Amazon Exits UK Grocery: What It Means | Fast Five Shorts
This segment from the Omni Talk Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Mirakl, Ocampo Capital, Infios, and Quorso, examines Amazon's decision to close all 19 Fresh grocery stores in the UK.
Chris argues this confirms that grocery is incredibly hard to disrupt and that Amazon can't win on freshness, price, or experience without the necessary scale. He predicts Amazon Fresh in the US is "dead on arrival" and questions whether Amazon is making similar mistakes with Whole Foods by moving away from the "Whole Paycheck" premium positioning.
Anne agrees that competitors like Sprouts, Lidl, and Aldi are beating Amazon at their own game with better distribution, fresher products, and lower prices. However, both hosts wonder if Amazon's pivot to online grocery could eventually win in a future where automated fulfillment becomes cheaper than in-store operations.
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#AmazonFresh #UKGrocery #WholeFoods #GroceryRetail #RetailStrategy #AmazonGrocery #Lidl #Aldi #Sprouts #OnlineGrocery
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Transcript
Amazon is closing all of its fresh grocery stores in the U.K. chris.
Speaker A:All of them.
Speaker A:According to CNBC, the company said in a Tuesday blog that it is preparing to close all 19 of its fresh UK stores, quote, following a thorough evaluation of business operations and the very substantial growth opportunities in online delivery, end quote.
Speaker A:Five of the fresh locations are expected to be converted into Whole Foods stores, Amazon said.
Speaker A:Chris, what do you think of Amazon closing its fresh stores in the uk?
Speaker A:Do you think the move says anything about Amazon's grocery ambitions here in the us?
Speaker B:Oh, wow, this is, yeah, there's a lot of great stories this week.
Speaker B:I got a number of thoughts on this one too.
Speaker B:And I mean, I think first, first off, it confirms what we've always said on this show, which is grocery is incredibly hard.
Speaker B:It's incredibly difficult to unseat the incumbents with well established value propositions and scale already under their belt.
Speaker B:Like it's, it's damn near impossible when you think about it.
Speaker B:Like there' very few examples of people doing it successfully.
Speaker B:In fact, I can't even really name one.
Speaker B:And then the second part I'd make, which is why I'm personally short on Amazon's grocery ambitions here in the States, is they can't win on freshness and quality because they don't have the scale of their operations to get the best produce right and the best fresh meat.
Speaker B:They can't win on price because they're going up against Aldi, Walmart, Costco, Sam's Club, you name it.
Speaker B:It's going to be hard to break into that.
Speaker B:They could try, but it's not, it's going to be hard to get the brand recognition for that.
Speaker B:And then it's impossible to win on experience or like or, you know, anything of that nature because you don't have stores.
Speaker B:And grocery shopping is a very local and personal experience for many folks.
Speaker B:So I just look at Lidl, who we interviewed, their CEO of the US here, you know, at grocery shop Joel Rampel, and they're having trouble establishing their value proposition in the United States for those very same reasons.
Speaker B:And, and here's the thing, they have 200 stores already, right, and have been at it for a long time.
Speaker B:So, so Amazon Fresh in the US to me is dead on arrival.
Speaker B:It's doa.
Speaker B:And, and here's the other point though.
Speaker B:I think this is important too, and I'm curious what you think on this.
Speaker B:I think they're making similar mistakes with Whole Foods.
Speaker B:Like this week they said a grocery shop, they're going away from the Whole paycheck connotation, which I think that actually is what you want people to say about your brand.
Speaker B:You want it to be prestigious, you want it to be something aspirational.
Speaker B:And now you're trying to go away from that.
Speaker B:It just shows me that you're, you're so frickin lost here in terms of what's going on.
Speaker A:Yeah, I think that, I mean, you made some great points there.
Speaker A:I think the, the real point of contention, I think for Amazon here is that Sprouts, Lidl, Aldi, all of these players are beating their main mission.
Speaker A:We heard from, you know, all of them that they're really focused on only opening in locations where they can have distribution centers close by where they can ensure that they're getting you the freshest, most local as possible product for the lowest price.
Speaker A:And if, I mean, Whole Foods isn't going to be able to compete with that.
Speaker A:Their model is just not set up that way either.
Speaker A:And these new players are already the go to on price.
Speaker A:And so I think that that's the, that's the challenge here.
Speaker A:Amazon can't survive on tech.
Speaker A:Convenience and tech is not enough.
Speaker A:It's about price, it's about qual quality.
Speaker A:And as you mentioned, Amazon just doesn't have the scale or the infrastructure to do either one of those.
Speaker A:Well right now.
Speaker A:So I'm, I'm, I'm in agreement.
Speaker A:I think it's very concerning.
Speaker A:I, the one thing question that I had for you though is like, why the move towards Whole Foods, do you think?
Speaker A:Why are they keeping these five stores in the UK and doing a Whole Foods concept?
Speaker A:Like what benefit is there there?
Speaker A:Are they trying to see if they can test, you know, this low price freshness like the new Whole Foods, not whole paycheck concept?
Speaker A:Like.
Speaker B:Yeah, I don't know.
Speaker B:My, my hunch is some consultant did some Venn diagram of the opportunity of Whole Foods in the, in the UK market and they said, okay, let's try it here.
Speaker B:And you know, Amazon's famous for experimenting, so who knows if it'll work too.
Speaker B:And sure, who knows what concept they're doing?
Speaker B:Maybe they're trying their daily shop concept that they're all big on here too, you know, I don't know.
Speaker B:Yeah, the one caveat I would have in terms of what we're saying, it goes back to, we said at the outset too, which is like, you know, it seems like Amazon, as much as they don't want to admit it, I think Amazon already knows what we're saying and that's why they're pushing the online side of the business so hard.
Speaker B:Yeah the online side of the business is still so hard for the reasons we said.
Speaker B:It's you still face all the same factors in terms of differentiation but at the end of the day like you know you go back to Tim Center's comment can they get to a point where it is the cheapest, most preferred way for consumers to shop not now but 10 to 15 years out.
Speaker B:But I still think Amazon has a tough challenge to win that battle because Walmart is better positioned in the US Even you know even Walmart, maybe even Kroger or maybe even the Re you know somebody in that realm is better positioned for all the reasons we said so.
Speaker A:Right.
Speaker B:It just I just think it's going to be a hard battle.
Speaker A:Yeah, yeah I agree.
Speaker A:Another fun one to watch though for the next couple months here.
Speaker B:Yeah what a great show so far.
