DISCUSSION
Stale Amazon grocery stores need a fresh approach
Written by George Anderson
An Amazon Fresh is not coming to a neighborhood near you just yet.
Andy Jassy, Amazon.com CEO, speaking last week on the company’s fourth-quarter earnings call, said that the company will delay opening new Fresh stores until it figures out how to differentiate the locations from established competitors in the market. He said Amazon is getting close to the answer and expects to be back opening stores at some point this year.
Mr. Jassy said getting Amazon Fresh right will build on its other grocery strengths.
“If you think about the online grocery offering, we have a very large business there,” said Mr. Jassy. “It looks different from the typical mega physical grocery store. But if you think about the aisles in a grocery store, from packaged food to paper products to canned goods to pet supplies to health and personal care items to consumables, we have a very large business there that continues to grow at a rapid clip and that we think will continue to grow.”
Where Amazon is falling short, according to Mr. Jassy, is in perishables.
“If you really want to have significant market segment share in perishables, you typically need physical stores,” he said.
Amazon has some of that with its Whole Foods division, which has nearly 500 locations.
“I really like the progress that that business has made on profitability in the last year. And I like what I see in front of it, and I think that's a very … it's a premium product, but it's a significant business. It's a good business for us in the grocery space. I think if you want to have a mass physical store offering, you need a different offering,” said Mr. Jassy.
Amazon Fresh is intended to help Amazon reach a mass audience.
“We have a few dozen stores so far,” said Mr. Jassy. “We're doing a fair bit of experimentation today in those stores to try to find a format that we think resonates with customers [and] it's differentiated in some meaningful fashion and where we like the economics.”
Amazon’s CEO said the company has seen “encouraging signs” from its tweaking to date.
“When we do find that equation, we will expand it more expansively,” he said.
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