Amazon and Groceries - The Holy Grail of retail
What exactly is Amazon doing with grocery stores?
Amazon recently opened a larger format grocery store as I am sure a lot of you read. As I was reading that announcement I could not help but think of this announcement in terms of jobs to be done (read this article from Clayton Christensen for context and the Jobs-to-be-done framework)
The article is 7 years old and the fact of the matter is that grocery stores are going nowhere as are probably not movie theaters (not that I personally go anymore). In the grocery/retail format the job to be done differs and could be because of:
A forgotten item
Weekly shopping
Daily shopping
Pre-prepared meals
Now tie this back to the original reason that Amazon focused on online groceries. No labor costs and no retail space costs. That didn't work but they learnt a lot from that experience:
People probably want to touch/feel groceries
People are A-ok to buy prepared meals (Amazon go stores)
People are not ok to buy groceries
People are A-ok to self checkout (in fact self walkout!!)
So then the barrier to online grocery shopping can potentially be bridged by two avenues
A physical grocery store
Having the customer feel the product without the grocery store. How does one do this? Imagine drones that would allow you to “feel” and keep or return the goods if they are not to your standard. Say you need a pound of tomatoes. The drones carry 2-3 pounds and you just put back what you don't want. The drone weighs and charges you appropriately
Now this also adds a new dimension to the problem. How much selection does the human generally need to “choose” a pound. Aha, the cameras are carefully capturing that information in the “cashier free” stores which will enable them to figure that out.
The only remaining problem is store selection. Why does this matter? Because the size of the store (and thus cost of real estate) depends on selection. Staffing depends on selection. If Amazon can figure out which fresh products have the most returns then it can stock those more and figure out how to assess customer quality before, well uh “droning” them over.
The key problem then becomes what retail has been doing for years. Which is storefront aisles to “tempt” you into a chocolate. Things you may forget to buy and things you just didn't know you need.
Once again a problem Amazon is well suited to solve as you start shopping. (you got tomatoes are you in need of spaghetti?)
The key lesson for other grocers is that Amazon is not “giving up”. Do not mistake Amazon opening a store as a defeat. If the current grocery stores do not experiment - and some are, such as Krogers with autonomous delivery) they will be left behind in the Amazon “data” dust.