Amazon (AMZN, Financial) has announced plans to test mini robotic warehouses at Whole Foods locations. The initiative aims to attract more customers to its stores and provide a competitive edge against other grocery retailers. A micro-distribution center is being established in Plymouth Meeting, near Philadelphia, and will be operational next year. This facility will allow shoppers to order from Amazon’s website and its Amazon Fresh service while browsing Whole Foods, with in-store pickup available at checkout.
During a press event near an Amazon warehouse in Nashville, Anand Varadarajan, head of Amazon’s global grocery business product and technology team, demonstrated a model of the completed facility. This small automated warehouse will be attached to Whole Foods, where robots will pick and transport items such as socks, soda bottles, and tennis rackets, preparing them for customer pickup.
This setup will enable shoppers to purchase essentials like PepsiCo products and Kellogg's cereals, which Whole Foods does not offer, leveraging Amazon’s extensive online inventory. Amazon intends to minimize the need for shoppers to visit multiple grocery stores, a common practice in the US as per a study by Drive Research.
Varadarajan highlighted that while customers visit Whole Foods for natural and organic products, many still shop elsewhere for everyday groceries. The micro-distribution centers aim to reduce the necessity of shopping at different stores or placing multiple online orders.
Amazon has been striving to capture a larger share of the grocery market, a category where Americans spend more than on other verticals like apparel or electronics. Nonetheless, it faces fierce competition from established players such as Walmart (WMT), Kroger (KR), and Albertsons (ACI), as well as regional grocery chains.
In 2017, Amazon acquired Whole Foods for $13.7 billion, a deal far surpassing any of its previous transactions. The company has since rolled out various grocery services, including delivery and its supermarket chain Amazon Fresh, targeting a broad customer base. CEO Andy Jassy noted the growth in sales of everyday essentials like paper towels and dish soap, reflecting Amazon's influence in the grocery sector.
