Why Amazon Fresh Should Partner with Retailers Who Sublease
Instead of buying up defunct retailers, the new idea seems to be for Amazon Fresh grocery to sublease from retailers looking to unload a little extra space - in this case, Kohl's.
This idea could be clever for both sides, but ultimately I think not game-changing.
Kohl's gains by having more traffic near its stores.
Amazon gains by not having to up-fit and build out an entirely new store.
It doesn't appear there is any exchange of customer information, and the two locations are separated by a wall. To a consumer.
It's still not as convenient as a Super Walmart. What's the key move here? More buying power in grocery for Amazon.
Can Amazon out-innovate disrupt this low-margin category and wrestle it from Walmart and Kroger? It strains credibility to think Kroger can compete with Amazon long-term if they keep throwing money at it. Walmart has started to focus more intently in the last 2 years but still has a ways to go in order to match Amazon's innovation speed.
To this question, of innovating in low-margin/grocery, John Peterson weighed in saying “If and when Amazon starts building the conveyor-based supply chain it takes to move mass quantity (and not just fast each picking at an FC), then any retailer who isn't willing to make similar investments should be worried. Amazon has already shown they are willing to make such bets on automation and robots in their FCs and sortation centers.”
Scott Luton adds “ YES, Amazon can. The bigger question: how can Walmart and Kroger continue to evolve, re-invent, and disrupt their current models in a way that resonates with consumers??”
James Richardson says “Kroger is very nervous about this. I see little benefit for Kohl's merchandise business. This is a CFO's attempt to rescue a failing chain through a real estate business model.” Ouch - harsh assessment, but probably accurate.
