On Monday, March 4, Heather Haddon and Esther Fung of the WSJ reported that Amazon’s “latest plans threaten to steal sales of some of the [grocery] industry’s more profitable products.”
According to their reporting, “The e-commerce giant plans to launch urban grocery stores that could offer a spectrum of goods that includes beauty products alongside food.” Though “a small portion of supermarket sales,” beauty products “offer higher profits than more traditional items.”
For other grocery stores, such as Walmart, Kroger, and Target, “the move couldn’t come at a worse time.” Amazon’s grocery competitors are already trying to develop online platforms for selling groceries in order to compete with Amazon online. Amazon’s smaller urban grocery stores are expected to launch at the end of this year “in major cities, including Los Angeles, Chicago, and Washington D.C.”
Explaining why this is such a “blow,” the co-authors of “Grocers Face a New Amazon Blow” write, “The timing of Amazon’s store development comes during a difficult period for the roughly $1 trillion food and consumer-product retail sector, which already deals with low margins and extreme competition.”
As a result of the changing grocery landscape, the larger grocery stores are stalling traditional expansion plans.
According to the WSJ, “Kroger, the U.S.’s largest supermarket chain by stores and sales, has scaled back on new store plans.” Instead of investing in new stores, Kroger “is spending tens of millions of dollars to build a network of automated warehouses for online grocery services, while trying to expand in higher-margin mass merchandise with a clothing line