People are eager to return to grocery stores, but Amazon seems to be missing the opportunity.
Stores still matter. Where's Amazon? |
 | | Irene Suosalo |
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Sales at Amazon's stores, mostly from its Whole Foods grocery chain, fell by 15 percent in the first three months of this year compared with the same period in 2020. Those sales have now been declining for a year. |
The numbers from Amazon have gaping holes that make it hard to know exactly what's happening. But we can tell that something isn't quite working. |
Nearly four years after Amazon agreed to a huge deal to buy Whole Foods and a year into a pandemic that played into the tech giant's strengths, it's worth asking two questions: Is Amazon losing in groceries? And why has one of the world's most ambitious and inventive companies mostly been a follower rather than a leader in one of the biggest spending categories for Americans? |
What Amazon does in groceries matters to all Americans, even if we never buy milk and bananas from the company. Consumers and Amazon's competitors consider it to be at the cutting edge of innovation. But that's not the case in groceries — at least not yet. |
Let me backtrack to those falling sales numbers from Amazon's physical stores. The problem is that those numbers don't include the grocery orders that people place online and then pick up at stores or have delivered. Those sales have mushroomed during the pandemic for Amazon and its competitors. |
An Amazon spokesman told me that adding up all of the ways that people are grocery shopping from Whole Foods, including online ordering for pickup or deliveries, shows that the company's sales have been increasing. Amazon doesn't give specifics, however, which is often a sign that the numbers aren't amazing. If Amazon is selling many more groceries than it did before the pandemic — as is the case with Walmart and Target — the company is being uncharacteristically quiet about it. |
This makes me wonder whether Walmart's grocery sales, which increased by 9 percent in the year that ended on Jan. 31, are growing faster than Amazon's. That shouldn't be happening, given both Walmart's mammoth lead over Amazon in grocery sales. |
I'm also going to say something that might sound wacky after a year of manic shopping by clicks: Real life grocery stores still matter. A lot. And that's not a great sign for Amazon. |
Sucharita Kodali, who studies shopping and consumer behavior for the research firm Forrester, recently dug into our pandemic-altered habits and found that many people were eager to roam the grocery aisles again. |
Stores are familiar to navigate, and some people are nostalgic for their old habits, Kodali told me. And many people, according to Forrester's analysis, have been discouraged by botched orders, high prices or other problems with online grocery shopping. |
Many companies, including Amazon, Target and Walmart, also pluck many items for online grocery orders from the regular store shelves. Grocery sellers need their stores for both in-person shopping and the virtual kind. |
Let's see what happens to Amazon in the coming months. Those in-store sales could bounce back as city dwellers near Whole Foods stores come back and as office workers grab prepared meals again. |
But no matter what, Amazon's blah Whole Foods sales are worth paying attention to. They're another sign that something is amiss in what has been 15 years of Amazon's mostly disjointed and unsuccessful strategy in groceries. |
I remain interested in what Amazon does in groceries. But for now, maybe we should pay less attention to Amazon in this area until it shows that whatever it's doing is working. |
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