The nation’s largest grocer is not taking a back seat in the race to streamline in-store fulfillment of online grocery orders.
Walmart has been piloting a new technology called Alphabot that is designed to enable quicker, more efficient picking of online grocery orders at the store level. The retail giant has been testing the technology at its supercenter in Salem, New Hampshire, since mid-2019.
Developed exclusively for Walmart by startup Alert Innovation, the Alphabot system operates inside a 20,000-sq.-ft. warehouse-style space, using autonomous carts to retrieve ambient, refrigerated and frozen items ordered for online grocery. After it retrieves the products Alphabot delivers them to an in-store workstation, where a Walmart associate checks, bags and delivers the final order.
As the Walmart grocery pickup and delivery process currently works, associates select items from the sales floor for customers, package them and then deliver them. While associates will continue to pick produce and other fresh items by hand, Alphabot will help make the retrieval process for all other items easier and faster, according to Walmart.
Alphabot’s fully autonomous bots operate on three axes of motion. Because the carts that carry items move both horizontally and vertically without any lifts or conveyors, there are fewer space constraints, which Walmart hopes will make adoption of the system easier across stores.
By increasing fulfillment speeds, Walmart also hopes this technology can create more convenience for customers, allowing them to place orders closer to pick-up time, and reducing wait time when picking up an order.
In addition, Alphabot continually shares order information in real-time. Armed with this data, Walmart intends to make shelf-stocking more intelligent – such as placing items that are usually bought together close to each other. Walmart also seeks to use order data to help make more personally targeted substitutions when a customer’s first choice is out of stock.
“By assembling and delivering orders to associates, Alphabot is streamlining the order process, allowing associates to do their jobs with greater speed and efficiency,” said Brian Roth, senior manager of pickup automation and digital operations for Walmart U.S. “Ultimately, this will lower dispense times, increase accuracy and improve the entirety of online grocery. And it will help free associates to focus on service and selling, while the technology handles the more mundane, repeatable tasks. This is going to be a transformative impact to Walmart’s supply chain. Alphabot is what we think of as micro-fulfillment – an inventive merger of e-commerce and brick and mortar methods.”
Albertsons, a major grocery rival of Walmart, is running a similar “micro-fulfillment” center pilot supported by a hyperlocal fulfillment solution from Takeoff Technologies. Located inside an existing store, micro-fulfillment centers typically hold about 15,000 to 18,000 of the local market’s most popular products. The centers use robotic technology to fulfill e-commerce orders and provide real-time information about inventory.
Walmart said that its Salem location will continue to serve as home base for Alphabot while the process is “studied, refined and perfected.” After collecting associate and customer feedback, Walmart will assess next steps for a broader Alphabot rollout.
Albertsons once again is reportedly readying for an initial public offering. The Wall Street Journal, citing sources close to the discussions, reported that the Boise, Idaho-based retailer is set to decide in the coming weeks on whether to proceed with an initial public offering that might value the company at roughly $19 billion.
The WSJ report also noted that the company has filed documents confidentially with the Securities and Exchange Commission, and have been updating the filings. Additionally, it said an IPO would offer a way out for longtime private-equity backer Cerberus Capital Management. However, it also noted that internal discussions have wondered whether an IPO is best timed now or in the future when the company has been further strengthened.
Albertsons is no stranger to IPO preparations. In 2015, the company considered going public following its merger with Safeway, projecting then to raise more than $1.8 billion dollars, but the IPO never took place. The company also proposed going public in 2018 when it proposed an acquisition of Rite Aid that ultimately was terminated after Rite Aid’s shareholders soured on the price being offered by Albertsons.
Since 2015, when the company had a debt load of $12.1 billion, the company has paid down a good portion, with it reporting this month with its third-quarter earnings that the debt load was now $8.7 billion as of Nov. 30, 2019.
In the company’s last full-year earnings report, it saw total revenue of $60.5 billion for the year ended Feb. 23, 2019. Albertsons’ current fiscal year-to-date earnings total $47 billion, tracking ahead of the $46.5 billion it had garnered at the same time in fiscal 2018.
The IPO talk comes as the company has put effort into strengthening its omnichannel reach, including its Drive Up and Go grocery pickup, prescription delivery in one to two hours and growing e-commerce offerings.
U.S. retail sales increased for a third straight month in December, with households buying a range of goods even as they cut back on purchases of motor vehicles, suggesting the economy maintained a moderate growth pace at the end of 2019.
Other data on Thursday showed the number of Americans filing claims for unemployment benefits dropped for a fifth straight week last week, indicating the labor market remained strong despite a recent slowdown in job growth. That should help sustain consumer spending and probably keep the longest economic expansion on record, now in its 11th year, on track.
The Federal Reserve on Wednesday described the economy as having continued to expand modestly in the final six weeks of 2019. The U.S. central bank has signaled that it could keep interest rates unchanged at least through this year after reducing borrowing costs three times in 2019.
“There’s more fuel in the tank of this economic expansion,” said Chris Rupkey, chief economist at MUFG in New York.
The Commerce Department said retail sales increased 0.3% last month. Data for November was revised up to show retail sales gaining 0.3% instead of rising 0.2% as previously reported. Economists polled by Reuters had forecast retail sales would gain 0.3% in December. Compared to December of last year, retail sales accelerated 5.8%. Sales increased 3.6% in 2019.
Excluding automobiles, gasoline, building materials and food services, retail sales rebounded 0.5% last month after falling by a downwardly revised 0.1% in November.
The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have edged up 0.1% in November. Core retail sales for October were also revised lower.
Overall sales rose in December despite retailers such as Target Corp, Kohl’s, J.C. Penney and Macy’s reporting a decline in sales for the holiday period as foot traffic in malls dropped.
Though a report last week showed a slowdown in job growth in December and the increase in the annual wage gain retreating to below 3.0%, the labor market remains on solid footing. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 204,000 for the week ended Jan. 11.
Economists had forecast claims would rise to 216,000 in the latest week.
The dollar was little changed against a basket of currencies, while U.S. Treasury prices fell. Stocks on Wall Street were trading higher, with the S&P 500 index crossing the 3,300 threshold for the first time, as upbeat earnings from Morgan Stanley and a tech rally added to optimism from an initial U.S.-China trade deal.
SOME RED FLAGS
While claims are trending lower, there are some worrying signs emerging. The claims data showed layoffs in manufacturing, transportation and warehousing, construction, educational services and accommodation and food services industries in late 2019 and early 2020.
Some of the job losses in manufacturing, which were spread across at least eight states, could be related to the 18-month trade war between the United States and China, which has hurt business confidence and undercut capital expenditure. U.S. President Donald Trump and Chinese Vice Premier Liu He signed a “Phase 1” trade deal on Wednesday, a first step toward defusing the trade war.
But with U.S. duties remaining in effect on $360 billion of Chinese imports, about two thirds of the total, economists do not expect the initial deal to provide a boost to manufacturing, which is in recession.
A third report on Thursday from the Philadelphia Fed showed factory activity in the mid-Atlantic region accelerated in January, with manufacturers reporting receiving more orders. But a measure of unfilled orders at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware contracted and manufacturers cut hours for employees.
Even as trade tensions have eased, a pall remains over manufacturing, which accounts for 11% of the economy. Boeing has suspended production of its fast-selling 737 MAX jetliner starting this month and ripple effects are already being felt, with a major supplier announcing layoffs last week.
“Manufacturing will grow at a subdued pace in 2020, constrained by slower external and domestic growth as well as ongoing uncertainty on the trade policy front despite the Phase-one trade deal,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York.
For now, consumers appear set to continue driving the economy, also thanks to house prices and a bullish stock market.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.2% annualized rate in the third quarter. Given the downward revisions to October and November core retail sales, growth in consumer spending is expected to have slowed to around or below a 2.5% rate in the fourth quarter.
Growth estimates for the fourth quarter are as high as a 2.5% rate, in part because of a drop in imports, which compressed the trade deficit. The economy expanded at a 2.1% pace in the July-September period.
In December, auto sales fell 1.3%, the biggest drop since last January, after increasing 1.5% in November. Higher gasoline prices lifted receipts at service stations, which jumped 2.8%. Online and mail-order retail sales rose 0.2% after being unchanged in November.
Sales at electronics and appliance stores rebounded 0.6% in December. Receipts at building material stores surged 1.4% and sales at clothing stores accelerated 1.6%. Spending at furniture stores edged up 0.1%. Americans also spent more at restaurants and bars, with sales rising 0.2% last month. Spending at hobby, musical instrument and book stores rebounded 0.9%.
UFCW 8-Golden State members working for Rite Aid turned out this month in unprecedented numbers to support their Union, with 91% voting to reject the company’s contract proposals and authorize a strike if one becomes necessary to reach a fair labor agreement.
The voting took place in 24 cities throughout Central and Northern California.
The company’s proposal, which it released days after announcing its largest quarterly revenue gains in 10 years, eliminates existing medical benefits for many new employees and retirees, leaving scores without medical coverage. Health care benefits were promised to retirees throughout their years working for Rite Aid.
The company’s offer includes a wage increase for workers but also shifts more medical costs to the workers, negating Rite Aid’s proposed increase.
“Rite Aid is in the business of health care. There’s no excuse for it to abandon the health needs of its own employees,” said Jacques Loveall, president of UFCW 8-Golden State. “It’s time for the company to return to the bargaining table and take care of their employees.”
Customers also sounded off in support of Rite Aid workers. Petition signatures and messages of support have come in from all across the United States through the Union’s website, www.RiteAidWorkers.org.
“All we have is our people. Quit lining the pockets of your shareholders at the expense of the people who actually represent you.” Joy Hughes, Phoenix, Ariz.
“Your employees deserve to share in “your” company’s profits. They are the ones who made the profits for you! Share the wealth, don’t hoard it and rip off your employees. If you don’t, I’ll never shop at Rite Aid again.” Donna Mckee, Lederach, Penn.
“Seniors, retirees, rely on benefits being predictable and sustaining as prices go up and life changes are made. It’s cruel to strip away those things out of simple greed.” Roger Templeton, Santa Monica, Calif. “Stop hurting people. Be decent. I will never shop at Rite Aid again if you hurt your workers.” Michelle Salgado, Seattle, Wash.
Rite Aid Corporation is one of the nation’s leading drugstore chains, operating more than 2,400 stores in 30 states. Rite Aid reports annual revenues of $21.6 billion and has seen its stock (RAD) increase by over 63% in the last month.
UFCW 8-Golden State represents members working in grocery and drug stores, food-processing plants, distilleries, medical facilities and offices.
The Kroger Co.’s Delta division and United Food and Commercial Workers Union (UFCW) Local 1529, based in Cordova, Tenn., have come to new labor agreement, according to a published report.
The agreement covers more than 9,000 workers in west Tennessee, Mississippi, and northwest Arkansas, the Memphis Business Journal reported, adding that higher starting wages and periodic raises were included in it.
Effective immediately, new full- and part-time employees now earn about $10 an hour, up from $7.65 and $7.35, respectively, with a yearly wage hike and health care benefits.
“We are pleased to reach an agreement that benefits our associates,” Kroger Delta division President Victor Smith said in a statement supplied to the Journal. “This new contract provides significant wage increases, maintains affordable Kroger-sponsored health care and continues investments in our associates’ pension fund for their retirement. I appreciate our associates for supporting this agreement and for the uplifting service they provide every day to our customers.”
The grocer has almost 6,200 full-time employees in the Memphis market, making the company the 10thlargest employer in the area, the publication noted.
Gig workers who deliver groceries on the app Instacart are angry—and they want you to be, too.
Many of the app’s 130,000 workers claim to have seen their pay drop by more than 50 percent in 2019 alone, as the company has sought to lower costs and appease its investors.
Workers are now calling for a national boycott. They’re asking customers and the general public to tweet under the hashtag #DeleteInstacart on January 19, and to email Instacart CEO Apoorva Mehta on January 20, asking him to restore the 10 percent default tip—which workers lost back in 2016. (The default tip sits at five percent.)
“We have fought for fair pay, but Instacart continues to lower it. This current protest only has one small demand—to raise the app’s default tip amount back to 10%,” Instacart workers wrote in a post on Medium published Monday. “In order to continue fulfilling your orders, we must see action from Instacart.”
In November, thousands of workers staged a 3-day national strike, demanding the app restore its default tip to 10 percent. But less than 48 hours later, the company slashed bonus pay—one of Instacart’s last pay perks, which can amount to 40 percent of earnings.
Late last year, customers and even a California legislator responded by shaming the company on social media and calling for a boycott. Instacart workers hope to revive the Instacart backlash online next week.
“We’re trying to attack Instacart from every possible angle. At this point, we know that Instacart doesn’t care if its workforce is angry, but we do know that they care about their customers,” said Sarah Clarkson, an Instacart shopper in Mountain View, California and an organizer of next week’s action, told Motherboard. “Our most successful actions so far have involved customers.”
Much of the recent spotlight on tech worker organizing has focused on white collar workers like engineers at Google and Amazon. But Instacart’s November strike likely engaged more workers than any white collar tech worker strike against a single company in the United States last year.
More than 100 workers have reached out to Motherboard since November about their pay cuts— some saying they’ve had to contact the Red Cross and other charities to get food for Thanksgiving dinner and gifts over the holidays. Others have been threatened to have their utilities turned off.
“I don’t believe there’s another gig company that has workers who are more pissed. At this point, morale is so low,” said Clarkson. “We want to put Instacart in a position where they can’t ignore us anymore.”
Instacart did not immediately respond to request for comment.
Grocers have had to test and invest at a faster pace than they’d like since Amazon acquired Whole Foods nearly three years ago. But they’re starting to get their footing, and the result is a much better shopping experience for consumers. This year, look for retailers to build out a few of the most promising services and technologies that will help them compete in the next decade of food retailing.
Premium and specialty private-label rollouts will accelerate
From Target’s Good & Gather to ShopRite’s new food and household brands, 2019 saw retailers push private label into new premium categories. Tory Gundelach, senior vice president at Kantar Consulting, told Grocery Dive she expects retailers to continue expanding their gourmet and specialty selections in 2020.
“I think we should expect to see in 2020 the next step to that, whether it’s plant-based private label products or alternative protein private label products,” said Gundelach.
Experts agree alternative protein will become the next frontier in private label. So far, the space is dominated by a few companies like Impossible and Beyond Meat. But grocers are starting to edge in, most notably Kroger, which launched Simple Truth Plant Based last fall.
Given how popular the category is, the biggest hurdle may be finding a supplier.
“I don’t know that there’s enough manufacturing capacity right now to satisfy the demand [in plant-based] right now,” said Jim Hertel, senior vice president with Inmar Analytics.
A report from retail consulting firm Daymon found that 20% of sales growth in private label comes from premium products. According to Andrew Moberly, director of category solutions at Daymon, premium store brand lines are critical to boosting loyalty.
Neil Saunders, managing director with GlobalData Retail, thinks retailers will increasingly use store brands to differentiate their grocery selections and invite new and compelling products that are more complex than just household staples — products like meal solutions and value-added meal kits.
“Retailers are becoming more confident to push these more higher-priced items within their own private labels,” Saunders told Grocery Dive.
Grocers will go big with micro-fulfillment
Several retailers signed on to pilot micro-fulfillment warehouses in 2019, and this year grocers will roll out facilities at at least three times last year’s rate, predicts Chris Walton, a former Target executive and founder of Red Archer Retail.
MFCs, as they’ve come to be known, combine the efficiency and accuracy of large-warehouse sorting with the close-to-the-customer appeal of store picking, which up to this point has been the predominant mode of e-commerce fulfillment.
Most retailers are choosing to collocate an MFC with their existing stores, either by bolting on a facility or by repurposing existing space. An “omnistore” concept developed by Locai imagines micro-fulfillment at the center of the store, handling fulfillment of shelf stable goods while consumers shop perimeter departments. Firms are also building standalone facilities that can operate as outposts for one or multiple grocers.
MFCs aren’t a panacea for the inefficiencies of online grocery fulfillment. Items like produce don’t work in the automated system, requiring a combination of human and robot picking. In a recent earnings call, Ahold Delhaize chief financial officer Jeff Carr said executives still “need to be convinced that we can achieve the labor efficiency” before expanding beyond the single pilot MFC at a Stop & Shop in Hartford, Connecticut.
But according to analysts at financial firm Jefferies, MFCs remain the most viable technology for improving e-commerce metrics. The firm notes the technology is quick to build, utilizes existing assets, boasts speedy delivery and pickup and can eliminate more than 75% of labor costs.
In-store dining will evolve
In-store restaurants have helped grocers bring in new customers and add meal dollars to their bottom lines. This year, look for them to push the trend even further by adding destination food halls, said Stewart Samuel, program director at IGD Canada.
“In the U.S., I’m [seeing] a stronger focus on the food hall format where they add things like wine bars, tap rooms or food counters,” he told Grocery Dive.
In 2019, Whole Foods opened its two-story Mid-Atlantic flagship location in Tysons Corner, Virginia, with a food hall that housed restaurants like Officina, an Italian eatery founded by Michelin star chef Nicholas Stefanelli, along with unique names like Curiosity Doughnuts, Rappahannock Oyster Co. and Genji Izakaya.
Kroger also debuted its first food hall this year at its new two-story, urban-format store in Cincinnati. The food hall, called On The Rhine Eatery, houses five restaurants including Asian, barbecue and food truck-style fare. It also has indoor and outdoor seating and a full-service bar.
These halls, which are mainly cropping up in cities but could soon move to the suburbs, are part of grocers’ remodeling efforts aimed at giving shoppers reasons to visit beyond their regular grocery trips, Samuel said.
Retail apps will roll up
Grocers have begun to recognize the need for fewer e-commerce apps and tools, and as they continue to become more sophisticated in their efforts, Tory Gundelach with Kantar said they’ll continue to simplify their customer-facing assets.
“We’ve created this ecosystem or this web, if you will, that in an effort to serve shoppers’ needs for all different types of fulfillment, we’ve made it really complicated,” Gundelach told Grocery Dive. “Where possible, retailers will start to roll services together, have it be one set of apps, one set of order mechanisms.”
This not only simplifies the experience for shoppers, but for retailers as well. One example the industry has already seen is Shipt rolling into the Target app, Gundelach said. In November, Target announced it would offer same-day delivery for groceries and other items via Shipt from the Target app.
H-E-B launched a new app that allows shoppers to order groceries, clip coupons and create shopping lists, among other features, in an effort to offer a richer and more seamless experience.
Grocers will finally figure out AI
Grocers have struggled for years to comprehend artificial intelligence (AI), much less fit it into their operations. But more than two years after Amazon shook up the industry, retailers are getting the hang of the technology and how to use it, said Bill Bishop, chief architect with Brick Meets Click.
Companies have so far deployed AI for targeted tasks, like cutting food waste and improving circulars. Bishop said this year retailers will make strides in two key areas: demand forecasting and analyzing customer purchase data.
Refinements to AI technology will help grocers track and analyze more closely what shoppers are buying. It will also allow them to more accurately supply their stores, able to forecast demand down to the individual item versus the case pack level.
“When you do that you can dramatically increase inventory turns, you can increase the efficiency of the entire process,” Bishop said.
The result, he said, will be better economics for grocers and a more personalized shopping experience for consumers.
“It’s the difference between winning the customer and selling the customer more stuff,” Bishop said.
Retailers will play a deeper role in customer health
Retailers have long marketed health and sold better-for-you products. As they look for ways to boost loyalty, they’re increasingly becoming health destinations with an expanding array of specialized services.
“It’s something we’ve seen for the last few years and we expect this trend to continue to grow,” Samuel told Grocery Dive.
Walmart is piloting its own clinic, Walmart Health Center, while Kroger and Publix have partnered with local hospitals to offer integrated care options. To draw more customers to its pharmacy, Albertsons is offering genetic testing at stores in Idaho and Pennsylvania.
According to a new report from the Food Marketing Institute, 71% of food retailers see health and wellness as a growth opportunity for their business.
Samuel said in 2020, there could also be more of a shift in product mix in-store, such as more plant-based products and other items that help consumers meet specific lifestyle and dietary needs.
“There really is a strong case for grocery retailers to play a big role in helping consumers live those healthier lifestyles overall,” Samuel said.
California would become the first state to sell itsown brand of generic prescription drugs in an effort to drive down rising healthcare costs under a proposal Gov. Gavin Newsom is expected to unveil in his new state budget Friday.
A broad overview of the ambitious but still conceptual plan provided by Newsom’s office says the state could contract with one or more generic drugmakers to manufacture certain prescriptions under the state’s own label. Those drugs would be available to all Californians for purchase, presumably at a lower cost. The governor’s office said the proposal would increase competition in the generic drug market, which in turn would lower prices for everyone.
Whether drugmakers would follow California’s lead as Newsom’s administration has suggested is far from certain. And other key details, including what prescriptions would be manufactured, were notprovided.
“A trip to the doctor’s office, pharmacy or hospital shouldn’t cost a month’s pay,” Newsom said in a statement. “The cost of healthcare is just too damn high, and California is fighting back.”
Last year, Newsom signed executive orders to consolidate the state’s prescription drug purchases into a government-run program, a plan that is still in its early phases. Under the current system, Medi-Cal and state agencies separately negotiate prescription drug prices, but Newsom wants to consolidate to give the state more purchasing power.
The executive order last year called for the state-run collective to be open to small businesses, California residents and local governments, with a handful of counties already pledging to join, including Los Angeles.
On Friday, Newsom is expected to announce plans to expand on the state’s bulk buying plan and seek additional partnerships. Newsom plans to propose a drug pricing schedule for California, a system in which drug manufacturers would bid to sell their prescription drugs at set uniform prices in the state. Newsom’s plan calls for drug prices to be equal to or lower than those of any other state, national or global purchaser in order to sell their products in California.
No other specifics for the plan were made available. Newsom has said he would like to openthe state’s future bulk buying program to all entities in California that negotiate with drug manufacturers, including Medi-Cal and the private insurance market.
In October, the state released its first report detailing wholesale drug price increases using data from a pricing transparency law passed in 2017. That report showed generic drugs had the largest median price increase from 2017 through the beginning of 2019, rising 37.6%, according to the Office of Statewide Health Planning and Development. That increase was based on the list prices of the drugs before discounts and rebates. Overall, the median list price for all drugs rose 25.8% over the three-year period, according to the report.
“These nation-leading reforms seek to put consumers back in the driver seat and lower healthcare costs for every Californian,” Newsom said in a statement.
Amazon on Monday confirmed its plans to open a new grocery chain. The retailer told CNET it will open the first location early next year in Woodland Hills, California, near Los Angeles. A spokesperson declined to give the brand name, additional locations or details on assortment and pricing, though did note the store will feature conventional checkout stands as opposed to Amazon Go-style technology. In October, The Wall Street Journal reported Amazon has signed leases for “dozens” of grocery locations around Los Angeles, including one in Irvine, and is interested in building stores in Chicago and Philadelphia. The stores will feature a mainstream assortment of products, the Journal reported, citing sources familiar with the project.
Nearly two years after Amazon acquired Whole Foods for $13.7 billion, a new supermarket chain could help the e-commerce giant sell more groceries to more people, gather valuable data and continue feeding its Prime loyalty flywheel.
Since its marquee grocery acquisition, Amazon has pushed down prices at Whole Foods stores in an effort to net more customers. But refashioning a store commonly known as “Whole Paycheck,” at which analysts noted prices were typically 15% higher than the competition, has proven difficult. Although Prime members get some special savings and more conventional brands have appeared in the aisles, reports have noted little to no change in the retailer’s average basket prices. The Wall Street Journal reported that Whole Foods prices are actually starting to creep up as suppliers battle inflation and other headwinds.
Although its exact positioning is unclear at this point, Amazon’s new chain will reportedly be more in line with a traditional supermarket. It may lean toward a value offering popularized by discounters like Aldi and Lidl, which would allow Whole Foods to maintain its positioning toward the high end of the market while the new brand would reach a more mainstream audience.
“If I’m Amazon, I’m thinking of opening a store more conventionally driven, more price-oriented than Whole Foods,” said Neil Stern, senior partner with McMillanDoolittle, in an interview with Grocery Dive following Friday’s news.
Amazon acquired Whole Foods after struggling to grow its online food and beverage business, including its Amazon Fresh brand. News of the new chain further proves that the e-commerce powerhouse needs physical stores in order to succeed in grocery, sources said.
“Grocery is still a store-based business. Amazon didn’t upend the grocery industry with Whole Foods, so now it’s taking matters into its own hands,” Matt Lindner, senior e-commerce analyst with Mintel, told Grocery Dive.
Amazon will use its new stores as distribution points for its growing grocery e-commerce business, WSJ reported. Same-day delivery and pickup has rolled out to dozens of markets. Last month, Amazon announced it will make its Amazon Fresh service free to Prime members, rolling back what was previously a $15 monthly charge. Competing retailers like Walmart and Albertsons are also offering e-commerce subscription services.
In addition to delivery from the unnamed new chain and from Whole Foods stores, Amazon’s physical footprint would allow it to build out Amazon Fresh — which exited several markets back in in 2017 — and generally get food and beverage orders to shoppers faster and cheaper than before. Earlier this year, Amazon’s Happy Belly private label launched its first milk and dairy products, available only through Amazon Fresh.
Perhaps most importantly, a conventional supermarket chain would offer yet another avenue for Amazon to collect consumer data and learn how to sell more cereal, produce, meat and other groceries to consumers. The company’s ability to adapt and learn — not to mention its $850 billion market cap — puts it in a class all by itself in the supermarket industry.
“Amazon grocery stores will certainly use their expansive shopper data to merge the in-store and online grocery experience,” Sylvain Perrier, CEO and president of grocery e-commerce provider Mercatus, wrote in comments emailed to Grocery Dive.
For conventional grocers like Kroger and Albertsons, which haven’t yet seen their bottom lines impacted by the Whole Foods buy, this news signals a new competitive challenge. These chains have accelerated their rollout of store technology and online shopping, straining their profitability as they struggle to insulate their businesses.
A new grocery chain from the world’s largest e-commerce company could signal an even faster rollout of online and in-store innovation. If Amazon brings the same low-price strategy it employs online to the new stores, it could also mean even more heated price wars in crowded markets across the U.S.
“Amazon has that brand recognition and association in the mind of the consumer that if you shop online, you’re going to get the lowest price anywhere,” Lindner said. “If Amazon can bring that low price model to grocery chains, especially where the profit margin is so low, then it could be a game changer.”
“We are two people working eight automatic registers, when there could be six more cashiers,” Mr. Naubir, 21, said. “Older workers are especially concerned that machines used Sunday afternoons could stretch to the entire week, and then they would lose their jobs.”
Around 15,000 cashier jobs — almost one-tenth of the total — have disappeared in the past decade in France. While that is nowhere near the hundreds of thousands that unions warned would be shed, job losses are expected to mount as automation increases, said Mathieu Hocquelet, a labor sociologist at the Centre d’Etudes et de Recherches sur les Qualifications.
“These are precarious jobs, so there will be mass unemployment,” he said.
At the cafe, Mrs. Guechaichia and the other workers watched from a distance as customers filtered into the store. While townspeople were sympathetic, the protests had not kept away all shoppers. Groupe Casino said around 1,000 consumers were going there Sunday afternoons, bringing in significant sales.
Mr. Roche, the Carrefour maintenance employee, said the longer opening hours were just the start of a Western-style culture of overconsumption coming to France.
“We are opening on holidays and staying open 24 hours for businesses to make more money,” he said. “But workers’ salaries aren’t increasing, and people don’t have more money to consume.”
Declining purchasing power has been a central theme of Yellow Vest protesters in France, where the median monthly take-home pay is about 1,700 euros (about $1,900), meaning that half of workers make less than that.
Mrs. Guechaichia said no cashiers had yet been laid off. But employees no longer working at a cash register were being retrained for other tasks, such as stocking shelves and greeting customers.
How long those jobs will be around, she said, is anyone’s guess.
“Even if we give them flexibility, they will always ask for more,” she said. “All of the social achievements we’ve worked for are collapsing like a house of cards.”