Amazon CEO To Wait And See If Store Remodels Produce Desired Results

Amazon
AMZN
CEO Andy Jassy said in February that the company would not open any more Amazon Fresh stores until it came up with a concept that resonated with consumers and produced financial results that justified expansion. Two newly remodeled stores in the suburbs of Chicago seem unlikely to change Jassy’s mind about lifting the freeze any time soon.

The stores in Schaumburg and Oak Lawn, Ill., broadly include tweaks that are standard offers at many grocery competitors. Amazon’s me-too approach to designing and running the locations suggests that any forthcoming improvements will likely deliver minor incremental gains at best.

The remodeled locations feature Krispy Kreme Doughnut shops near the store entrance where customers can pick up their favorite baked items and get hot and iced coffee, espresso drinks and frozen lattes. The shops are the first of their kind to be located inside Amazon Fresh stores, even though similar concepts inside grocery stores are common throughout the U.S.

Amazon is emphasizing selection more as it seeks to bring the joy of new product discovery to its customers’ shopping experiences.

Claire Peters, worldwide vice president of Amazon Fresh, wrote in a company blog on Tuesday that the remodeled stores contain 1,500 additional national and private label items with most of the new additions in dairy, snacks, health, home care, and baking products.

Because it’s Amazon, technology is part of the story. The remodeled stores will feature updated versions of Dash
DASH
Cart, enabling Prime members to purchase goods without stopping at a checkout register. Amazon has also added self-checkouts in the store to give customers another option for completing their shopping trips.

Jassy, speaking yesterday on the company’s second-quarter earnings call, said Amazon Fresh had made progress in cost structure and in-stock levels.

Amazon Fresh laid off hundreds of “zone leads” in its stores last week. The zone leads were responsible for managing specific departments within the chain’s stores, including oversight of the on-shelf availability of products.

Jassy said Amazon Fresh was focused on finding a store format that connects with customers. He said the remodeled Chicagoland stores and others planned for the Southern California market will help the company assess whether it is on the right track.

“We’re hopeful that we will find that format and that it gives us the type of results that give us confidence to want to expand more broadly. But we won’t expand unless we see that type of resonance. We’re not just going to be undisciplined. We’re going to be thoughtful and disciplined about it,” said Jassy.