Editor's Plate: Is Grocery Jeff Bezos's Next Play?

July 12, 2021
In his July column, Dave Fusaro proposes: if you thought Walmart was a tough customer, imagine dealing with Jeff Bezos.

As the world’s richest man steps back, at least a little, from his shopping and entertainment empire, there are indications grocery may be next on Jeff Bezos' to-conquer list; not that he doesn’t already have a huge footprint in the business.

Is he banking on a continuation of online shopping fueled by the pandemic or hedging bets with physical stores? Probably both. A number of observers see his next move as a major disruption of grocery retailing.

While most of America took the day off July 5, Bezos formally stepped down as CEO of the world’s largest online sales company. The transition had been flagged far in advance, having been announced during the company’s fourth-quarter conference call back in February. Bezos’ other title was changed to executive chairman, which undoubtedly foretells that he will remain intimately involved in big strategy decisions.

Recall there used to be things called bookstores and record shops before Amazon, which has been in existence just since 1994. Will grocery stores be the next business category they make extinct?

During that February conference call, Chief Financial Officer Brian Olsavsky said in answer to a question, “[Jeff Bezos] will be involved in many large one-way door issues ... meaning the more important decisions – things like acquisitions, things like strategies, and going into grocery and other things.”

(As an aside, look at these staggering full-year financials. Undoubtedly buoyed by the pandemic, Amazon’s 2020 net sales increased 38% to $386.1 billion – nearly equal to the gross domestic product of Israel – and net income nearly doubled, to $21.3 billion, or $41.83 per share.)

Two weeks before the conference call, the company opened its second Amazon Fresh grocery store in the Chicago area, where I live, in a former Babies R Us space in suburban Schaumburg, a stone’s throw from our office. Two more Chicago-area locations are planned for this year.

I’m tempted to call those humble beginnings, but recall Amazon already owns Whole Foods and its 700 or so locations via its $13.7 billion acquisition in 2017. While it hasn’t destroyed Whole Foods, as some naysayers predicted, Amazon hasn’t exactly optimized or capitalized on it either. Meanwhile, the company has opened a dozen Amazon Fresh stores, plus 30 automated Amazon Go convenience stores in big cities. Those are not humble beginnings.

(How do I know those numbers? I asked Alexa.)

I’m reminded that Walmart tentatively stepped into the grocery arena with its Hypermarkets in 1987, then jumped in big-time with its Supercenters a year later. Walmart hit a home run, becoming the largest food retailer in the U.S. in 2001 when its grocery sales reached $56 billion.

On the other hand, I also recall a Food Processing cover from September 2004 that showed a number of grocery items on a checkout belt along with a CD player, a man’s shirt and a Craftsman circular saw. We photographed it at the second Sears Grand store, also in suburban Chicago. The concept didn’t last long, and it didn’t save Sears. The Great Atlantic and Pacific Tea Company (A&P) had a great 150-year run, but it’s been gone nearly a decade. Somewhere in those factoids are lessons for both Amazon and Kroger.

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