Stores Still Matter. Where’s Amazon?

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Last year Amazon was so successful that I almost cannot speak. Except in one area.

Sales at Amazon stores, primarily the Whole Foods grocery chain, declined 15 percent in the first three months of this year from the same period in 2020. These sales have now been in decline for a year.

Amazon’s numbers have gaping holes that make it difficult to know exactly what is happening. But we can say that something doesn’t quite work.

Almost four years after Amazon agreed on a major sales contract for whole foods and a year on a pandemic that played out the tech giant’s strengths, it’s worth asking two questions: Is Amazon losing food? And why was one of the most ambitious and inventive companies in the world a fan rather than a leader in one of the largest spending categories for Americans?

What Amazon does about groceries matters to all Americans, even if we never buy milk and bananas from the company. Amazon consumers and competitors see it as a pioneer in innovation. But that’s not the case with food – at least not yet.

Let me come back to the falling sales in Amazon’s physical stores. The problem is, those numbers don’t include the grocery orders people place online and then pick up or have delivered in stores. Those sales have skyrocketed for Amazon and its competitors during the pandemic.

An Amazon spokesperson told me that the sum of all the ways people shop at Whole Foods, including ordering online for pickup or delivery, shows that the company’s sales have increased. However, Amazon doesn’t give any details, which is often a sign that the numbers aren’t amazing. When Amazon – like Walmart and Target – sells a lot more groceries than it did before the pandemic – the company is unusually quiet.

So I wonder if Walmart’s grocery sales, which rose 9 percent for the year ended January 31, are growing faster than Amazon’s. That shouldn’t be happening as Walmart’s mammoth has a head start on Amazon in grocery sales.

I’m also going to say something that might sound crazy after a year of manic shopping with clicks: grocery stores in real life are still important. Much. And that’s not a good sign for Amazon.

Sucharita Kodali, who researches shopping and consumer behavior for research firm Forrester, recently looked at our pandemic-changed habits and found that many people were eager to roam the aisles of grocery stores again.

Yes, many people tried delivering groceries or picking them up at roadside stores for the first time during the pandemic, and some of these habits persist. However, Kodali wrote in a recent report, “The vast majority of grocery sales in the United States are and will continue to be in stores.”

Shops are familiar with navigation and some people are nostalgic for their old habits, Kodali told me. According to Forrester’s analysis, botched orders, high prices, or other issues with shopping for groceries online have discouraged many people.

Many companies, including Amazon, Target, and Walmart, also pick lots of items off regular store shelves for online grocery orders. Grocery sellers need their stores for both in-person and virtual shopping.

Let’s see what happens to Amazon in the coming months. Those in-store sales could rebound if townspeople return near the Whole Foods stores and office workers get ready-made meals again.

But no matter what, Amazon Blah Whole Foods sales are worth watching. They’re another sign that in 15 years of Amazon’s mostly disjointed and unsuccessful strategy when it comes to food, something is wrong.

Walmart, the regional chain Kroger and startups like Instacart and Uber are trying clever ideas to disrupt the food industry. In addition to the untested technology of skipping the cashiers in stores, Amazon’s big step in groceries seems to be opening a new chain alongside Whole Foods.

I am still interested in what Amazon is doing regarding groceries. But for now, maybe we should pay less attention to Amazon in this area until everything it does turns out to be working.

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