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 How Amazon's New Grocery Chain May Affect the Future of Groceries

The grocery industry is already changing quickly, and things could get even crazier. Amazon is about to join the fray.

Amazon already owns Whole Foods and plays a significant role in the grocery industry, but the company is also quietly developing a national grocery chain.

Amazon has opened 11 Amazon Fresh locations across the country in the last six months, with plans for dozens more, putting it in direct competition with mega-retailers like Walmart and Dollar General.

Amazon's New Grocery Strategy

Although many prices have dropped since Amazon purchased Whole Foods, the store still features more expensive organic and locally sourced items. Amazon Fresh, on the other hand, is aimed at Prime members who want to save money.

The store's goal is to appeal to a broader range of customers, from lower-income shoppers looking for a bargain to higher-income customers who want the convenience of grocery pickup and delivery. So far, Amazon Fresh pricing appears to be in line with what customers would expect from Walmart or Aldi—two retailers known for their low prices.

                                                 Photo by Imants Kaziļuns on Unsplash

The expansion of Amazon Fresh does not imply that Amazon will abandon Whole Foods; rather, it indicates that the company is looking to expand its impact in grocery and reach more customers.

Grocery Shopping Powered by Technology

Amazon is known for its tech-centric brick-and-mortar experiences, most notably its cashier-less “Just Walk Out” technology. However, the ability to shop and go has been limited to smaller, convenience-type stores rather than large supermarkets.Amazon Fresh has the potential to change that. Just Walk Out technology is being tested by Amazon at an Amazon Fresh location in Illinois. 

If the technology can be successfully scaled, it could lead to widespread cashier-less grocery shopping, which would completely transform the shopping experience. Even in the absence of cashier-less technology, Amazon Fresh locations rely heavily on technology to provide a convenient customer experience. Digital price tags are used in stores and can be easily updated to reflect sales. Smaller items are automatically added to smart "dash" shopping carts as they are placed in the cart.

Photo by Franki Chamaki on Unsplash

How Can Other Grocery Brands Compete?

As Amazon incorporates cutting-edge technology into its grocery stores, other brands in the industry will undoubtedly feel compelled to incorporate such innovations into their business models as well. After all, who wants to be left behind in terms of market technological advancements?

Many startups, such as Caper, are attempting to replicate Amazon Go's technology in order to provide customers with a more seamless shopping experience. A smartcart is one such product, which allows customers to scan the barcodes of their purchases as they fill their cart.

This cart also includes a scale for items sold by weight. The main idea behind this is to avoid the checkout line and to shorten the time it takes shoppers to complete their purchases.

Needless to say, in order to remain competitive, other grocery brands should begin incorporating such technology into their stores in order to improve their customers' shopping experiences. Customers will be more inclined to shop in a store that allows them to run their errands the quickest and with the least amount of human interaction as the industry becomes more tech-savvy.

Photo by Dang Tran on Unsplash

As a result, other grocery brands will benefit from automating services wherever possible in order to remain competitive. Customers' shopping experiences have undoubtedly changed as a result of Amazon's entry into the food retail industry.

While they have not yet established a firm foothold in the market, their future expansions and service innovations pose a serious threat to the industry's titans. As a result, staying current with market innovations is critical for other grocery brands to maintain their prominence in the industry.

What It Means for Grocery's Future

There's a lot of money to be made in the $900 billion grocery market in the United States. However, Amazon's entry comes at a time when other retailers are expanding their operations and chains such as Aldi are expanding into new areas of the country. However, Amazon has a well-known brand and millions of loyal customers. Its solid reputation, combined with a technologically advanced experience, could propel it to the forefront of the grocery industry.

Amazon has already demonstrated its ability to exert influence over its competitors. When Amazon Fresh was first introduced in 2019, competitors such as Walmart and Target rushed to add more pickup and delivery options in order to compete. If this holds true, Amazon may be forced to accelerate the development of their technology initiatives and store updates.

Amazon's entry into the grocery industry may force the entire industry to adopt more digital solutions and place a greater emphasis on experience rather than just products. In an industry that has seen tremendous growth and change in the last year, the addition of another major player will only add to the disruption.

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