![]() But in 2022, Whole Foods held less than 2% of grocery market share, according to data from Chain Store Guide. ![]() Competition in the mass-market sectorĪmazon acquired Whole Foods Market in 2017 for $13.7 billion - a segment of Amazon's grocery business that experts say has served the company well, thanks to its position as a top specialty retailer.īartashus said Amazon did benefit from a "transfer of knowledge" about the grocery sector through the Whole Foods acquisition. Sundaram said this means any new player needs to have a unique quality to attract and retain shoppers. The grocery industry is saturated with big-name brands, and it's a low-margin business. "The investor community is really skeptical, at this point, that the current strategy can scale," Berke said. On Amazon's next earnings call, scheduled for this Thursday, Berke said he expects Jassy to reiterate that the company is still in "pause mode" But I do think that we have a very significant opportunity in the grocery segment." "And when we do find that equation, we will expand it more expansively. We see some encouraging signs," Jassy said on the call. On the February earnings call, Jassy said Amazon is "doing a fair bit of experimentation" in its Fresh stores, but it remains committed to its grocery business. Since late last year, Amazon has laid off about 27,000 employees across its divisions in an effort to curtail costs. CEO Andy Jassy said on an earnings call in February that the company won't open new Fresh stores until it reevaluates its grocery model. The Fresh job cuts, which affect lower-level management employees at many of the company's 44 Amazon Fresh locations in the U.S., come just months after Amazon started scaling back its overall retail operations. cities, with further expansions planned, according to Amazon Fresh vice president Claire Peters. This delivery option is now available in a dozen U.S. Jennifer Bartashus, a senior retail-staples analyst at Bloomberg Intelligence, said Amazon may have hired too many workers to staff its Fresh stores, given the relatively limited traffic that the stores are receiving.īut Martin, the Amazon spokesperson, said the company is still committed to grocery "because we believe when we find the right mix of offerings for customers we'll be able to make their lives even easier."Īmazon announced on Wednesday it will start offering grocery delivery from Fresh stores to customers who are not Prime members – yet another attempt to reach more shoppers. Foot traffic data analyzed by Bloomberg Intelligence shows customers shop at nearby competitors far more frequently than they do at Amazon Fresh locations. "The hope was technology would give them an edge, but it didn't really happen."Īpparently, many shoppers haven't bought into the futuristic grocery experience. "When Amazon entered this business, their assumption was they could use technology to compensate for their late entry, for their lack of scale and lack of a large physical network," Girotra said. Girotra said automating the shopping process hasn't yielded the results Amazon was envisioning when it launched the Fresh chain. Shoppers can avoid checkout altogether cameras in the stores detect what they grab, and they're sent a receipt after they leave.Īmazon also operates over 20 cashier-less convenience stores called Amazon Go. use what the company dubs Just Walk Out technology. More than half of Amazon Fresh stores in the U.S. Regarding the recent layoffs, Amazon spokesperson Jessica Martin said Amazon is assessing the Fresh stores' "organizational needs." Martin declined to share how many employees were affected, though The Washington Post reported that hundreds of workers lost their jobs. Karan Girotra, a professor at Cornell Tech, said the Amazon Fresh job cuts underscore Amazon's failure to lure in shoppers and secure a competitive edge through its automated shopping experience.Īrun Sundaram, a research analyst at CFRA Research, said Amazon is currently "another regular grocery retailer amid all the other grocery retailers out there." ![]() Technology is a key component of Amazon's grocery challenges. "This is the largest retail category that Amazon has struggled to compete in." Amazon's bet on automated shopping "Grocery is truly the final frontier for Amazon in terms of untapped growth," said Jordan Berke, CEO of Tomorrow Retail Consulting. Amazon laid off workers at its brick-and-mortar grocery stores last week - the latest sign of the e-commerce giant's struggles to stand out in the competitive grocery landscape.
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