The only constant in the world of selling groceries of late seems to be the constant change. The long-awaited first Amazon Fresh brick-and-mortar store officially opened for business in Los Angeles this week, while Whole Foods talked up falling prices. But new data indicate that the great grocery boom we’ve seen over six COVID-wracked months might be starting to slow down.
Here are the latest headlines:
First Amazon Fresh Opens To General Public
Amazon snapped up a lot of headlines a few weeks back with the news that it would soon open its first Amazon Fresh brick-and-mortar grocery store – initially by invitation, then to the general public.
This week, the eCommerce giant gave the public open access to the shop, located in Los Angeles. Anyone could shop, try out the new high-tech Dash Carts and settle up using the combined power of a Dash Cart and the Amazon app rather than using a checkout line.
Consumers also have an opportunity to interact with Echo Show devices strategically placed throughout the store, designed to make suggestions and point consumers in the direction they need to go to find items on their shipping list.
However, the store isn’t quite operating at full capacity, as COVID-related limitations have made that impossible.
Whole Foods Promises Price Cuts
For nearly as long as Whole Foods has been open, critics have given it the nickname “Whole Paycheck” — a not-so-subtle jab at the chain’s often high prices.
But Whole Foods CEO John Mackey said this week the nickname no longer applies. Speaking to CNBC, he said price drops that have been ongoing this year at Amazon’s Whole Foods subsidiary will carry on apace.
“We’re going to continue to lower our prices over time at Whole Foods,” Mackey told the network. “Cut our costs, lower prices, get more business, lower prices, cut costs — I think we’re in a virtuous circle right now.”
Mackey said the chain has taken a long hard look at its operations to find more cost reductions. He added that the process has become easier under the umbrella of Amazon, which bought Whole Foods in 2017.
“Amazon’s brought new critical tools to Whole Foods to help us think it through — to cut down our shrink, cut down our spoilage, cut down our theft that’s occurring,” Mackey said. “We’re just bringing a more critical eye to our costs at Whole Foods.”
The chain’s planned additional changes include greater automation and self-checkout opportunities that Mackey said would boost the consumer experience and bring down Whole Foods’ operating costs.
Grocery Delivery Firm Weee! Has A Big Year
Distinctively named grocery-delivery startup Weee! has had an unbelievable and unexpectedly good year so far. The five-year-old startup, which focuses on Asian groceries, has seen 600 percent year-over-year growth. It serves roughly 120,000 households across nine major markets and recently expanded into San Diego, Portland, New York City and New Jersey. The firm also staged a $35 million Series C financing round led by DST Global.
“We’re very inclusive,” founder and CEO Larry Liu told PYMNTS in a recent conversation. “Anyone who has an interest in specialty Asian products can find what they are looking for. And we also offer staples — things that can be found in mainstream supermarkets — so our customers can shop here as a one-stop destination.”
Liu said Weee! focuses on products of interest to Asian-Americans “because that’s a very underserved community. People often have to drive hours to get what they want, and the shopping experience at ethnic grocery markets is not ideal.”
He said the pandemic caused business to spike, which pushed Weee! to seek fresh funding so that it can keep up with its sudden, rapidly-expanding consumer count. The money will help Weee! bring on staff and build out additional infrastructure necessary to serve its growing customer base.
The Grocery Buying Boom Slows Down
But will the grocery customer base really keep growing? New Nielsen data out this week found that Americans might finally feel they have enough beans on their shelves for the COVID crisis.
Nielsen found that the biggest spike in the U.S. grocery buying has passed, as food and beverage sales grew just 11.5 percent in August vs. 31.2 percent in March. The firm also discovered that online sales have also pulled back some, with delivery and curbside pickup sales totaling $5.7 billion in August, down from $6.6 billion in May and $7.2 billion in June.
The slowdown seems to stem from many sources. For instance, U.S. government stimulus checks have largely been expended, while $600-a-week enhanced unemployment benefits have also expired. Experts told CNN that might be exerting some downward pressure on the segment.
But more importantly, Americans simply seem to have conquered their instinct to squirrel away products amid the pandemic. “People aren’t hoarding,” Katie Thomas, head of the Global Consumer Institute at Kearney, a strategy and management consulting firm, told CNN. “They’re not stocking up on products like they were.”
Still, The Battle For Business Goes On
Slowdown or not, most analysts forecast that grocery sales will remain elevated through 2020’s end — though perhaps not to the unprecedented degree seen early in the pandemic.
That means the race to capture consumers’ grocery spend will remain intense as more and more players try to snap it up. And we’ll keep you posted on their progress here, in the PYMNTS weekly grocery industry round-up.
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