Amazon Food Stores Wouldn't Disrupt the Grocery Business

The unconfirmed reports that Amazon is planning to build 2,000 food stores within 10 years here in the United States,, beginning with a pilot program of 20 stores by the end of 2018, has the grocery industry in a tizzy. The stores will reportedly be under the Amazon Fresh banner and will be tested in two formats – a more traditional store with shelves and shopping carts, and one that's “click & collect,” where you order beforehand (or in-store on a kiosk) and just pick up.

Business Insider reported the plan, based on documents it obtained, including that the pickup locations would be 10,000 square feet and the more traditional format would be 30,000 square feet. The plan reportedly includes using cutting-edge technology like AR to read a customer’s license plate as they enter the area to speed up their curbside delivery. 

I’m not sure that if Amazon does follow this plan that it will be as disruptive and game-changing as many predict. I see it as a bit more iffy. I’m afraid that Amazon may well be looking at the past iterations of grocery shopping with a few technology whiz-bangs, rather than looking to the future, as it tries to fill in a niche between two already successful formats that are on the cutting edge that are taking the lead with “food,” not convenience or technology.

Millennials and Generation Z take technology for granted, they are leading the food trends, and they're in everything, from sustainability, traceability and social responsibility to unique and different culinary creations. They want a total food experience and are demanding that from retailers. For them technology is just a tool to achieve that, not the raison d’être. 

First of all, convenience stores have evolved. -- greatly. And one of their keys to success is their foodservice offerings.  The other missing piece is in-store dining, or grocerants, which is one of the biggest trends in grocery, which according to a 2016 Technomic report, are topping 9 percent and expected to sustain a similar pace over the next 10 years .

Then there are the elephants in the room – Aldi and Lidl. European retailers with a smaller footprint that carefully curate their private brands to offer high quality, low prices and barebones store environments. 

What opportunity do these leave Amazon? Certainly, the reports that their stores will only be available to those who have paid the additional fees for Amazon Prime and Amazon Fresh will be a turnoff to Millennials, unless they take a significant turn and drastically reduce their food and beverage pricing, which as an Amazon Fresh user, I can share aren't lower than I can find at a nearby supermarket.

Amazon may well have an uphill battle unless these plans are mistaken, or they make some changes pretty quickly.