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A Grocery Attack on Multiple Fronts
Amazon has entered the grocery store space with a bang. From the recent opening of its AmazonGo store, to its acquisition of Whole Foods last August, Amazon has threatened to disrupt the grocery store industry and has jolted the stock price of many of its competitors. But will these new developments have a material impact on food shopping habits and the grocery store shopping experience generally?
Amazon’s new store, which debuted late last month in Seattle, bypasses one staple of the retail experience: the checkout process. In order to enter the AmazonGo store, the customer must scan the AmazonGo application from his or her smartphone. From there, cameras track the customer’s movement around the store using facial recognition. The shelves are weightedand can determine when someone has taken a product off of that shelf. As the customer leaves the store, everything in his or her cart is tallied, and the customer’s Amazon account is charged for the purchases (although there are processes to resolve disputed charges). The customer never has to stop to unload a cart, scan any items, or pay a cashier. It is a novel approach to the traditional retail system, one that Amazon is hoping to implement in more stores across the country.
However, this technology is not without its flaws. Some of these setbacks have included the cameras misidentifying customers who looked similar. Children, when allowed into the stores, disrupted the weight sensors by moving items between shelves or replacing them in the incorrect place. But, despite these initial hiccups and concerns about the loss of cashier jobs, the AmazonGo store has been generally well-received.
Amazon’s acquisition of Whole Foods also has the potential of reshaping the grocery shopping experience. Less than six months after completing the acquisition, Amazon announced that it would deliver groceries from Whole Foods to a customer in just two hours as part of its Amazon Prime Now service. Amazon has spent the last few months integrating Whole Food’s products into the Amazon family. In fact, Whole Foods products were featuredon the shelves of the AmazonGo store. Many items from the Whole Foods line were immediately available through Amazon’s original grocery delivery service (Amazon Fresh) and, shortly after the acquisition, Alexa devices were being sold on the shelves of Whole Foods.
Why would Amazon roll out both the AmazonGo and Whole Foods acquisition initiatives in such a short span? The AmazonGo store certainly generated a lot of buzz in the retail industry, so why not focus on one new feature at a time? While we can only speculate as to the rationale behind these decisions, Amazon’s interest in the grocery sector has been clear for a while, beginning with its testing of “drive-through” grocery stores in 2015. Now, Amazon appears to be pushing ahead full-steam in its efforts to dominate the grocery market, as it has many others. Although stocks for other grocery stores fell after the acquisition of Whole Foods, it remains to be seen whether this merger will spell the end of other grocery providers. What is evident, however, is Amazon’s willingness to go boldly into a new sector and its efforts to reshape an industry through technology and the breadth of its company’s reach.
Development, acquisition, permitting, zoning, financing and leasing make up the core of Chelsea Johnson’s practice. A Real Estate Associate in our Boston office, Chelsea represents clients in the development of mixed-use, office, retail, institutional, industrial and residential projects. Prior to joining Goulston & Storrs, Chelsea worked primarily with the low-income housing and solar investment tax credits by setting up transactions to finance the construction, rehabilitation and management of affordable housing and renewable energy projects.