Has the supermarket of the future just arrived?
Amazon has been experimenting since December 2016 with a concept store ‘Amazon Go” in Seattle. It has been a ‘Beta’ store, open only to Amazon employees, as they set about solving the obvious wrinkles in an environment with no cashiers, and no self-serve cashier machines, just a ‘walk in walk out’ App that manages the whole process.
Oh wonder of wonders, no queues!
Amazon Go opened to the public on Monday this week. The key question is what are they going to do with it?
It seems to me there are two basic strategic choices:
- Roll it out via their own stores, an Amazon Go expansion, and/or via Whole Foods, which gives them an immediate footprint of 470 stores in areas with higher income, and tech savvy consumers
- Sell it to others, just as they have with Amazon Web services.
For what it is worth, my bet is that they will progressively roll out the technology into selected Whole Foods stores, the ones surrounded by higher urban densities, in what will be a ‘mass beta’ of the technology, then sell the technology to others as they have done with AWS. This would enable them to capture a slice of the installation costs as well as ongoing subscription revenue and a percentage of sales.
This will be around the world, a global retail disruption of the sort not seen since the first Piggly Wiggly supermarket was opened in 1916.
I do not know what is happening in the executive suites of Coles and Woolies, but if they are not deeply concerned about their current business model in the face of this coming Amazon tsunami, they are truly short sighted. My instinct is that the strategic deficit of Coles and Woolies, and to a lesser extent, Aldi, faces is just too wide to be bridged.
I have previously suggested that Amazon might reach out to Harris Farm as a way to build a footprint in Australian retail, by leveraging the lessons that will emerge from Whole Foods. This now seems even more likely than it was 6 months ago when Whole Foods was acquired.
Amazon is going gorilla hunting.
Allen Roberts is a guest contributor to Australian Food News and writes another of his regular articles here. He is the Director of Strategy Audit www.strategyaudit.com.au and has worked in the food sector for more than 35 years. To read his full biography click HERE.
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