Amazon Revamps Grocery Business to Compete With Walmart and Kroger

Amazon is reportedly overhauling its grocery operations to compete on that front with rival Walmart.

Changes on tap include updated stores, a warehouse automation pilot and offering fresh food delivery to non-Prime members, Bloomberg News reported Wednesday (Aug. 2).

Meanwhile, Amazon will also merge its eCommerce grocery offerings — Whole Foods, its supermarket chain Amazon Fresh and its main website — into a single online cart.

Tony Hoggett, SVP Worldwide Grocery Stores at Amazon, told Bloomberg it’s part of a plan to turn Amazon from a niche grocer into a shopping destination.

“We’re serious about grocery,” he said. “Our plan is on building this really strong grocery relationship with customers over time.”

Beginning Wednesday, the report said, Amazon will start inviting consumers without Prime subscriptions in a dozen cities to order groceries online from Amazon Fresh stores and warehouses. The plan is to make the offer standard nationwide by year’s end and in the future include products from Whole Foods and other grocers.

As PYMNTS reported in April, comments from Amazon CEO Andy Jassy during an earnings call may have hinted at this outcome.

“If you really want to serve as much of grocery as we’d like to, you have to have a mass physical offering, and that’s what we’ve been working on for a few years with the brand we’ve called Amazon Fresh,” Jassy said.

“We wish we were further along at this point. We’ve tried lots of ideas. We haven’t yet found conviction around the format that we want to expand much more broadly.”

The CEO added that Amazon has “a set of experiments and ideas and concepts” that it is working on across its “dozens” of mass-market brick-and-mortar stores.

“This year, it has been getting clearer that the company has lost its conviction concerning the Fresh brand,” PYMNTS wrote, noting reports of stores intended to be Amazon Fresh locations sitting empty.

Research by PYMNTS has shown that grocery purchases are one area where Amazon routinely trails its rival Walmart, as evidenced by the two companies’ recent sales events: Walmart’s Walmart+ Week and Amazon’s Prime Day, which overlapped last month.

Walmart shoppers spent twice as much as Amazon customers, with that spending heavily concentrated on groceries, 52% compared to 45% in 2022. By contrast, just 21% of Amazon Prime subscribers purchased groceries.

“Still, Amazon stands to benefit from consumers’ increasing adoption of eCommerce grocery options,” PYMNTS wrote last month.

Data from our study “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services (AWS), found that 32% of shoppers are very or extremely likely to up their online grocery purchases in the next year.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.