As Amazon continues to try and figure out how to expand its physical presence in the grocery store business, overall financial results in the first quarter shows the company has a lot of fight.
Amazon registered a 9% gain in revenue during Q1, which calculated out to just over $127 billion. Profits came in at $3.17 billion. Versus first quarter 2022, Amazon’s sales numbers in North America during first quarter 2023 were 11% better ($76.9 billion).
Grocery, however, continues to be top-of-mind for the corporate giant, and CEO Andy Jassy emphasized the strategy during the financial call.
Jassy noted in the current environment where consumers are being cautious about what they spend and finding ways to trade down in different product variations, consumables stayed very strong and Amazon continues to be very pleased with that part of the grocery business.
Amazon, however, still needs a bigger brick-and-mortar presence in the supermarket industry. Jassy said Whole Foods Market continues to grow nicely and that there were a number of changes in the past year that have changed the profitability trajectory. As for Amazon Fresh, Jassy hopes the pause in establishing new brick-and-mortars will pay off down the line. The CEO said a set of experiments and concepts are being worked on across a number of stores and the hope is to continue with an expansion strategy.
Amazon, headquartered in Seattle, sees more positive growth in Q2, projecting net sales to be up to as much as 10% at $133 billion.
According to Business Insider, analysts at Bernstein have put together a comeback strategy for Amazon and the main component is purchasing existing stores that are on the chopping block due to the proposed Kroger, Albertsons merger. The grocers are expected to shed up to 500 stores, and many are in areas that could be favorable for Amazon. The price to acquire is another selling point. Bernstein analysts also are proposing that Amazon quickly rebrand stores or focus on stores in targeted regions. When Supermarket News reached out to Albertsons, based in Boise, Idaho, about the Amazon strategy the grocer had no comment.
In late April Whole Foods announced it was laying off hundreds of workers while it restructures the organization, according to a memo reported first by the Wall Street Journal.
“As the grocery industry continues to rapidly evolve, and as we — like all retailers — have navigated challenges like the COVID-19 pandemic and continued economic uncertainty, it has become clear that we need to continue to build on these changes,” the memo said. “With additional adjustments, we will be able to further simplify our operations, make processes easier, and improve how we support our stores.”
Whole Foods will be decreasing its operating regions from nine to six and centralizing some units within its operations division. Category-specific store operations support will switch from a regional structure to a team within global operations. Supply chain management will now be within Whole Foods’ global supply chain division. Global support teams will receive further adjustments and the company’s team member services will be enhanced.