Amazon Halts All New Amazon Fresh Just Walk Out Stores

[pseudo3d]

I suspect that the word of halted stores was probably related to the news of the proposed Kroger Albertsons merger (no way they didn't know, surely they had a chance at the altar too) as well as a strategic shift back to dash carts vs the ultra expensive and flaky just walk out. And that makes a lot of sense. Why spend the money and effort to keep building new boxes, convert difficult projects like old Kmart and Sears and Office Depot buildings etc. plus wire them with millions of dollars in cameras when there is most definitely going to be a wave of actual supermarket buildings that will become available with management that actually knows what they are doing?

Let's take this in a different direction: what if the majority of the SpinCo stores wind up being acquired by Amazon? This could be a brilliant experiment especially if SpinCo becomes like Alb LLC where they license the name. Imagine if for example one of the Arizona non union nameplates and brands goes to Amazon. They could leave the operation in place and implement their best working tech, which right now is dash cart. Now they have a real example of real conventional grocery stores "plussed" with Amazon tech, which could make licensing and selling such tech more attractive to other regional chains. They could even do something like a sub brand like Albertsons +Amazon so it would be identified as an Albertsons store (the way LLC did) but it has Amazon tech.

First, Amazon's track record with brick and mortar hasn't been good. The bookstores/five-star stores closed, and their "department store" won't see another location. Their merchandising of existing Amazon Fresh stores, from what I've told, is not very good either, so the "halted stores" isn't out of the ordinary. In fact, they might've passed on Albertsons because they might have had second thoughts about the grocery industry already.

I doubt that Amazon Fresh was doing so badly to pull the plug on it entirely at least at that stage (it means Amazon stock price takes a hit) but I'm not sure what the merger would mean to them. Kroger is going to do its best to make sure that the SpinCo stores are trash, probably throwing some unionized stores under the bus in the process. Could Amazon buy the stores, gut them, and reopen them as nonunionized Amazon Fresh stores? Sure they could, but again those stores are going to be tired and need a lot of capex pumped into them that Amazon probably wouldn't be willing to provide, especially if they're in less affluent areas.

If Amazon really felt that grocery was a worthwhile endeavor they could slip around it by lobbying against the Kroger-Albertsons merger, then swooping in and buying out Cerberus et. al's shares, then they'd have free reign to integrate any Amazon.com features into the stores at their leisure without significant investment, they could "trade" Amazon Fresh stores to Albertsons, and they wouldn't have to deal with unionized stores, because as far as they're concerned, the unionized employees are Albertsons' employees, not Amazon employees. And they could still keep Whole Foods.

[Bagels]

I don't think Amazon will take over much of anything from Safeway/Albertsons due to the union situation. I guess they could close down and "remodel" and reopen as non-union but that is exactly the type of thing the FTC and certain politicians are currently at war about with regards to this merger and the FTC is either going to do better this time or this will be Haggen II.

Kroger's preference is to sell the stores they divest; SpinCo will be comprised of assets they are unable to sell. If Amazon intends on continuing to operate brick and motor grocery stores, this will give it an opportunity to acquire prime locations at under market leases. If Amazon buys select stores, and not most of the stores under a specific banner, it has no legal obligation to keep any ex-Albertsons-Kroger employees, let alone recognize the union. Reality is, those who are deeply attached to the union will stick with Kroger and "bump" into other locations.

SpinCo establishes a floor price for the stores being divested. The issue divesting stores in the past is in some cases the stores had to literally be given away, or even pay someone to take them (see Safeway when they took over Carr's and the Alaska Marketplace fiasco), or be fined to keep operating the store with no buyers coming forward... but no option to close it...

Trying to pass off any stores from Kroger/Safeway to Amazon will have the FTC declining this merger. The Union is going to ensure every store is sold to a union buyer and if not they will go cry to Warren and Bernie about it and the merger will get blocked. But nothing stops SpinCo from selling the real estate to Amazon if SpinCo elects to do that...

This forum is putting too much emphasis on SpinCo. Kroger's goal is to sell divested stores -- having Amazon acquire a large block of stores would be a good thing in terms of getting the FTC to approve the merger, since Amazon is a more formidable competitor than any start-up. Unions are opposed to the merger - that's not going to change or increase regardless of which locations are sold off.

[storewanderer]

This forum is putting too much emphasis on SpinCo. Kroger's goal is to sell divested stores -- having Amazon acquire a large block of stores would be a good thing in terms of getting the FTC to approve the merger, since Amazon is a more formidable competitor than any start-up. Unions are opposed to the merger - that's not going to change or increase regardless of which locations are sold off.

The unions can and will be bought off to support the merger. Just wait. It may be as simple as a stated promise to only sell stores to union competitors. It may be some kind of backdoor deal that nobody knows the details of. But at the end of the day there is no way this merger goes through without union support or at the very least getting them to not outwardly oppose the thing.

Unless of course, Kroger doesn't want to go through with the merger. In that case proposing things like selling stores to Amazon, will absolutely put the union up in arms. And then, union opposition can be a convenient scrapegoat for the merger not going through...

[mbz321]

Based on this article, it seems like the Amazon Fresh concept is likely DEAD. This particular store in the article has been 'under construction' for years now. There are many other half-finished to almost ready-to-open stores scattered around the Philly region. What a waste.
https://patch.com/pennsylvania/bensalem ... ip-opening

[storewanderer]

Based on this article, it seems like the Amazon Fresh concept is likely DEAD. This particular store in the article has been 'under construction' for years now. There are many other half-finished to almost ready-to-open stores scattered around the Philly region. What a waste.
https://patch.com/pennsylvania/bensalem ... ip-opening

Similar situation out in CA on multiple sites. The CA sites don't have exterior signs yet like this one though.

Would any of these possibly work as Whole Foods?
Perhaps a Sprouts-like format? For another operator...? Fresh Thyme...?

[mbz321]

Just to add, I happened to stop in my local Fresh store last night...the store was absolutely void of customers, a few days before Thanksgiving, like maybe less than 5 customers including myself. Every other grocery store/Walmart/etc, has packed parking lots, I parked 2 spaces away from the entrance Even some loss leaders they are running this week ($1 cartons of store brand ice cream) aren't getting people in the door. I did find some cheap meat and veggie markdowns that made for a very inexpensive dinner though! (My main reason for stopping in was just to get an Amazon gift card, as the store is coded as a grocery store and gets me 5% back on my credit card).

[pseudo3d]

I've probably said this before but the fact that Amazon Fresh's stores are ALL in Albertsons overlap areas (except for Europe) makes me think that they'd be a good suitor for Albertsons if/when the Kroger merger fails. It wouldn't even need to have "Amazon buy Albertsons", they'd just need to buy the private equity share. Pulled off correctly, Cerberus gets its cash, Amazon gets to save face while still being a big part of grocery (and keeps Whole Foods), and Albertsons gets nearly 40 new stores spread across half a dozen divisions.

[ClownLoach]

Based on this article, it seems like the Amazon Fresh concept is likely DEAD. This particular store in the article has been 'under construction' for years now. There are many other half-finished to almost ready-to-open stores scattered around the Philly region. What a waste.
https://patch.com/pennsylvania/bensalem ... ip-opening

I think they were looking at cost cutting on these delayed stores by eliminating the "Just Walk In" and the literal millions of dollars of wiring and equipment, which is why they were moving back to the dash carts in these Pennsylvania stores that are now mothballed. But even without the millions in infrastructure there was no way they could make a profit on such low sales. We have seen old, dumpy stores make millions of dollars in sales and shiny, slick beautiful palaces go out of business. The product and offering has to be right first, and Amazon Fresh is not compelling. The only thing that is unique is the alleged convenience of their technology, but the limitations of that tech cancel out its value to the customer. Past that they don't have any other edge - not assortment, quality, price, service, or true convenience. Too many better places to go that can offer any of those options to the customer.

It appears that the location that was under construction (but not signed yet) in Corona, CA is DOA. The construction vehicles and trailers have been removed from that portion of the shopping center. Amazon Fresh was the only anchor and the opposite side of the freeway is a large power center with Target, Best Buy, a movie theater and plenty of vacant space Amazon could have occupied probably for less than they spent to be on their own. Across the street directly is a very good Stater Bros. Not sure who they thought they would take share from and since they already have warehouses everywhere within ten minutes of the site I don't understand how they would have saved on grocery delivery costs by leasing retail space. All the other businesses that chose to open there are doomed unless they can get another anchor in.

[Alpha8472]

Just to add, I happened to stop in my local Fresh store last night...the store was absolutely void of customers, a few days before Thanksgiving, like maybe less than 5 customers including myself. Every other grocery store/Walmart/etc, has packed parking lots, I parked 2 spaces away from the entrance Even some loss leaders they are running this week ($1 cartons of store brand ice cream) aren't getting people in the door. I did find some cheap meat and veggie markdowns that made for a very inexpensive dinner though! (My main reason for stopping in was just to get an Amazon gift card, as the store is coded as a grocery store and gets me 5% back on my credit card).

Safeway sells Amazon gift cards and Target gift cards. You can then get 5% off many types of gift cards including gas station cards. The Amazon Prime card has a deal if you sign up for 10% off gas station purchases for a limited time.

[storewanderer]

I've probably said this before but the fact that Amazon Fresh's stores are ALL in Albertsons overlap areas (except for Europe) makes me think that they'd be a good suitor for Albertsons if/when the Kroger merger fails. It wouldn't even need to have "Amazon buy Albertsons", they'd just need to buy the private equity share. Pulled off correctly, Cerberus gets its cash, Amazon gets to save face while still being a big part of grocery (and keeps Whole Foods), and Albertsons gets nearly 40 new stores spread across half a dozen divisions.

Won't happen... too many unions at Albertsons.

And really based on how Whole Foods has gotten under Amazon I hope it does not happen.

Oh, maybe I read this wrong. You are implying Albertsons should buy Amazon Fresh? I think these are useless for Albertsons- they are the wrong size stores in the wrong locations with the wrong layout, wrong department sizes, just wrong wrong wrong. There are a few in former grocery stores that may work... but most of these are not former grocery stores. They are former Bed Bath and Beyonds, former Toys R Us, etc.