Amazon Fresh Sees Foot Traffic Increase As E-Commerce Giant Plans More Grocery Store Openings
A set of mixed fundamentals provides the backdrop for e-commerce behemoth Amazon's continued foray into physical grocery sales.
On the positive side, the 18-month-old Amazon Fresh brand saw foot traffic increase in Q4 2021, according to Placer.ai data.
"Between Q2 ‘21 and Q4 ‘21, visits grew for every single one of the eight stores analyzed," Placer.ai said in a blog posted in early February. "While part of the growth may be due to initial Covid-related capacity restrictions, the fact that store occupancy rose across the board at these early locations indicates that these venues are generating increased demand over time — a positive sign for any retailer."
Amazon is planning to open more stores in its quest for physical grocery store market share, Progressive Grocer reports. The retail giant already has 23 Amazon Fresh locations nationwide, with roughly as many under construction or in the planning stages for an opening this year. It also has more than 500 Whole Foods Market stores, plus 24 Amazon Go convenience stores.
Convenience is a main selling point in the e-commerce giant's bid for grocery market share. Its various platforms offer a cashier-less checkout system and a shopping cart that includes the ability to check customers out without a cashier.
“We will continue to invest in technology — like our Just Walk Out shopping and the Amazon Dash Cart — to make the grocery shopping experience more convenient for customers,” Amazon Vice President Jeff Helbling told Progressive Grocer.
Despite Amazon's splashy acquisition of Whole Foods in 2017 for $13.7B and the quick rollout of its physical stores under the Amazon Fresh brand since then, the e-commerce giant remains a small player in the overall $750B U.S. grocery store segment.
As of mid-December, Amazon's market share in physical sales of groceries, combining Whole Foods and Amazon Fresh, came in at 2.4% over the previous 12 months, according to research firm Numerator data, as reported by CNBC.
Market leader Walmart took in nearly a fifth of all U.S. grocery store sales for the same period (18%). Other grocers besting Amazon include Kroger (8.8% of total sales), Costco (6.4%), Albertsons (4.7%), Ahold Delhaize (4.3%) and Publix (3.7%).
Moreover, Amazon's grocery stores tallied lower sales in 2021 than in 2018, even though its footprint of leases expanded by 17% over those years.
“It’s almost like the grocery business is an expensive hobby,” Longbow Asset Management CEO Jake Dollarhide told CNBC.
