Inside Amazon Go: two years on

Stewart Samuel
Program Director - Canada
@RetailAnalysis

Date : 20 January 2020

It’s been almost two years since Amazon Go opened to the public in Seattle. We visited a recently opened store in New York to see how the format is evolving.

Over the last two years, the network has grown to 24 stores across four cities, Seattle, San Francisco, Chicago and New York. The retailer has opened in a mix of locations, with a range of different footprints, typically 1,000 to 1,500 sq ft.

Source: IGD Research

We visited the retailer’s store on 45th Street in the heart of Manhattan. It is within sight of a large Whole Foods Market, which features a dedicated food-to-go/convenience space at street level. It is also surrounded by several food-to-go outlets and coffee shops including Pret-A-Manger, Sweetgreen and Starbucks.

Source: IGD Research

As with all locations, entry is via the Amazon Go app. It is fast and frictionless. This store is approximately 1,000 sq ft, featuring two main aisles. One is dedicated to food-to-go-ranges and one to top-up groceries. A range of impulse products are located at the front of the store.

Source: IGD Research

In contrast to the surrounding food-to-go outlets, Amazon Go offers a wide range of branded soft drinks and waters. This is complemented with a snacking offer at the front of the store, in line with a more traditional convenience store format.

Source: IGD Research

Signage throughout the store points towards its lunchtime credentials. In this location, surrounded by office towers, this is the key mission which the store aims to serve.

Source: IGD Research

A significant amount of space is dedicated to sandwiches, wraps, salads and bowls. Most of these are sold under the ‘Amazon Kitchen’ brand.

Source: IGD Research

Several local brands are featured at the store. These include bakery items from Dominque Ansel Bakery, Magnolia Bakery and Ess-a-Bagel. Soup from foodservice chain, Hale & Hearty, is also available.

Source: IGD Research

In contrast to some of the initial stores which were opened, this location offers a range of self-serve coffee and espresso, in partnership with Starbucks. As with other products in the store, there is no requirement to scan any product or cup. Customers using the store’s paper cups, or their own, simply walk out with their coffee. The store also features a Coca-Cola Freestyle soft drinks unit.

Source: IGD Research

The front of the store, beyond the barriers, is a mid-sized seating area. Microwaves are also available in this area along with an Amazon collection locker.

Source: IGD Research

Checking out is easier than walking in. Customers walk out with no scan of the mobile app required. The app is only used to enter the store and there is no requirement to scan any product. Within a few minutes of leaving the store, a notification is sent via the app featuring the receipt.

The one to beat

Despite all the advances which have been made over the last two years by other retailers and technology companies, Amazon Go remains the checkout-free concept to beat in North America. While retailers continue to invest in solutions which either replicate this experience, or simplify existing checkout solutions, the focus must be on the customer experience. Beyond downloading the app, the Amazon Go experience is frictionless, easy for shoppers, and through our experience, highly accurate.

Balancing cost and experience

Question marks remain on the cost, and consequently, the scalability of the solution. Current limitations with loose products, especially produce and bakery items, may also prevent its use in larger format stores. For most retailers, striking the balance between cost and experience is key. For suppliers in impulse categories, the challenge is very real. Front of store checkout racks drive significant volume. This area is also highly profitable. A shift towards a checkout-less environment will require companies with products in this area to look at new opportunities to drive sales, including integrating with store apps and optimising location-based marketing tools.

What’s to come?

All eyes will be on southern California later this year, with Amazon set to launch a new supermarket format. Whether it blends in elements of Amazon Go or Whole Foods Market remains to be seen, but we do expect a strong tech and digital component. Recent reports of the retailer developing a hand-based payment system, could also be a major format innovation, but is likely to be some time before this is tested in the market.

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