Amazon opens fresh produce supermarkets behind stalls, but many remain empty | Wilnesh News

On a humid afternoon in August, hundreds of shoppers lined up outside a store. Amazon Fresh food supermarkets in suburban Philadelphia are eagerly awaiting the grand opening of their stores. A man in a banana costume cheered the crowd on, while Amazon workers handed out free samples of cold brew coffee.

This event has been a long time coming. The Fresh store in Bensalem, Pennsylvania, looks ready to open as of 2022. But month after month, it remained empty, Amazon’s familiar smile affixed to a sign overlooking an empty parking lot.

“I always thought it was going to open, but it didn’t,” Bensalem Town Council President Joe Knowles told CNBC. “All of a sudden, boom, it’s ready.”

The Bensalem store is one of a handful of new stores Amazon has launched in recent months, the first since the company stopped expanding the franchise more than a year ago. Since June, Amazon has opened seven more stores in California, Illinois, Maryland, New Jersey and Virginia, with more expected to open this year and next. The company said it will open five more redesigned stores this week in Illinois and California.

It’s the latest development in Amazon’s on-again, off-again efforts to become the marketplace juggernaut the company has been pursuing for 17 years, culminating in its $13.7 billion acquisition of Whole Foods Market in 2017, the company’s largest ever deal. Amazon’s aimless strategy is sometimes an effort to expand its “everything store” mission, and sometimes it’s focused on making high-end products more affordable. In some cases, the market provides a testing ground for in-store technology.

Still, Amazon will only capture 1.4% of the U.S. grocery market by 2023; Walmart 23.6% and Kroger’s 10% share according to Numerator data.

The grocery store is part of the portfolio, which also includes Go convenience stores and same-day delivery for Prime members. company also launched Earlier this year, unlimited grocery delivery subscriptions launched in the United States. Tuesday, Amazon introduce A new grocery store brand called Amazon Saver includes items like pancake syrup, deli meats and canned goods, most for under $5.

The grocery store chain debuted in the early months of the coronavirus pandemic. Amazon opened its first such store in Los Angeles’ Woodland Hills neighborhood in September 2020, aiming to offer cheaper prices than Whole Foods. The company has added package delivery counters, unmanned checkouts and voice-activated displays that allow shoppers to ask Alexa for recipe suggestions or help finding items.

By early 2022, Amazon will open 46 Fresh stores around the world. Amazon is implementing massive layoffs starting in 2022 and closing some newer, unproven bets.

In February 2023, Jassy announced during a quarterly earnings call that Amazon planned to close some Fresh supermarkets and Go convenience stores. Jassy said he was also pausing further development of the grocery business until the company finds a store format that resonates with shoppers and “economics that we like.”

Crispy Creme Donuts

With its workforce slashed, Amazon has returned to investment mode and poured resources into Fresh, opening new stores after refining the experience and testing the redesigned model in select locations in California and Illinois late last year. Jassy and Amazon Fresh leaders admit that in order to grow its already “very large” grocery business, the company needs a larger physical footprint.

In 2022, only 11% of sales in the $1.6 trillion U.S. grocery market will come from online. That’s well below e-commerce penetration in other categories, such as consumer electronics, where 41% of purchases are made online, according to Jefferies data. The bank’s analysts wrote in an October report that the company “needs to have a physical presence in the grocery space to make it big.”

As part of the Fresh store redesign, Amazon created a more colorful layout and added Krispy Kreme donut and coffee stands. In April, the company said it would remove cashierless checkout technology called Just Walk Out from its U.S. grocery stores and Whole Foods markets in favor of computerized Dash Carts that track customers as they shop. and inventory merchandise.

Amazon told CNBC that purchases increased and customer satisfaction scores were higher at the redesigned locations. The company said it expects to selectively open new Fresh stores over time based on shopper feedback.

“We really like the early results,” Jassy said during the company’s first-quarter earnings call in April, referring to the revamped Fresh stores. “They’re definitely doing better in almost every aspect. It’s early days and there are still things that need to be worked out, but we like what we see.”

Still, at least 22 grocery stores across the country remain vacant or unopened despite construction completion, according to interviews with city officials and local news reports.

Delays or cancellations have prompted at least five lawsuits. Landlords in Pennsylvania, New Jersey, New York, Florida and Washington state claim the company violated its contracts by terminating leases, with some seeking tens of millions of dollars in damages. Amazon reached settlements with property owners in Florida and Washington state last year, court documents show. Attorneys representing the owners did not respond to requests for comment.

Amazon declined to comment on the status of its grocery stores that have yet to open.

In Rancho Mirage, Calif., a small desert town about 30 minutes southeast of Palm Springs, there was a store that was struggling. The market, formerly home to a Stein Mart department store, is located in a shopping center that also houses a Hobby Lobby, an Italian restaurant and a blood bank. Shoppers in the area can find Whole Foods, Walmart, Trader Joe’s and Aldi within a short drive.

Amazon began remodeling its stores in 2021 and added the signage the following year. But there is still a “Opening Soon” sign on the door. City Councilman Ted Weill said the company has told Rancho Mirage officials and mall owner Albanese Cormier that the store is expected to open in 2025.

AlbaneseCormier did not respond to a request for comment.

Weir said not many companies can afford to leave a building vacant for years.

“Amazon has so much money, whether they invest $10 million, $20 million, $30 million in the project and then decide not to move forward, so be it,” Weir said. “This is not going to be Standards that prevent them from exiting.”

More than 500 miles north in Rancho Mirage, a suburb of Roseville, Amazon recently opened a grocery store. The store was fully built last summer.

Jefferies analyst Brent Thill drove two hours from the San Francisco Bay Area to Roseville with his 16-year-old son, a week after the grocery store opened last month. Thiel said the supermarket’s selection was “amazing” but described the overall atmosphere as “bland”.

“When you walk into an Amazon Fresh store in Roseville, it feels like you’re in a stainless steel wine cellar,” Thiel said. “And there’s no decoration in the store, it’s just a giant building.”

Thiel has a buy rating on Amazon stock, but said the company has invested heavily in groceries to compete in “one of the lowest-margin businesses in the world.” But he called it “one of the biggest budget projects in the wallet,” which is clearly in line with Amazon’s broader retail strategy.

“If there are synergies with Amazon’s returns, if they can make it more unique, then who knows where it will go,” Thiel said.