Technology
Wednesday, September 11th, 2024 4:16 pm EDT
Key Points
- Amazon Fresh Expansion and New Openings: Amazon has resumed expanding its Fresh supermarket chain after halting growth due to economic conditions and internal cost-cutting measures. The company has opened several new Fresh locations since June, including the long-awaited store in Bensalem, Pennsylvania. This expansion comes after a pause in new openings and a reassessment of store formats.
- Store Redesign and Technological Adjustments: The redesigned Fresh stores feature new elements such as Krispy Kreme donut stalls and Dash Carts, replacing the previous cashierless checkout technology. Early results from these redesigned stores indicate improved customer satisfaction and increased sales. Amazon plans to continue selectively opening new locations based on customer feedback.
- Challenges and Legal Issues: Despite the expansion, at least 22 Fresh supermarkets remain vacant or unopened due to delays and cancellations, leading to lawsuits from landlords seeking damages for breached leases. Amazon’s financial capacity allows it to absorb these delays, but the company faces ongoing scrutiny regarding its grocery strategy and store investments.
In August, a highly anticipated Amazon Fresh supermarket in Bensalem, Pennsylvania, finally opened after a prolonged delay. The grand opening, featuring a banana-costumed mascot and free cold brew coffee samples, marked the store’s long-awaited debut. This Bensalem location is among several new Amazon Fresh stores that have opened since the company paused its expansion more than a year ago. Since June, Amazon has inaugurated seven Fresh locations across various states, with plans for further openings and redesigned stores in Illinois and California.
Amazon’s Fresh stores, part of its broader grocery strategy that also includes Go convenience stores and Prime delivery services, aim to capture a larger share of the grocery market. Despite the company’s significant push into groceries, including its $13.7 billion acquisition of Whole Foods in 2017, Amazon’s grocery market share remains modest at 1.4%. This contrasts sharply with Walmart’s 23.6% and Kroger’s 10% shares. Amazon initially launched Fresh during the early pandemic, focusing on competitive pricing and technological innovations like cashierless checkout and voice-activated displays. However, CEO Andy Jassy’s cost-cutting measures and the broader economic climate led to a halt in Fresh store expansion and the closure of some locations.
Recently, Amazon has resumed investment in Fresh stores, experimenting with redesigned layouts and new features like Krispy Kreme donut stalls and Dash Carts, which replace cashierless checkout technology. These changes have reportedly led to increased customer satisfaction and sales. Despite this progress, several Fresh stores remain unopened or vacant, leading to lawsuits from landlords seeking damages for breached leases. Amazon’s ability to keep properties idle for extended periods highlights its financial strength but also raises concerns about its grocery strategy’s effectiveness. While the company continues to refine its approach, including redesigning stores to better meet consumer needs, the grocery sector remains challenging due to its low profit margins.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/11/amazon-opening-fresh-supermarkets-after-stall-but-many-still-vacant.html
