Amazon’s plans for brick-and-mortar grocery stores


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Amazon (AMZN) has been quietly launching a brick-and-mortar grocery store chain over the past year. The first Amazon Fresh location opened in Los Angeles in September. As of last week, 11 Amazon Fresh stores are now in operation. The company plans to open at least 28 more, from Sacramento to Philadelphia.

Over the past year, traditional stores like Walmart (WMT) and Target (TGT), along with Amazon have rushed to fill the demand for online grocery shopping. Though many consumers may stick to online ordering habits formed during the pandemic, brands are also making plans for when some people will want to return to shopping in-person.

Related: The housing market one year into the pandemic

Challenges With Whole Foods

Amazon has been working to capture part of the $900 billion US grocery market for some time. The company acquired the grocer Whole Foods for $13.7 billion in 2017. Amazon had hoped to grow the chain and make it more accessible to everyday shoppers by lowering prices and offering online ordering.

However, Amazon has faced stumbling blocks in its efforts to reinvent Whole Foods. Even during the pandemic-induced boom for most grocery chains, Whole Foods has struggled to appeal to mainstream shoppers. Amazon sees Amazon Fresh as a way to achieve what it has not yet been able to do with Whole Foods.

Possibilities for Cashierless Groceries

Amazon is also developing cashier-less technology which it may introduce at its Amazon Fresh locations in the near future. The company currently uses this technology at its smaller Amazon Go convenience stores, which consists of cameras, sensors, and computer vision which allows customers to put items in a cart and then walk out as their credit cards are charged automatically.

Amazon Fresh stores are much larger than Amazon Go stores, so it could be some time before the technology is ready to be scaled up. But if Amazon is able to roll out this system at its grocery stores, this could be a useful way for the company to gain ground in a competitive industry.

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