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.

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 may be planning to open 2,000 grocery stores

A Business Insider report earlier this week suggested that Amazon envisions having 20 bricks-and-mortar grocery stores open by the end of 2018, and as many as 2,000 in another 10 years. The report said the information was gathered from internal memos sent between 2014 and 2016. Amazon has not commented publicly.

According to Business Insider, locations for the 20 stores would include New York, Miami and Las Vegas, and would serve as tests. A rollout of as many as 200 stores per year could follow, pending the test results.

Supermarket News pointed out yesterday that Amazon's entry into bricks-and-mortar food retail would suggest that the future of grocery shopping includes a combination of virtual and physical options.

Amazon Fresh, the company's virtual shopping option, expanded this week in the Dallas and Chicago markets.

Kroger to expand to Wisconsin and Illinois with Roundy's purchase

Kroger announced last week that it would buy Roundy's Supermarkets for $800 million. Roundy's stores are in Wisconsin and Greater Chicago, markets Kroger doesn't currently have a presence in.

Kroger, already the largest conventional supermarket chain in the U.S., will add 151 stores and 101 pharmacies to its roster. In addition to Roundy's, the banners Kroger will take over include Pick 'n Save, Copps, Metro Market and Mariano's.

TargetExpress to open in Center City Philadelphia

Target announced last week that it plans to open a TargetExpress store next summer at 19th and Chestnut in Philadelphia, and according to reports, the company is already considering a second Center City location.

Earlier this year Target announced that it would open TargetExpress stores in urban areas, including San Francisco and Chicago.

The Philadelphia store is slated to be 21,000 square feet over two floors and will carry smaller items than typically found in full-size Target locations. The smaller items will allow carless customers to carry them and stash them in cramped apartments, according to a company spokesperson.

A decision has not been made yet as to whether there will be a pharmacy in the store. Earlier this week Target and CVS announced that the drugstore chain would acquire Target's pharmacy and clinic businesses.

Target to test new approach to food

Target CEO Brian Cornell said on Tuesday that the company plans to transition "from grocery, which is transactional, to food, which is more personal and inspirational." This new approach will be tested this summer in Chicago, where the plan is serving as a pilot for the chain's new strategy.

Cornell also said that customers are telling Target that they are "looking for us to deliver a specialized assortment that is more natural, organic and gluten-free, with more localization and personalization... all merchandised in a more inspirational way."

(Editor's note: So, in other words, Target customers want a Whole Foods store.)

Cornell pointed out that food will not become one of the store's signature categories, but said that the company doesn't plan to minimize its commitment to food, which represents about 20% of the overall business.

Kroger could be a player in Safeway sale

According to published reports, Kroger, the largest supermarket chain in the U.S., recently approached Safeway about buying part of its operations. The reports also said that Kroger contacted Cerberus Capital Management, the private equity firm that is considered the favorite to purchase Safeway, about buying some stores that Cerberus may not want.

Cerberus led the investor group that purchased Supervalu last year. Safeway recently closed its 72 Dominick's stores in the Chicago area, sold its Canadian business, and in the last couple years sold or closed all but one of its Genuardi's stores.

Experts speculated that an arrangement between Kroger and Cerberus could help address antitrust concerns that could arise in select markets if one of the companies purchases Safeway.

Safeway to dispose of Dominick's chain in Chicago

Safeway announced last week that it plans to dispose of its 72 Dominick's supermarkets in the Chicago area. Safeway is also the parent company for Genuardi's, which recently exited the Philadelphia market (with the exception of one yet-to-close store in Audubon, PA).

Dominick's had a loss of $31.5 million for fiscal 2012, and losses are projected to increase this year. Safeway said that selling the chain will likely result in a cash-tax benefit of between $400 - $450 million that it will use to offset expenses from the recent sale of its Canadian assets.

In a separate report, Safeway said there has been interest from several parties for Dominick's, and the company seeks to exit the Chicago market by early 2014.

According to Safeway President and CEO Robert Edwards, "Everything we do is designed to maximize shareholder value, and the sale of Canada, the partial IPO of Blackhawk, and now the decision to leave Chicago demonstrates that commitment."

Whole Foods opens first membership-only wellness club

Back in February we learned that Whole Foods was planning to open Wellness Clubs in select stores. Last week, USA Today reported that the first club opened in Dedham, MA, and additional sites are coming soon at Whole Foods locations in Princeton, Manhattan (Tribeca), Chicago and Oakland.

The membership-only clubs will cost $45 per month plus a one-time fee of $199. Members will have access to lifestyle evaluations (I assume shopping at Whole Foods will garner initial high marks) and access to nutrition, cooking and health classes. They will also get discounts on 1,000 "better-for-you" foods sold in the stores.

Whole Foods Founder and Co-CEO John Mackey says 10 additional Wellness Clubs could be rolled out in 2012 if the first five are successful, and the program could go national in 2013.

There is no doubt other retailers will pay close attention. If Whole Foods finds the program successful - meaning that thousands of customers forked over $739 for the service in year one - similar programs are bound to pop up at other retailers who are health conscious, or at least want to be.

Walmart Express debuts in Gentry, Arkansas

Recently Walmart unveiled the first of their Walmart Express stores to the press. According to reports, this Gentry, AK store actually looks like a smaller version of Walmart's 180,000 square foot store, even though it's only 15,000 square feet. The store has exposed pipes and yellow walls, carries about one-tenth of what a superstore carries, but still has a varied selection ("from bacon and milk to socks and DVDs," according to one story.)

According to Walmart, most Express locations will have a pharmacy, and some will sell gas. The stores will generally be located in towns too small for a full-sized Walmart, and in cities where a big store doesn't fit. Fifteen to 20 Express stores are planned by the end of January, 2012, mostly in Arkansas, North Carolina and Chicago. Looking ahead, it's possible they will build 350 stores per year.

In the mean time, the world's largest retailer is experimenting a bit. According to a story in the CSP Daily News, Walmart Express will let customers help determine what they should carry by posting signs that say, "If you want it, we'll get it," and by offering delivery right to the store.

Click here for an external picture of the new Walmart Express store.