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FROM THE DESK OF DEBORAH WEINSWIG
Amazon’s Journey to Omnichannel as It Consolidates Grocery Around Amazon Fresh Amazon’s grocery store expansion continues apace. In the US, the company’s latest plans are to open Amazon Fresh supermarkets in Oceanside, New York, and Norridge, Illinois, by the end of 2022, which will take the company’s US 2022 openings count to 22. In the UK, Amazon Fresh is a nascent convenience format and we have tracked two openings so far this year. Amazon Fresh is currently the most obvious manifestation of Amazon’s intentions in grocery, and an acknowledgment that to win share in this category, a substantial physical store presence is needed. For a long time, Amazon took a somewhat scattershot approach to grocery, with an abundance of online-only services and banners (we note some of these, along with the usage rates we recorded in our 2022 US online grocery survey, in Figure 1). We have seen some signs of reining in this array—Prime Now has been replaced by Amazon Fresh rapid delivery and Prime Pantry has been closed. At the same time, we are seeing greater integration of stores and digital under Amazon Fresh (and also Whole Foods Market).Figure 1. US: Amazon’s Major Online Grocery Services and Proportion of Amazon Online Grocery Shoppers That Used Them in the Preceding 12 Months (%) [caption id="attachment_152081" align="aligncenter" width="700"]
Base: US respondents aged 18+ who had purchased groceries on Amazon in the past 12 months, surveyed in March 2022Source: Coresight Research[/caption] In place of a surfeit of digital services, online and offline are being consolidated around the Amazon Fresh name, augmenting existing chains Amazon Go and Whole Foods. Reflecting the centrality of Fresh, last week, Amazon used Prime Day (July 12–13) to launch a new year-round benefit of 20% off the price of select everyday essentials at US Amazon Fresh stores for Prime members.
Figure 2. US: Amazon’s Major Grocery Store Formats and Online Integration [caption id="attachment_152082" align="aligncenter" width="700"]
Source: Company reports[/caption]
Legacy store-based rivals have spent many years integrating digital and physical retail, yet this appears to be a work in progress for Amazon, with hints that it has not yet achieved complete channel-agnosticism. For example, just this week, Amazon UK announced that Amazon Fresh would price-match UK grocery market leader Tesco—yet this will apply only to the online Amazon Fresh service and not to the expanding chain of UK convenience stores under the same name. We think that decision is inconsistent with an omnichannel approach (although the urban convenience format of UK Amazon Fresh stores is one mitigating force against aggressive price-matching in the chain).
We expect Amazon to continue to unify online and offline in grocery—effectively playing catchup with some longstanding rivals. Meanwhile, the company’s Just Walk Out technology and Dash Carts (smart shopping carts featuring checkout functionality) remain a competitive advantage for Amazon. These technologies present an opportunity to deploy digital tools in stores to drive down friction and drive up convenience in the same way that pickup services have done across the industry. Rivals including Kroger and Giant Eagle have introduced similar checkout-free capabilities—and see the Aldi Shop & Go story later in this report. These integrations, coupled with aggressive store openings for Fresh, will make Amazon a much greater threat to grocery incumbents than its formerly fragmented and siloed offerings had done.
US RETAIL AND TECH HEADLINES
Kroger Debuts Virtual Food Court in Its Dallas Store (July 19) GroceryDive.com- Supermarket chain Kroger has opened a virtual food court at one of its Dallas stores in an expanded collaboration with ghost kitchen company Kitchen United, wherein customers can bundle food from nine restaurant brands into one pickup or delivery order at an on-site digital kiosk or through Kitchen United’s website or Mix app.
- The opening of the virtual food hall is the latest step in Kroger's move into ghost kitchens and expanded meal solutions to attract customers. Kroger first teamed up with Kitchen United in summer 2021 at one of its Houston locations.
- Department store chain Macy’s plans to open a Toys“R”Us store in every Macy's store in partnership with brand management firm WHP Global, an acceleration of their shop-in-shop partnership initiated in 2021.
- According to Macy’s, the store rollout will run from late July through October 15, in time for the holiday shopping season. The toy shop footprints will range from 1,000 square feet to 10,000 square feet.
- Apparel and footwear company NIKE has partnered with RTFKT Studios, a Web3 fashion house specializing in digital apparel, to add the RTFKT x NIKE Augmented Reality (AR) Genesis Hoodie to its non-fungible token (NFT) clothing line.
- Each owner of the AR Genesis Hoodie will also receive a physical hoodie with a near-field communication (NFC) chip to enable wireless communication between the garment and its individual NFT.
- Discount grocer Save A Lot has expanded its network of suppliers in partnership with RangeMe, an online product discovery platform.
- Save A Lot will have access to over 200,000 suppliers, with the ultimate goal of sourcing private and national-brand products, increasing selection and providing ongoing value to its customers. According to the company, 70.0% of its inventory is made up of private brands.
- Walmart has partnered with drone operator DroneUp on the official launch of a drone delivery service, hosted on July 21, 2022, at a public event at a Walmart store in Arkansas.
- The retailer is expanding its drone delivery service to 34 sites by the end of the year, with the aim of reaching 4 million US households across Arizona, Arkansas, Florida, Texas, Utah and Virginia.
EUROPE RETAIL AND TECH HEADLINES
Aldi Opens First AI-Powered Supermarket (July 18) BusinessWire.com- German grocery chain Aldi has entered into a partnership with Trigo, an Israel-based technology company that builds AI-powered infrastructure for retail stores, to open an artificial intelligence (AI)-powered cashierless grocery store—called Aldi Shop & Go—in Utrecht, the Netherlands on July 20, 2022.
- Aldi Shop & Go spans 3,982 square feet and enables shoppers to walk in, select their items and simply walk out without having to scan items or queue at the checkout. Trigo's technology uses shelf sensors and ceiling-mounted cameras to analyze anonymized shopper movements and product selections.
- Kazidomi, a Belgian online retailer of organic and ecological products, has acquired Smartfooding, an online store for organic, gluten-free and vegan food products and its organic baby food store, Graine de Bonne Santé.
- Smartfooding customers can now place their orders and manage their loyalty memberships on Kazidomi’s side. While Graine de Bonne Santé will retain its separate name and webshop, its activities will be managed by Kazidomi.
- British department store retailer Marks & Spencer (M&S) has partnered with UK-based prestige make-up brand Benefit Cosmetics to sell its beauty products.
- M&S customers will be able to shop the Benefit collection at M&S.com, with free next-day delivery to over 700 M&S locations. Five M&S destination stores will also host a Benefit Cosmetics counter, with beauty experts on hand to advise customers on makeup products. Moreover, 10 further stores will have products displayed in a bespoke Benefit Cosmetics fixture.
- The Swiss division of the Netherland-based hypermarket SPAR is set to open two EUROSPAR stores in Davos.
- The newly designed EUROSPAR market concept offers a wide variety of fresh produce, with much of it sourced locally. The stores also feature plastic-free packaging solutions.
ASIA RETAIL AND TECH HEADLINES
Carrefour Announces Sale of Its Operations in Taiwan (July 20) InsideRetail.asia- French multinational hypermarket chain Carrefour is set to sell its 60% stake in Carrefour Taiwan to Taiwanese food company Uni-President. The stakeholder also runs the 7-Eleven brand in Taiwan.
- Carrefour Taiwan was valued at $2 billion at the time of agreement. Having already left China, Carrefour no longer has any operations in Asia.
- Indian business-to-business (B2B) platform Lal10 has raised $5.5 million in a Pre-Series A funding round. Led by Yuj Ventures and Beyond Capital Ventures, investors Spiral Ventures, Singularity Ventures, Asymmetry Ventures, Blacksoil, Panthera Peak and Pegasus FinInvest also participated in the round.
- Lal10 plans to use the funding to grow its presence in the US, Japan and the Middle East. The company will focus on the independent textile market.
- Chinese online consumer-focused credit service provider Qudian plans to move into brick-and-mortar retail to take advantage of the growing ready-to-cook meals segment.
- The company plans to open 50,000 stores selling sell semi-cooked meals by 2023, 10,000 of which will open this year in China. The company currently has 15 facilities that produce its precooked food across 15 cities including Wuhan, Hubei, Shenzhen and Guangdong. It aims to increase its production facility footprint to 30.
- US-based apparel retailer Victoria's Secret is set to open its first physical store in India in collaboration with its local franchise partner, Major Brands. The store will open in Mumbai in August and span 5,000 square feet in the city’s Palladium mall.
- The store will host three brands—Victoria’s Secret, Victoria’s Secret Beauty and Victoria’s Secret Pink. Following Mumbai, the company plans to open additional locations in Delhi and Bengaluru in 2023, as well as up to 10 exclusive store outlets over the following five years.
- WinCommerce, a Vietnamese supermarket and minimart operator, plans to add 720 WinMart outlets to its network by the end of 2022. The openings comprise 700 WinMart+ outlets, a hybrid minimart or convenience store, and 19 WinMart supermarkets and hypermarkets.
- According to the company’s Deputy General Manager of Operations, Nguyen Van Quy, the expansion plan is on track and more than 300 new stores have already been opened so far this year.