reymann wrote: ↑August 14th, 2024, 7:05 am
Amazon Fresh is opening their first NorCal store in Roseville. Can they be the store that Save Mart was supposed to be in NorCal pricing wise? If they are successful in getting into the Sacramento area, they should get aggressive with central valley expansion.
Don't get your hopes up because you're headed for great disappointment.
The shelf prices are super crazy inflated high. They run a few loss leaders in the ad but not great.
The reason the prices are so high is to cover the high cost of deliveries and curbside pickups which are a higher percentage of their business. The offering is that it's the "same low price" delivered as in store. This has plagued Amazon Fresh since its inception when they did have good pricing only to drive up incredible losses on the delivery. This is why they mothballed stores, delayed stores, canceled stores to stop the bleeding of cash.
It was a meteoric crash as some of these stores opened in 2020 with unbelievable staffing, dozens of highly paid managers recruited from Target and over 300 employees in a converted Toys R Us size store. Then they realized the hard way that they were losing so much on every order that they had to jack up the prices through the roof to immediately stem the bleeding. Those first few stores still did decently well, but then the version 2.0 stores started opening and those were the ones without traditional checkout lanes or dash carts but instead they had the now infamous "just walk out" camera technology. That never worked right from day one and scared away many customers who didn't even know how to enter the store because of the automated security gates. That large second wave of stores bombed hard, and that was what pushed Amazon to halt openings and mothball already built stores to figure out how to fix the mess or liquidate the chain. They had set aside almost a billion dollars to cover liquidation costs last year but it seems they are going to press on with openings now that they have removed the biggest obstacle to sales which is the terrible "Just Walk Out" camera payment system. Now the stores are getting self checkouts and they're bringing back the Dash carts which were fun and worked well, it's actually nice to have a running total on your grocery bill as you shop.
So what they do now is hand out coupons that are only good for in store purchases to bring down the crazy high shelf prices. Pretty much every weekly ad has some sort of coupon like 20% off $50 or more, or $15 off $75 or whatever format.
What they need to do is simply charge more for delivery and lower the shelf prices. They have made progress there and did lower shelf prices slightly when they increased the delivery minimum even for Prime customers, but that only served to piss off those customers who rightfully believe that when they pay more than the cost of a Costco membership for what's advertised as unlimited free shipping that should include the delivery of the groceries.
It is a pain in the butt to try to think in terms of what the prices are after coupon versus before and figure out what is thereby a good deal VS a bad deal.
I do imagine that if they can ever strike the right balance of in store customers to delivery that they could lower prices on the shelf and deliver for the same price and make a profit. But there are a lot of barriers to that, and wait till you see what they don't offer. No service meat or seafood (in most existing stores it is still just covered up with a big canvas). No real bakery other than a few thaw and serve items. A minimal hot and salad bar, less than a quarter of what you'd expect at Whole Foods. I gave up on their deli because I could never get anyone to respond to the call button.
Maybe they'll play with a new pricing model up there. They have been known to do exactly that when they enter a new market. My understanding is every new market they've also played with the assortment and layout, but that too may depend on their access to inventory from whatever distributors they're using. They have had terrible out of stock issues plaguing them since inception that they blame on inability to get prioritized for product like Coke and Pepsi because they're a new business and they are too small right now, I don't really believe that considering one time earlier this year I came in and not one direct store delivery vendor product was in stock except for a few expired breads which made me wonder if they hadn't paid their bills. Right now it is a mess in SoCal but the remodeled stores and larger format stores seem to be doing better. I unfortunately have only one of the small format tests in a closed Rite Aid and the selection is so poor it is a complete joke, but they do generate a lot of clearance constantly changing the assortment trying to figure out what they should carry in a 20K size Fresh store while the rest of the chain is between 30K and 50K+.
What you will realize almost immediately is the entire claim that Kroger and Albertsons make to justify their merger, that Amazon is going to put them both out of business, is a total farce. They're still losing so much money on these crappy stores that they have sites that have been waiting to be opened for almost 4 years now but it is cheaper to pay the rent on the empty building than actually open the doors. I figure that eventually Amazon is going to need a replacement CEO when investors tire of Andy and the new guy will shutter the entire Fresh chain so fast it makes heads spin.
Yeah, that's Amazon Fresh. Good luck with that.
