Amazon Go store opens in NYC, accepts cash

The opening of the Amazon Go store last week in New York City represents the chain's 12th location, and the first to accept cash. The 1,300 square foot store is located in downtown Manhattan, across from One World Trade Center and on the second level of an upscale mall that includes shops, food vendors and restaurants.

Like other Amazon Go outlets, the store has no regular cashier. However, unlike the other 11 stores, customers may pay with cash upon request. Amazon Go is known for its "Just Walk Out" technology, where shoppers use the Amazon Go app to get into the store and automatically pay for the items they remove from the shelves.

Reports say that the cash option was added as Amazon has received criticism for discriminating against underbanked consumers who prefer to pay in cash. A number of cities, including Philadelphia, have enacted bans against cashless stores.

The new Manhattan store carries an assortment of grocery staples, plus ready-to-eat meals and snack options made by Amazon employees as well as local kitchens and bakeries. The store also sells Amazon Meal Kits, which the company said has all the ingredients necessary for making a meal for two in about 30 minutes. 

Amazon Go's other stores are in Seattle (four), Chicago (four) and San Francisco (three).

Amazon still dominant, but competitors gaining ground

Nielsen reported recently that Amazon's e-commerce lead is shrinking as major brick-and-mortar retailers like Target, Walmart and Kroger - along with e-grocery company Instacart - have outpaced Amazon in percentage growth of online consumer packaged good (CPG) purchases.

In the two-year period beginning in January 2017, the number of e-commerce buyers of grocery and other CPG products for Amazon rose 29%. However, the growth for Instacart (256%), Walmart (207%), Kroger (172%) and Target (122%) was far greater.

According to Nielsen, Amazon competitors gained ground in the last couple years by rapidly ramping up their online grocery fulfillment capabilities for home delivery and for store pickup.

Despite big gains by competitors, Amazon still enjoys a healthy lead. Its reach among U.S. online purchasers is approximately ten times more than any other retailer.

Whole Foods and Instacart end partnership, 56 workers let go

Whole Foods and Instacart announced earlier this month that the two companies have "mutually agreed" to end their delivery services partnership, effective May 15. As a result, 56 Philadelphia-area workers have been laid off.

The end of the Whole Foods - Instacart relationship did not come as a surprise to industry analysts, many of whom predicted the change since Amazon purchased Whole Foods in 2017. Whole Foods currently offers Prime Now, a one- and two-hour delivery service in more than 60 U.S. cities, including Philadelphia.

Instacart remains a strong presence in the Philadelphia market, as it has relationships with Reading Terminal Market, CVS, Aldi, Sprouts Farmers Market, Sam's Club, Wegmans, Acme, and Costco. Overall, the company is in 5,500 cities and delivers from nearly 20,000 stores.

"The U.S. is nearly a $1 trillion grocery market, and last year we saw almost every major grocer in North America bring their delivery business online in a significant way," said Instacart CEO Apoorva Mehta in a statement last year. "We believe we're in the early stages of a massive shift in the way people buy groceries, and we expect that one in five Americans will be shopping for their groceries online in the next five years."

Amazon reportedly to launch supermarket business; Philly in the mix

Amazon plans to launch a new retail grocery business, according to a report in The Wall Street Journal. The report stated that Amazon already plans to open a grocery store in Los Angeles - possibly before the end of this year - and has signed leases to open two more in early 2020.

In addition, the company is in discussions to open grocery stores at shopping centers in Philadelphia, San Francisco, Seattle, Chicago and Washington, D.C. The Journal also reports that Amazon is considering potential acquisitions of existing small-to-medium size grocery chains.

"I would speculate this is a traditional grocery play that leverages the best of Amazon technology and shopper insight," said Danny Silverman, CMO at Edge by Ascential. "As Amazon continues to look for ways to capture the last mile through physical retail, they need to test and find propositions that speak to different shopper segments. Whole Foods is a relatively narrow proposition, (Amazon) Go is small footprint and (Amazon) Fresh is delivery-only. A more traditional grocery play would cover critical gaps in their current model."

Price comparison finds Whole Foods and Acme as most expensive in Greater Philly

A December story on Philly.com reported the findings of a Consumers' Checkbook study that compared prices of 19 grocery stores in the region. The lowest prices? Walmart. The highest? Whole Foods.

"When Amazon purchased Whole Foods last year, many consumers were excited by the prospect of paying Amazon-like prices for Whole Foods-quality products," said Checkbook Executive Editor Kevin Brasler. "But we're not there quite yet."

Checkbook staff members checked prices on 154 common items, and they surveyed thousands of consumers to assess the quality of the products and services offered at the stores. Although Whole Foods scored poorly on price, it was one of the highest rated grocers.

Unfortunately for Acme, it was not only one of the highest-priced grocery chains, but it was also one of the lowest rated. Only Whole Foods was more expensive.

The highest rated store in the region was Wegmans, and their prices came in at three percent below average.

No plans for more Whole Foods 365 stores

Whole Foods announced last month that the company will not open any more Whole Foods 365 stores, but the 12 existing stores will remain in business.

The smaller 365 stores were launched in 2016 and featured Whole Foods private-label products in an attempt to lure customers who wanted to avoid the full-sized stores, also known at the time as "whole paycheck." However, since Amazon's acquisition of the company, many of the same private-label brands have become available in the regular stores.

Walmart has quickly become the top online grocer in the U.S.

The world's largest retailer is quickly becoming a big factor in online grocery shopping. In fact, consumer market researcher Packaged Facts said late last year that 23% of online grocery consumers cited Walmart as the retailer they use most for groceries. Amazon is the only retailer cited more often (38%).

As far as in-store grocery shopping goes, Walmart is the king. About 27% of in-store shoppers said Walmart is the store they most often buy groceries from. That's more than double the number of people that cited Kroger, the second most popular food retailer.

Package Facts noted that Walmart has successfully transformed itself into an omnichannel retailer, in part by turning its thousands of stores into a competitive strength in distribution.

By the end if its 2019 fiscal year (1/31/20), Walmart expects to have 2,140 online grocery pickup sites, covering nearly 70% of U.S. households, and online delivery through 800 stores, covering about 40% of the population.

The company expects to reach its goal of 40% growth in U.S. e-commerce sales for fiscal 2019.

Trader Joe's tops annual Retailer Preference Index

According to Dunnhumby's second annual Retailer Preference Index (RPI), Trader Joe's was the top grocery retailer, followed by Costco, Amazon, H-E-B and Wegmans. In a survey of 7,000 U.S. households, the RPI examined 56 grocery retailers to determine which companies have the strongest combination of consumer emotional sentiment and financial performance.

Market Basket finished 6th, followed by Sam's Club, Sprouts Farmers Markets, WinCo Foods, Walmart, Aldi, Peapod and The Fresh Market.

Dunnhumby said the rankings focused on seven "pillars": price; quality; digital; operations; discounts, rewards and information; convenience; and speed.

The company concluded that the top retailers on the index are mostly nontraditional grocers that have developed a highly targeted offering to bolster the value perception for their customer base.

"More traditional, regional grocery banners with a long history are hurting because of it, having relatively poorer-performing financials and/or emotional bonds," Dunnhumby said. "The reason: These traditional banners have inferior price perception and/or quality."

Trader Joe's also finished atop the rankings last year.

Instacart and Whole Foods to end partnership

Instacart said earlier this month that it will "wind down" its nearly five-year old partnership with Whole Foods. Instacart plans to lay off 243 of its 1,415 Whole Foods personal shoppers. However, the company said it expects to place more than 75% of its affected personal shoppers in similar jobs at other retailers in their area.

Industry experts had anticipated this move ever since Amazon purchased Whole Foods in 2017. As of June 2018, all Whole Foods stores in the U.S. were connected to Amazon Prime, and Prime Now delivery is currently available at Whole Foods stores in 63 cities.  In addition, Prime Now Pickup is offered at stores in 22 markets.

Despite losing the Whole Foods account, Instacart continues to expand, and currently works with more than 300 retailers. The click-and-collect Instacart Pickup program is expected to rollout soon to nearly 200 grocery stores in 25 metro markets.

Study reveals that Whole Foods' prices have not improved under Amazon

A study conducted by Senior Analyst Chuck Grom from Gordon Haskett in New York found that prices at Whole Foods haven't changed much in the year since it was purchased, despite Amazon's promise of lower prices.

As published in a September story by Forbes.com, in seven pricing studies of a basket of 108 items over the course of a year following the acquisition, Grom found that the basket's aggregate price was just 0.8% below the price before the acquisition was completed. In addition, compared with Whole Foods' first round of price cuts in the Fall of 2017, the basket price actually inched up 1.3%.

Whole Foods to finally open in Newtown Square, PA

Long after the Whole Foods building was constructed at Ellis Preserve in Newtown Square, PA, it was announced that the store would open in January. Steve Spaeder, from Ellis Preserve developer Equus Capital Partners, said Amazon's purchase of Whole Foods delayed the opening by a year and a half.

Business is booming at first Amazon Go stores

Initial reports about the Amazon Go store concept have been positive, and sales appear strong. In fact, advisory firm Brick Meets Click estimated that sales per square foot at the Seattle store are about $2,700. That's nearly $5 million in annual sales for an 1,800 square foot, cashierless store.

According to Brick Meets Click, "Amazon Go stores produce more sales per square foot than virtually any other retailer except Apple and a few other specialty stores."

The company also estimates that the inventory turns over around 50 times per year, which is four-to-five times more than at other retail operations.

Furthermore, digital marketing firm inMarket believes Amazon Go stores are more of a threat to fast-casual restaurants and convenience stores than to supermarkets. Peak visitation hours at Amazon Go stores in Seattle and Chicago over the past 60 days have been on weekdays during lunch and breakfast.

"Amazon Go's combination of ready-to-eat and ready-to-cook food choices challenges both grocers and restaurants," reported Brick Meets Click Co-Founder and Managing Partner Steve Bishop. "With no lines or waiting, it's easy to see why people would stop by twice a day - first to grab lunch and later to pick up a dinner portion on their way home."

There are six Amazon Go stores open, all with the company's "Just Walk Out" technology, and more locations are planned. In fact, Bloomberg reported in September that Amazon is mulling plans to open up to 3,000 Amazon Go stores by 2021.

Whole Foods taking a small bite out of Trader Joe's traffic

In the past year, Whole Foods has increased foot traffic at the expense of Trader Joe's, Walgreen's and Dollar Tree, according to Sense360, a California-based company that tracks location data from millions of smartphone users. The data covers Whole Foods locations that are within a mile of competing stores.

In addition, the number of shoppers who visited a Whole Foods at least six times in the past year increased to 11 percent in August as compared to 9 percent a year earlier, according to surveys by consumer products research company Tabs Analytics.

As for the competition for grocery dollars between Amazon / Whole Foods and Walmart, a former Amazon executive said that Amazon is "willing to experiment and be totally misunderstood for long periods of time. Walmart is built to deliver pallets to 4,000 stores and Amazon is built to deliver packages to millions of homes. Who do you want to bet on: the pallet people or the package people?"

Walmart poised to surpass Amazon as online grocery leader

A report released last week by Deutsche Bank Securities found that as a result of Walmart's investments in e-commerce, the company may overtake Amazon in online grocery market share by the end of the year.

"The retailer is reaping the returns of many years of investment in e-commerce and customer service," said Deutsche Bank Analyst Paul Trussell. "We believe the company is now in position to accelerate market share gains in grocery while also growing EBIT dollars and expanding ROI."

According to Walmart, the company offers online grocery delivery service in over 50 markets and more than 2,000 pickup locations. Walmart projects that it will have pickup sites in 430 markets, covering 69% of U.S. households, by the end of January 2019.

In 2017 Amazon had online grocery sales of $2 billion for a 12.5% market share. Walmart was close behind with sales of $1.78 billion and an 11.1% share.

Trussell believes Walmart could reach a 17% online grocery market share by 2025.

Amazon launches 30-minute curbside pickup at Whole Foods

Amazon announced earlier this month that it has launched a new curbside pickup service for Amazon Prime members at select Whole Foods stores. The service is currently available in Sacramento, CA and Virginia Beach, VA, and Amazon plans to expand it to other cities later this year.

Through the service, customers can place orders via Amazon's Prime Now app and have their groceries loaded into their car when they arrive at Whole Foods. Pick-up in an hour is free for orders of $35 or more, and $1.99 on orders less than $35. A 30-minute window is available for $4.99 with no minimum order.

Amazon also announced that in markets served by Prime Now, Prime customers can order from Whole Foods using Amazon Echo smart speakers and have the items delivered within two hours.

Kroger partners with China e-commerce giant Alibaba

Kroger announced last week that it plans to test sales of its Simple Truth natural and organic brand  through Alibaba, China's largest e-commerce retailer. The move will give Alibaba's 500+ million Chinese consumers access to Kroger's Simple Truth brand.

Kroger pointed out that the partnership supports its strategic plan to redefine the grocery customer experience by growing its private brand program, creating customer value and driving top-line growth via alternative revenue streams.

The Alibaba deal also means that Kroger is following Walmart and Amazon, who have significantly boosted their e-commerce presence in lucrative foreign markets.

Study finds that most consumers still want to buy groceries in stores

According to a recent Forbes.com story, The Food Marketing Institute estimates that online grocery sales will reach $100 billion by 2025, or about 20% of the grocery retail market. Today it is estimated that 2.0% to 4.3% of industry sales originate online.

Amazon currently leads the way in the online grocery market, with an 18% share as of December 31, 2017.

However, a new study by Morning Consult revealed that a majority of Americans prefer the in-store shopping experience over online shopping when it comes to groceries. According to the study, 65% of consumers say they have no interest in buying food and beverages online, even when their options improve.

The study (conducted in May among 2,200 American consumers) also found the following:

• One-third of those surveyed had previously purchased food or beverage products online at least once. 
• Early-adopters of online grocery shopping consist of high-income shoppers ($100k+; 45% have purchased groceries online), GenXers (39%), middle-income shoppers ($50k - $100k at 38%), men (38%), millennials (38%), and urbanites (36%).
• Of the consumers who have ordered groceries online, 56% have only done so a few times per year.
• Of those shoppers that purchase groceries online on a weekly basis, middle-income shoppers are way ahead of those with high incomes. Affluent shoppers prefer to shop in physical stores for their weekly groceries. And since typical affluent households spend 75% more on food than the average shopper, the study describes them as store shoppers that really matter. These high-income consumers have remained loyal to shopping for groceries in person.

Based on the findings, Morning Consult stated that enhancing the in-store shopping experience is the bigger opportunity that food retailers are overlooking in their race to home delivery of online orders.

According to Morning Consult, "By trying to push more grocery sales online, retailers are depriving themselves of the opportunity to entice shoppers to spend more in-store through attractive displays, strategic merchandising, helpful and friendly personnel and mouth-watering sight, smell and taste experiences that can only be found in-store. Just go to any Wegmans to see how exciting and fun grocery shopping can be. This is where grocery stores can really clean up."

Amazon brings Whole Foods into the mix for Prime Day

Amazon announced earlier this week that it plans to offer Prime customers $10 to spend on Amazon for Prime Day when they make a purchase of $10 or more at Whole Foods between July 11 and 17. Prime Day begins at 3:00 pm on July 16 and runs through July 17.

Here's how it works. Once a Prime member gathers up at least $10 worth of Whole Foods products, the member must then scan her Prime code in the Whole Foods or Amazon app at checkout. A $10 credit will then be applied to her Amazon account for use on Prime Day. A linked phone number can also be provided at checkout in lieu of the Whole Foods or Amazon app.

Whole Foods is involved in other Prime Day offers as well, including discounts on grocery delivery through Prime Now, and double rewards for eligible Prime members when they use their Prime Rewards Visa card.

Certain Prime member savings and benefits became available at all U.S. Whole Foods locations in late June.

Amazon Go convenience stores slated for Chicago, San Francisco

Amazon confirmed last month that Amazon Go convenience stores are slated for Chicago and San Francisco, but no timetable was provided. The first Amazon Go, an 1,800 square foot store that carries mostly food and beverages along with some nonfood items like batteries and over-the-counter medicine, opened in Seattle in January.

Amazon Go stores feature checkout-free shopping made possible by the company's "Just Walk Out" technology. Overhead cameras and weight sensors detect merchandise that shoppers take from and return to shelves, and keep track of items selected in a virtual cart.

Shoppers use the Amazon Go mobile app to gain entry, and when they leave the store, their Amazon account is automatically charged for the items they took with them.

Amazon adding Prime perks at Whole Foods

After several weeks of speculation, the news broker earlier this month that Amazon is planning new Whole Foods benefits for its Prime members. According to a CNBC report, "the new perks will bring the might of Amazon's membership program to the grocery industry, folding Whole Foods into a network other grocers are struggling to compete with."

The report also stated that about 75 percent of Whole Foods shoppers are Amazon Prime members, but less than 20 percent of Amazon Prime members shop at Whole Foods.

Sources told CNBC that Whole Foods will begin offering Prime members an additional 10 percent off of already discounted products. The discount would be in addition to perks that have already been rolled out, including free delivery of Whole Foods products to Prime members in certain locations, 5 percent cash back when members use the Prime Visa rewards card at Whole Foods stores, and other exclusive member deals.

The news of these new perks has come at nearly the same time Amazon announced a $20 annual fee increase for Prime membership, and a couple weeks after Whole Foods announced the end of its loyalty program.

For food retailers, the new perks turn Whole Foods into a more formidable competitor, expanding its reach well beyond its 400 store footprint and combating the grocer's major weakness - high prices.