Published: Thu, September 20, 2018
Finance | By Loren Pratt

Amazon to open 3,000 brick-and-mortar stores by 2021

Amazon to open 3,000 brick-and-mortar stores by 2021

Inc. (AMZN.O) is considering a plan to open as many as 3,000 new AmazonGo cashierless stores in the next few years, according to people familiar with matter, an aggressive and costly expansion that would threaten convenience chains like 7-Eleven Inc., quick-service sandwich shops like Subway and Panera Bread, and mom-and-pop pizzerias and taco trucks.

Amazon Go is Amazon's cashierless store, which features what it calls "just walk out" technology and payment through its proprietary app.

Having almost 3,000 locations would make Amazon Go the third-largest convenience store chain in the USA, just under 7-Eleven and the parent company of Circle K, according to CSP, an industry publication. Kroger fell 1.5 percent, and Target declined 0.6 percent. If Amazon's plans pan out, it could eventually become one of the largest chains in the US.

Those companies had already been on notice for more than a year after Amazon bought its way into brick-and-mortar groceries with the $13.5 billion acquisition of more than 470 Whole Foods Market stores.

A 3,000-store footprint would catapult Amazon into the ranks of America's major physical retail chains.

Bloomberg reported Wednesday that Amazon is considering different models as it looks to expand Go, including weighing whether to include a limited selection of groceries, or simply focus on prepared food pickup. Amazon's other brick-and-mortar initiatives include about 20 bookstores around the US and the natural grocery chain Whole Foods Market, acquired a year ago. "If we offer a me-too product, it's not going to work", he said. However, with less staff and strictly dedicated to foodstuffs, which have a higher profitability than other retail goods, Amazon hopes to recoup the investment faster than your bog-standard food store.

The report of new Amazon Go stores follows the opening of two new Amazon Go locations, in Seattle and Chicago, earlier this month.

Amazon could reduce the cost of hardware and increase profit margins by focusing on selling prepared foods, instead of offering an expanded selection of grocery items. The e-commerce giant may open as many as 3,000 such stores by 2021, according to the report.

The U.S. now has 155,000 convenience stores, with 122,500 of them combined with gas stations, according to industry group NACS.

If someone passes back through the gates with an item, his or her associated account is charged. Shoppers rate location and a lack of lines as the most important factors when shopping for convenience, he said. "The key to success will be convenient locations. It's too far away".

Like this: