3rd Amazon Go Store in San Francisco, #11 Overall, Now Open

Amazon has opened Amazon Go #11, its third store in San Francisco. The store is located at 575 Market Street.

That’s an extremely busy thoroughfare and very close to the Montgomery Street BART station. This one is near the “standard” store format of about 1,750 square feet, unlike the 450 square foot version Amazon is testing in one location in Seattle.

Amazon’s first Go in SF opened six months ago and is at 300 California St in the Financial District. The second Amazon Go in SF opened in December at 98 Post St.

Overall, Amazon continues to roll out its Amazon Go food stores primarily in relatively corporate urban centers, focusing on the grab-and-go use case that most capitalizes on the efficiencies afforded by the computer vision technology that enables the Amazon Go experience. There have been rumors of upcoming Go stores opening in airports as well. Amazon has said recently that it will accept cash in the future at its Go stores after outside pressure, but has not specified when it will do so.

The TJI Amazon Physical Retail Map has been updated with this latest opening.

16 Amazon Exclusive Brands Added to TJI Amazon Brand Database

We’ve added 16 Amazon Exclusive “Our Brands” to the TJI Amazon Brand Database. The new brands we’re seeing are across furniture, health, beauty, grocery, and apparel.

The new brands are:

  1. 360Feel – bath soaps
  2. 5th & Company – oils and powders
  3. Albapelle – women’s leather jackets
  4. Evowell – coffee and supplements
  5. Fancy Pantry – baking mixes
  6. Fast Beauty Co. – skin care
  7. GenMed – OTC pharmaceuticals
  8. HealthCareAisle – OTC pharmaceuticals
  9. Jenny (UK) – women’s shoes
  10. Jivi – skin care
  11. Necessity Skincare – skin care
  12. Premium Body Nutrition (UK) – nutritional supplements
  13. Sonja B – women’s tops, pants, and dresses
  14. True+Real – shampoos
  15. trueOrganics – snack foods
  16. Venta – candles

To track Amazon’s ongoing private label and exclusive brand efforts, Subscribe to the TJI Amazon Briefing.

Amazon’s New Head of Real Estate Joined from Discount Grocery Chain Save-A-Lot

In what could be another signal that Amazon is planning to develop a new chain of physical grocery stores, we have learned that Amazon recently hired a discount supermarket veteran as its new Head of Real Estate.

Patrick Waldron joined Amazon in September according to his LinkedIn profile, though Amazon has not officially announced his hiring that we have seen. Previously, Waldron was Vice President of Real Estate and Business Development at Save-A-Lot Food Stores, a discount grocery store chain with over 1,300 locations in the United States, primarily east of the Mississippi. Prior to Save-A-Lot, Waldron was Vice President of Real Estate at discount supermarket chain Lidl (US), where he worked for several years, moving to Save-A-Lot shortly after Lidl opened its first US stores. Today, Lidl operates about 65 stores in the US, also mainly in the eastern states (and thousands more in Europe).

Save-A-Lot stores are typically smaller format than major US supermarkets. While Save-A-Lot stores carry national brands, they also carry many of the company’s own private label products across a variety of categories. Save-A-Lot has also grown through a licensing model in which it acts effectively as a wholesaler to its local licensees. In 2016, the company was sold by Supervalu to current private equity owner Onex for $1.37 billion.

In addition to competing with traditional grocery stores, discount grocery chains in the US like Save-A-Lot are also increasingly competing with general merchandise dollar stores like Dollar General, Dollar Tree, and Family Dollar. While these stores typically do not carry fresh food, they are increasingly allocating square footage to frozen food in addition to non-perishables — and are also often located in the same or nearby shopping centers.

“Smaller formats are driving retail success. It’s the perfect storm for retail and private label,” Waldron said in an interview with Chain Store Age last year (while still at Save-A-Lot). “The physical experience has to be convenient, which is why Lidl, Aldi, and Dollar General are doing well.”

Above: A Save-A-Lot store in Amherst, OH. Source: Save-A-Lot (undated), via Google Images.

Last week, the Wall Street Journal’s Esther Fung and Heather Haddon reported that Amazon is planning to open “dozens of grocery stores in several major U.S. cities” that likely won’t compete with Whole Foods and may or may not incorporate the Amazon brand. Amazon’s hiring of Waldron could be seen as evidence that Amazon is interested in developing a new type of grocery store chain.

Those we spoke with in the grocery industry said they are generally expecting Amazon to proceed with a new type of chain distinct from its current physical retail grocery stores.

While Amazon has largely kept prices at Whole Foods in check since its acquisition a year and a half ago, the idea of adding a new brand of stores with more selection and lower prices would enable Amazon to eat into a larger share of the US grocery market, which has overall proven a tough nut to crack for Amazon over time. Whole Foods stores are generally located in higher-income areas, and Whole Foods’ standards prohibit it from carrying items that contain anything on its “Unacceptable Ingredients For Food” list.

Eliminating that restriction would allow a new brand of Amazon-owned grocery stores to carry a wider selection of products and brands. Of course, Amazon would still face the challenges of the traditional grocery market. Nevertheless, more grocery stores would also enable Amazon to expand its Prime Now footprint for fast delivery of fresh items, and expand its network of pickup locations. We would also expect such a chain to carry a high portion of Amazon “Our Brand” items.

Another potential angle here is pharmacy. Whole Foods stores don’t have pharmacies, but many of the larger grocery stores in America do. We believe Amazon is investing substantially in its online/mail-order pharmacy distribution infrastructure, and having a network of local pharmacies would both complement its online pharmacy and offer a network of local mini fulfillment centers for quick delivery.

Regardless, Amazon could potentially apply technology currently deployed in its Amazon Go stores to a new, larger format environment. Compared to traditional grocery stores, such a store could lead to higher customer satisfaction through automated checkout while also potentially delivering higher revenue per square foot for Amazon.

Between its Whole Foods Markets, Go, Books, 4-star, (for now) pop-ups, and more, we are tracking over 600 Amazon physical retail venues today. It is looking increasingly likely that that number will grow in the coming times.

Third Amazon Go Automated Grocery Store Opening Soon in San Francisco

Three months after it opened its second Amazon Go store in San Francisco, Amazon says it is planning to open its third automated grocery store in the city soon.

This one will be located at 575 Market St, as reported by the SF Chronicle. That’s an extremely busy thoroughfare and very close to the Montgomery St BART station. This one is said to also be near the “standard” store format about about 1,750 square feet.

The TJI Amazon Physical Retail Map has been updated. We are tracking over 600 Amazon physical retail venues overall.

Amazon Books Appears to be Coming Soon to Denver’s Cherry Creek Shopping District

Last November, Amazon opened its first Amazon 4-star store in Colorado inside the Park Meadows Mall in Lone Tree, about 20 miles south of downtown. Now, Amazon appears to be preparing to open its first Amazon Books store in Colorado in the Cherry Creek shopping district in Denver.

Amazon Books signs are now hanging on the building at 2787 E 2nd Ave. Windows are still covered in construction paper. Unlike the Amazon 4-star in Lone Tree, which is inside a big mall, the new Amazon Books is in a densely populated commercial zone with heavy foot traffic. The space is on the ground floor of a new eight-story office building that is still being finished.

Initial permits for the new location were first identified by BusinessDen last fall. No opening date has yet been announced by Amazon that we have seen. If the past is any indication, Amazon will open the store without much notice ahead of time.

The Amazon Books in Cherry Creek could become Amazon’s 19th Books store to date (assuming another Amazon Books store under construction doesn’t open first).

While Whole Foods grocery stores represent the majority of Amazon’s physical retail presence by square footage, over the last few years Amazon has been running experiments in new smaller-format physical retail spaces. So far, those have taken the form of Amazon Go automated grocery stores, Amazon Books stores, and Amazon 4-star stores.

The TJI Amazon Physical Retail Map has been updated to include the new location.

 

4th Amazon Go in Chicago, #10 Overall, Opens in Chicago

Amazon has opened Amazon Go #10, its fourth store in Chicago. The store is located at 111 E Upper Wacker Dr at the Illinois Center.

Chicago’s first Amazon Go, at 113 S Franklin St, opened in September, followed by the second at 144 S Clark St in October and the third at 500 W Madison St in November.

Chicago is one of the cities Amazon has targeted for its initial rollout of Amazon Go, along with Seattle, New York, and San Francisco.

Big picture, Amazon continues to open its automated Amazon Go food stores primarily in urban centers, focusing on the grab-and-go use case that most capitalizes on the efficiencies afforded by the computer vision technology that enables the Amazon Go experience.

The TJI Amazon Physical Retail Map has been updated with today’s opening date for Amazon Go #10. Other Amazon is also testing its Amazon 4-star format in select markets. We are tracking over 640 Amazon physical retail venues overall.

Amazon: Private Label Products Represent <1% of Sales, Excluding Whole Foods

Last week, Axios’ David McCabe did a story on some of the regulatory efforts looking at Amazon’s private label initiatives. Apparently in response to that post, Axios says Amazon issued it the following statement:

“Amazon’s private label products are less than 1% of our total sales. This is far less than other retailers, many of whom have private label products that represent 25% or more of their sales,” the spokesperson said in an additional statement after this story was published. The company added that private-label products accounted for a greater percentage of sales at retailers like Costco, Walmart and Kroger, as well as major European brands, than they do at Amazon. (The “less than 1%” figure does not include sales at the Amazon-owned Whole Foods grocery chain.)

Depending on how you want to guesstimate total private label sales (Amazon reported $177 billion in total sales in 2017, including about $6 billion from its physical stores), that would put the number below about $1.7 billion for 2017. That is a good bit lower than estimates we have seen from various analysts. Amazon will report its year-end 2018 results in a few weeks, which should include full-year numbers for physical stores.

By comparison, CNN’s Nathaniel Meyersohn recently pointed out that Costco’s Kirkland Signature private label brand generated nearly $40 billion of revenues in 2017. Costco reported about $126 billion in sales for FY 2017, which would put Kirkland at about 30% of sales.

So, it seems like there may be some room for growth for Amazon’s private label efforts.

EU regulators have been looking at Amazon’s marketplace efforts in greater depth recently. In addition, Indian regulators recently passed new rules that go into effect February 1 which apparently limit marketplaces from selling products they have an ownership interest in, amongst other new restrictions.

Amazon Building New Perishable Meal Platform for “Time-Starved Customers”

Speculation has been growing about Amazon’s recent grocery efforts. On the one hand, Amazon has built out its first few Amazon Go automated food stores in urban centers and is likely to roll the concept out much more broadly. On the other hand, Amazon has been leveraging its Whole Foods Markets real estate as mini Prime Now food distribution centers, and could build out more Whole Foods stores to be able to broaden its geographic reach and shorten delivery times in more cities and suburban areas.

But what will Amazon’s product strategy be?

An important part of what Amazon is currently thinking appears to be ready-made meals. According to a recent Amazon job posting (which has been taken down), Amazon is planning to build a “new perishable food platform” to deliver “world class meal solutions for time-starved customers.” The listing reads:

Are you interested in changing how customers solve the “what’s for dinner?” dilemma? If yes, Amazon is looking for somebody with your enthusiasm and skills to build and lead the team that delivers world class meal solutions for time-starved customers. We are looking for an entrepreneurial, analytical, operationally-minded category leader to deliver a new perishable food platform. This role will require the ability to set a vision and drive the end-to-end strategy that will fuel the growth and long term profitability of this critical assortment. The right person for this role will have deep experience developing and commercializing a portfolio of perishable packaged foods, communicating effectively to stakeholders and closely with the cross-functional teams as well as owning the P&L.

Ready-made meals is an interesting strategy because it leverages two major competitive advantages Amazon has been investing in heavily: 1) its Prime Now network of last mile delivery solutions, and 2) its growing network of Amazon Go and Whole Foods food distribution centers, er, grocery stores. Ready meals are a logical application to run on top of this infrastructure.

By focusing on ready meals, Amazon is apparently choosing a different strategy than the “mail-order ingredients you prepare yourself” meal kit companies like Blue Apron, Hello Fresh, Plated, and many more. Instead, Amazon is focusing on the “time-starved” segment of the population. We think that makes sense. (Note, however, that Amazon does offer its own selection of non-perishable meal kits, but they appear to be sparsely reviewed. There is also a single perishable meal from Tyson available via AmazonFresh in our spot check.) Amazon does also offer perishable foods at Whole Foods and Amazon Go currently.

By ramping up its ready meal efforts, Amazon will also be competing more broadly with restaurants that offer takeout or delivery, and the logistics networks like Uber Eats that are virtualizing them. (Amazon is also building its own food delivery service, Amazon Restaurants, that is available in about 20 cities.) Just as Amazon has built out its own portfolio of private label brands across multiple retail categories, including non-perishable food, we could see Amazon creating its own “restaurant-like” private label brands for different types of ready meals (pizza, Thai, etc).

Given the investments Amazon has made in grocery and logistics thus far, we expect perishable meals and related new food products to be an area that Amazon is prepared to invest in and grind it out over a period of time.

7 Whole Foods Markets and 365 Locations Added to TJI Amazon Physical Retail Map

Two more recently opened Whole Foods Market 365 locations have been added to the TJI Amazon Physical Retail Map. In addition four more recently opened Whole Foods Market locations have been added, in addition to one Whole Foods Market location opening soon.

The new locations added are:

  1. 365 Decatur
  2. 365 Northside Buckhead
  3. Whole Foods Market Chappaqua
  4. Whole Foods Market South Capitol Hill
  5. Whole Foods Market Fort Myers
  6. Whole Foods Market Madison Broadway
  7. Whole Foods Market Newtown (Opening Soon)

From Amazon Go to Whole Foods 365 to Amazon Pop-Ups, and Everything in Between

The breadth of Amazon’s physical retail operations is increasing. The TJI Amazon Physical Retail Map tracks Amazon Go, Amazon 4-star, Amazon Books, Whole Foods, Whole Foods 365, Allegro Coffee Roasters, Amazon Treasure Truck, Amazon Pop-Ups, and Amazon Smart Home Experience Pop-Ups locations. As Amazon adds more, we’ll track them, too.

Dive In

Amazon continues to create new products and services regularly, and we expect the number is only going to grow.

TheTJI Amazon Physical Retail Map is a starting point for researchers and analysts to navigate Amazon’s physical retail portfolio.

For professionals serious about tracking Amazon’s products and services on an ongoing basis, subscribe to TJI Briefing, which covers the latest developments across Amazon’s retail efforts.

2nd Amazon Go Store in San Francisco, #9 Overall, Opens Today

Amazon just opened Amazon Go #9, its second store in San Francisco, this morning. The store is located at 98 Post St, just a block and a half off of Market St and two blocks from Union Square.

This store is a standard-format store at about 1,750s square feet, unlike the 450 square foot version Amazon is testing in one location in Seattle.

Amazon’s first Go in SF opened 2 months ago and is at 300 California St in the Financial District.

Overall, Amazon continues to roll out its automated Amazon Go food stores primarily in relatively corporate urban centers, focusing on the grab-and-go use case that most capitalizes on the efficiencies afforded by the computer vision technology that enables the Amazon Go experience. There have been rumors of upcoming Go stores opening in airports as well.

The TJI Amazon Physical Retail Map has been updated with today’s opening date for Amazon Go #9. Other Amazon Go stores are located in Seattle and Chicago. Amazon is also testing its Amazon 4-star format in select markets. We are tracking over 630 Amazon physical retail venues overall.