Will Amazon give new meaning to convenience stores?

Discussion
Photo: RetailWire
Oct 12, 2016
George Anderson

There is a lot of grocery news coming out about Amazon.com. Construction on its not-so-secret drive-up grocery store in Seattle’s Ballard neighborhood appears to be heading to completion. The e-tail giant just dropped its annual subscription fee and converted to a monthly charge for Prime members to entice them to use AmazonFresh. Could it also be, as reported by The Wall Street Journal, that Amazon is planning to open convenience stores?

The stores, according to the paper, would stock a variety of dairy, meat, produce and other perishable items that customers could take home with them. The idea is to capture those customers who like to make quick stops to pick up small orders of groceries on their way home from work. Shoppers who need other items not stocked in the stores would be able to order them for same-day delivery by either using provided touchscreens or their personal mobile devices.

With its recent moves, Amazon seems intent on capturing greater share of the U.S. grocery market where it currently holds a 1.1 percent share, according to Cowen and Company.

Should Amazon pursue opening convenience stores, according to USA Today, it would follow unsuccessful attempts by Walmart with its To Go stores as well as Tesco’s Fresh & Easy. And it’s doubtful that the major, established c-store chains will cede ground easily.

Seven & I Holdings, the parent company of 7-Eleven, recently announced plans to expand in North America through an aggressive acquisition strategy. The company plans to up its store count in North America to 10,000 by its fiscal 2019. The convenience store giant currently has 8,900 stores.

DISCUSSION QUESTIONS: Are American consumers ready for a new type of convenience store emphasizing fresh foods? Do you think Amazon could create a winning concept?

Braintrust
"The convenience store seems to be an ideal format for Amazon to continue its march for AmazonFresh, as well as propagate the value of Amazon Prime."
"Amazon can create a winning concept. I think we are ready to revolutionize vs. evolve the fresh food shopping experience."
"Amazon definitely learns from its own mistakes and the mistakes of others. It also learns from the successes of others..."

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18 Comments on "Will Amazon give new meaning to convenience stores?"

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Lee Peterson
BrainTrust

I can hardly wait. Amazon has taught all brick-and-mortar retailers a thing or two with things like Fire, Prime, Echo, Dash, One-Click, etc., so I would expect to see the “Convenience Store of the Future” in this effort as another lesson. Let’s get on with modern retail, shall we?

Ken Cassar
BrainTrust

I’ve been tracking Amazon as an analyst since 1998 and have said this before, and I’ve been wrong most of the time. But THIS time I really do think that Amazon is out over its skis. Moving aggressively into fresh food categories in brick-and-mortar at the same time that it is expanding aggressively into new Prime Now markets, while trying to maintain its lead in cloud computing and keeping its lead in the digital assistant world is too much even for Amazon.

Chris Petersen, PhD.
BrainTrust
Compete is a verb! The announcement of convenience stores is a clear sign that Amazon is gearing up to compete … compete with pretty much everybody. I think that it would be a false assumption to conclude that Amazon’s convenience stores will be like a traditional convenience store. They are much more likely to be distribution/collection points than stores heavily stocked with merchandise. And who would be better than Amazon in using data on local market purchase trends to curate customer-tailored assortments? The convenience store seems to be an ideal format for Amazon to continue its march for AmazonFresh, as… Read more »
Adrian Weidmann
BrainTrust
Opening, maintaining and managing a network of convenience stores is a daunting task. Amazon certainly has the means to do something like this, but why? They would be better served by learning how to integrate their online expertise with the challenges of the physical store through a network of Amazon stores, then leveraging all these learnings in creating the next generation “store-within-a-store” concept. I suspect there isn’t a convenience store operator from 7-Eleven or Kroger to Couche-Tard (McDonald’s? Starbucks!?) that wouldn’t be interested in landing a contract with Amazon. It would give Amazon relatively fast market penetration and access to… Read more »
Ron Margulis
BrainTrust
Amazon definitely learns from its own mistakes and the mistakes of others. It also learns from the successes of others (Prime is based on the Costco membership model). They have the shopping data to determine what will have the most impact for the most consumers in the markets they go after. They have pulled in the merchandising expertise from the industry, with several former brick-and-mortar retail execs now working for them. And, perhaps most importantly, they have people with great imaginations that can pull off engaging shopping concepts. Just like the rest of retail, the keys for success will be… Read more »
Dave Wendland
BrainTrust

Yes, I think Amazon will give new meaning to convenience stores. What we must first do is throw away conventional logic that defines a c-store. Then use our imaginations in much the same way Amazon will as it launches into the brick-and-mortar fray. Honestly, I’d be very surprised if they do exactly what everyone else in the space is doing expecting different results … that sounds like insanity to me.

Brian Kelly
Guest
1 year 1 month ago
It is interesting to note that c-stores stands alone as the growth sector in U.S. retail. That means many are chasing it. From established brands hoping to satisfy The Street’s demand for growth to dollar stores opportunistically expanding, as well as regional players hoping for a national footprint. In order to deliver value, retailers constantly balance time and price. C-stores have become compelling due to the complex demands in lifestyles that have reshaped shopping behavior. I agree with Ken, operating a c-store is very different from a bookstore. The assortment complexity alone is daunting, not to mention 24-hour operation. And… Read more »
Tony Orlando
BrainTrust
Amazon could sneeze in the middle of the forest and it would be front page news. Fresh foods take an enormous amount of planning, labor, talent and skilled culinary people to pull off what this article is saying, and unless they do it like a scaled-down Whole Foods or Wegmans, success will be minimal. Anybody can stock their shelves with shipped-in sandwiches and salads, but real foodies want to see fresh in-house made products that are outstanding, or they will go somewhere else. Perhaps on a college campus, where Amazon is a god, this could work but there are too… Read more »
Robert DiPietro
BrainTrust

Amazon can create a winning concept. I think we are ready to revolutionize vs. evolve the fresh food shopping experience. Given the vast resources of Amazon and the ability to worry about profits later they can try some ideas that haven’t been thought of before. I can’t wait to see it in action. Between Amazon and Google opening brick-and-mortar stores, it seems ripe for revolution.

Roger Saunders
BrainTrust
Peters and Waterman, borrowing liberally from Peter Drucker, pointed out the value of “sticking to the knitting,” or doing what you do best, some 30 years ago. Amazon would do well to fully comprehend that wisdom. They are entering an entirely new arena with added real estate costs (that box has to deliver an ROI), new and different labor costs, working with fresh meat (can they get to scale and move product fast enough to avoid sanitation issues that grocers work hard to master?), setting themselves up for return merchandise and where-does-it-go logistics that UPS and FedEx study daily. I… Read more »
Susan O'Neal
BrainTrust
Globally, retail sales exceed $22 trillion. Walmart gets $482 billion of that, Amazon gets $100 billion of it. In that context, the opportunity for these two retailers who want to be “the place” you go whenever you want or need anything is huge — and investments in capturing that opportunity are (and should be) proportionally huge. Given 75 percent of retail sales occur within 15 miles of the home*, Amazon either has to come up with a consumer value proposition that beats “oh, I’ll just pick that up on my way home” (Prime, Fresh) or they have to invest in… Read more »
Shekar Raman
Guest
1 year 1 month ago
It’s here. The moment that a lot of grocery and c-store chains have been dreading. It was always going to be here. It’s a small start but the signs are ominous. Amazon with its almost infinite skills in Big Data, personalization and most importantly logistics is entering the fresh foods market. This will surely mean more convenience to the customers who are already familiar with an incredibly reliable and efficient delivery system. One-click grocery, efficient pick-up, personalized recommendations and reliable quality. It’s a small start, but grocery chains that don’t move now to usher in the new era of retail… Read more »
Herb Sorensen
BrainTrust
Actually, if you focus strictly on shoppers and their needs and wants, this no-brainer has been obvious for at least a couple years. My own comment that “ALL supermarkets are essentially convenience stores with big long floppy tails,” foresaw this. Also, I have said that “as long as shoppers live in bricks and mortar houses, they WILL be shopping in bricks and mortar stores!” Looking at the frequent trips that shoppers take to buy food and drink also confirms the reality that food and beverage drives global retail through TRAFFIC. I think there are serious needs for brain-transplants for an… Read more »
Lee Kent
BrainTrust
Quite frankly I just don’t get Amazon’s venture into fresh food. What do they know about the grocery business and what have they done in the past to ready them? This is a tough market too. Why not play to your strengths like other successful businesses do? And, what is going to compel me, the consumer, to buy from Amazon? I’m still scratching my head over this one. That said, I would have been more excited to see Amazon open “convenience” stores that would make it more convenient for me to do business with Amazon. Pick up, drop off. A… Read more »
Mohamed Amer
BrainTrust

Amazon has been redefining retail (and business) since selling its first book in 1995. How we come to define and experience convenience stores in the digital era will also change with innovators such as Amazon (and others yet to come).

By blending massive data stores, predictive algorithms, instant consumer access and connectivity, we are on the cusp of a new “Omniretail” reality that will take the future convenience store in an unprecedented multi-functional direction.

Those not anchored in the past will view the future as full of potential rather than being limited by existing models.

Liz Crawford
BrainTrust

The C-Store business is sui generis. I am not convinced that Amazon can leverage either its brand or core competency to cover this new and unique area. I predict that it will have trouble gaining a foothold. But if established (Big If), then who knows? Sky’s the limit.

Shep Hyken
BrainTrust

Amazon knows they aren’t just a retailer selling merchandise. They are a retailer that also sells convenience. First, a robust website with great selection and competitive (extremely competitive) pricing. Second, a delivery system that can include two hour deliver for some merch in some markets. And third, their delivery, pick-up and shipping programs are all about more convenience for the customer. Amazon has been in the convenience store business for a long time!

Ken Morris
BrainTrust
Time-starved Americans are definitely interested in convenient, fresh foods, especially those of high quality and truly fresh. This trend is reinforced by some of the leading convenience stores — like Wawa, Sheetz and QuickTrip — that are expanding and promoting their options for fresh and made-to-order sandwiches, pizza and other deli items. Amazon is also looking to take advantage of a best practice in the supermarket space by offering prepared foods to time starved consumers. The convenience stores that are doing this right are focused on quality, not quantity, as this is what keeps customers coming back. Amazon has demonstrated… Read more »
wpDiscuz
Braintrust
"The convenience store seems to be an ideal format for Amazon to continue its march for AmazonFresh, as well as propagate the value of Amazon Prime."
"Amazon can create a winning concept. I think we are ready to revolutionize vs. evolve the fresh food shopping experience."
"Amazon definitely learns from its own mistakes and the mistakes of others. It also learns from the successes of others..."

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