Amazon Grocery Plans ‘Stunningly Conventional,’ Analyst Says

The first photos from the forthcoming Los Angeles grocery store now being developed by Amazon reveal what one analyst called a “stunningly conventional” space that looks to put functionality over style, according to a report.

Amazon, the Seattle e-commerce giant, has acknowledged it is building a new grocery store in Woodland Hills, Calif., but has been tight-lipped as to additional details. Reports have indicated the company could be pursuing dozens of sites in multiple cities for such a concept.

A report published this week in Bloomberg, based on some photos inside the developing store and a review of plans filed with local authorities, indicate the new unit could differ very little from peers in the space. The 33,000-square-foot unit has room for fresh prepared foods with signage indicating “Fresh Kitchen,” a staging area expected to facilitate assembly and pickup of online orders, and aisles of conventional shelving with electronic shelf tags, the Bloomberg report said.

McMillan Doolittle Senior Partner Neil Stern, quoted in the report, said a review of the plans reveals a “stunningly conventional” layout, adding, “I don’t think they are going to reinvent how food is sold.”

Amazon is thought to be pursuing a physical grocery store so as to get a bigger share of grocery sales—the vast majority of which are still conducted at physical stores—but also to better support booming sales in grocery, most fulfilled through delivery. Stores close to customers can cut down costs of local deliveries while providing more cost-effective pickup options, as players in both the physical and virtual space appear to be more convinced than ever that a combination will be necessary to efficiently meet demand.

Earlier this week, for example, Ahold Delhaize said it would be shutting down operations of its “pure-play” Peapod online grocery serving Chicago, Milwaukee and Indianapolis primarily through delivery, choosing instead to focus online investment in areas where it also operates stores. Speaking in a conference call this week, Ahold Delhaize CEO Frans Muller said he envisions the volume of online orders for store pickup—a fulfillment method considerably less expensive than delivery—will eventually match those for delivery at the retailer.

“When you can satisfy a lot of customers with click-and-collect, that total cost profile and margin profile will be more beneficial in the total mix than the expensive last mile,” Muller said, according to a Sentieo transcript. “We are very proud that we can offer both. A lot of customers prefer both, or make a choice there. But in the total percentage, over time, I think click-and-collect versus home delivery will develop into a ‘50-50 type’ distribution than where we are now, at roughly 70% [delivery], 30% [pickup].”