CT Insider reports that Amazon has decided not to open Amazon Fresh stores in the towns of Westport and Brookfield, despite the fact it had done considerable work on the store facilities over the years.
Instead, Big Y will take over the locations, offering those communities more traditional supermarket shopping alternatives.
Some context from the story:
"For a time, Amazon Fresh was eagerly anticipated by Connecticut consumers and viewed by some as cutting edge grocery shopping. The stores use state-of-the-art technology that replaces checkout lines with wireless technologies that charge customers as they walk out the door with the items they purchase.
"But in February 2023, Amazon executives began pausing any new openings of Amazon Fresh locations while they tinkered with unspecified elements of the business model. Company officials still haven't said in any detail what the future holds for the Amazon Fresh concept, including a location that was reportedly under development for the company on the Boston Post Road in Orange.
"But several supermarket and retail experts said the abrupt halt to the chain's expansion is evidence that the concept was not adequately vetted before being rolled out in a number of major metropolitan areas around the United States as well as in Connecticut."
CT Insider also quotes MNB fave Burt Flickinger, managing director of the New York City-based retail consulting firm Strategic Resource Group.
Flickinger said "when Amazon Fresh was first launched, 'it was highly successful and was an easy, efficient shopping experience.
"'When they first opened in any market, they'd start a price war with any other chain in order to gain market share,' Flickinger said. 'But as the pandemic progressed, there was a massive supply chain disruption and massive price spikes that hurt them. Even today, food prices are still 20 percent over where they were before the pandemic.'
"Another factor that may have derailed the Amazon Fresh business model, he said, were changes in management with those running the business.
"'A new group of business bureaucrats came in to run Amazon Fresh and so they weren't a willing to offer as many specials,' Flickinger said."
Flickinger says that the company's biggest challenge right now is fixing its Whole Foods division, which he described as "simply not competitive."
- KC's View:
I'm not surprised by the Amazon Fresh decision - those empty stores sat like mausoleums for way too long. To be honest, I still think it is even money that Amazon will eventually pull the plug on physical/fresh retailing (with the possible exception of Whole Foods) and decide to focus its food retail budget on online sales of packaged grocery. This decision does nothing to dissuade me that I'm wrong about this speculation.
As for Big Y, it is a strong competitor, and it is coming into markets that will require it to bring its A game in Brookfield it is close to both a Costco and a Stew Leonard's, and in Westport location it is fairly close to an Ahold Delhaize-owned Stop & Shop, as well as to a Fresh Market, Stew Leonard's, and a Wegmans that should open sometime next year. I do think that Stop & Shop is going to take it on the chin in this battle, unless it does something to dramatically improve its value proposition. It is a weak competitor, market share dominant only because of locations, and it feels like a number of folks think there is blood in the water.