Sponsored By

First Amazon Go locations demonstrate concept’s strong appeal

Cashierless stores unlikely to be direct competitor to supermarkets

Russell Redman

November 2, 2018

5 Min Read
Supermarket News logo in a gray background | Supermarket News

In the early going, Amazon.com Inc.’s cashierless Amazon Go store concept has proved highly productive but not likely a head-on competitor to grocery stores.

Strategic advisory firm Brick Meets Click estimated sales per square foot of the first Amazon Go, opened to the public in January in Seattle, at $2,700 after studying the 1,800-square-foot store’s operations for several days.

“Amazon has designed a store that maximizes customer throughput and sales to produce exceptional results. In fact, Amazon Go stores produce more sales per square foot than virtually any other retailer except Apple and a few other specialty stores,” Brick Meets Click said this week in an installment of its “The Lookout” column.

“As impressive as this number is, it’s likely to go higher as more customers become aware of the convenience of shopping these stores and Amazon finds ways to drive even more sales from the modest footprint,” the brick-and-mortar and digital grocery consultancy added.

Amazon_Go_store_sign_interior2_0.png

Brick Meets Click also reckoned the inventory turns for the store, located at 7th and Blanchard in downtown Seattle, at around 50 per year — four to five times the number of turns typically generated at other retail operations and likely to rise as more shoppers visit the store.

Related:Amazon’s sales jump in Q3, but not at physical stores

“The exceptionally high performance of both of these retail productivity metrics makes it clear that Amazon has succeeded in disrupting the established self-service model by developing a model that makes much more efficient use of inventory and the retail footprint,” Brick Meets Click observed.

In a “first look” report at shopper visitation patterns to Amazon Go stores, digital marketing firm inMarket determined that the retail concept is more of a threat to fast-casual restaurants and convenience stores than to supermarkets. For the study, released this week, inMarket examined five Amazon Go stores in Seattle and Chicago over the past 60 days.

Peak visitation hours for Amazon Go were during lunch (12 p.m. to 2 p.m.) and breakfast (8 a.m. to 9 a.m.) on weekdays, with Wednesday being the busiest.

“Visits to Amazon Go contrast traditional grocery stores in that they receive high traffic during the weekdays and lower traffic on weekends. This is in direct contrast to traditional grocery stores, which rely heavily on weekend foot traffic,” inMarket said in its report.

Three of the five stores were closed on weekends, but the weekday peak remained even when excluding those stores, the study found. “For Amazon, the decision to keep some of these stores closed on weekends indicates that they don’t necessarily see Go as a grocery competitor — yet — as weekends are vital to traditional grocery business,” according to inMarket.

Of shoppers in the study, 44% visited more than once over the research period, compared with 56% who visited once. “At Amazon Go, retention does seem to be happening,” the report noted.

Customer visits had a median time length of 27 minutes. InMarket said this suggests that shoppers are taking their time and exploring the store or eating premade food offerings in the seating area.

“If this is the case, it would underscore that Amazon Go customers are indeed treating it as more of a c-store/restaurant hybrid versus a grocery store. Or perhaps shoppers are being slowed by their own apprehension about ‘just walking out,’” inMarket explained, referring to the store’s checkout-free technology.

Amazon opened its sixth Go store — the largest to date at 2,300 square feet — late last week in San Francisco, its first in California. On Oct. 8, a 1,200-square-foot location opened at West Adams and South Clark streets in Chicago.

Three more Amazon Go units are slated for those two metropolitan markets: In Chicago, Amazon plans to open a 2,000-square-foot store at the Illinois Center on East Wacker Drive in 2019 and a 1,700-square-foot location is “coming soon” to the Ogilvie Transportation Center on Madison Street. Due to open this winter at Post and Kearny streets in San Francisco is a 1,750-square-foot Amazon Go. Amazon has previously confirmed plans to open an Amazon Go in New York City but declined to give a timetable or location details.

The second Amazon Go, a 1,450-square-foot outlet, opened Aug. 28 in downtown Seattle (5th Avenue) and was followed by two larger units—a 2,100-square-foot store in Seattle (Boren Avenue) on Sept. 4 and a 2,000-square-foot location in Chicago (South Franklin Street) on Sept. 17.

In September, Bloomberg reported that Seattle-based Amazon is mulling plans to open up to 3,000 Amazon Go stores by 2021, including having about 10 Amazon Go stores by the end of 2018 and expanding to around 50 in key metro markets next year.

Amazon Go stores use overhead cameras, weight sensors and deep learning technology to detect merchandise that shoppers take from or return to shelves and keep track of the items selected in a virtual cart. Shoppers use the Amazon Go mobile app to gain entry to the store through a turnstile. When customers leave the store, the “Just Walk Out” technology automatically debits their Amazon account for the items they take and then sends a receipt to the app.

“Amazon Go’s combination of ready-to-eat and ready-to-cook food choices challenges both grocers and restaurants,” Steve Bishop, co-founder and managing partner at Brick Meets Click, wrote last month about a visit to the Go store in Chicago. “With no lines or waiting, it’s easy to see why people would stop by twice a day — first to grab lunch and later to pick up a dinner option on their way home.”

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like