of kitchens in the spaces Amazon has leased, we’ll see Amazon offer fresh and ready-made meal options prepared on-site, which presents some uncharted territory for the e-commerce giant,” he added. “Where I think today’s grocers have a slight advantage to Amazon at the moment is in the intricacies of the grocery supply chain, fulfillment and distribution infrastructure, and the unique ability to understand consumer demand between fresh and the center store. With that in mind, Amazon will need seasoned experts to pull this off.” 

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