The recently announced Amazon Fresh checkout-free stores UK slowdown is part of a larger movement, observes Celia Van Wickel, Senior Director, Digital Commerce at Kantar.
Amazon is said to be halting its expansion plans in the UK due to claims about the macro-economic environment and revenue performance.
In a LinkedIn post, Van Wickel says: “Only within the past month, Amazon was still focused on Amazon Fresh in the UK with its Tesco Price Match.”
“But if you look at the details, the price match offer is online only. Amazon has struggled with Whole Foods outside the US, with the UK standing at seven locations since 2018.”
In 2022, Amazon has opened four UK Fresh store openings to date, whereas in the US, there have been 18 openings thus far this year.
Van Wickel comments: “Strategy between the US and UK have been different. In the UK, store openings were focused on the city of London, whereas in the US, Amazon have been larger format Fresh stores in the suburbs.”
“Amazon is using Southern California as a testing ground for how much they can penetrate physical grocery in a market.”
“But even in the US there is an indication of a Fresh store slowdown, all amid the recent restructuring of the physical stores division. When you restructure, things pause as you reevaluate strategy.”
When looking at active US store openings in mid-July, Amazon had about 21 new locations hiring, an indication of opening soon. By the end of July and early August, multiple new locations hiring had job postings removed.
Removed locations include Philadelphia, PA, and Eatontown, NJ. Amazon has paused some openings due to supply chain issues as with Brookfield, CT.
Such issues have been evident in new US stores with shelves not fully stocked.
Most have taken at least 14 months to open to include Amazon’s expensive Just Walk Out technology. A store in Plainview, NY was secured in July 2021 with no signs of going live at this time.
Van Wickel says: “I don’t doubt that macro-economic issues are part of things. Amazon has aimed to be price competitive with Amazon Fresh stores, but locations have indicated more affluent areas.”
“Earlier this year, Placer.AI saw cross-shopping in early locations with grocery stores and Trader Joe’s and Whole Foods.”
She continues: “It is evident that the store strategy for Amazon is in flux and has a new team to refocus its efforts.”
“Their stores are part of their long-term micro-fulfilment goals to speed up pickup and delivery. Things are shifting for Amazon as any test and learn company may do. It is clear the Just Walk Out technology has value, given its shift to the AWS division.”
Van Wickel concludes: “If Amazon could solve for a retrofit solution for Just Walk Out, that would allow them more value and opportunity to scale to Whole Foods, maximising their store analytics offering for advertisers.”
“The data is too valuable. While small relative to Amazon’s total net sales, physical store sales have been growing low double digits in 2022, a caution for Amazon.”