Amazon, the online retailer long feared to disrupt the grocery sector, has yet to find the right formula in its supermarket bet, its chief executive Andy Jassy said on Thursday (2), adding that its operating profit could fall to zero in the current quarter.
“We’re not going to expand the physical Fresh stores until we have that equation, with differentiation and economic value that we like, but we’re optimistic that we’re going to find that in 2023,” Jassy said.
Savings from layoffs do not make up for the financial impact of consumers and cloud customers clamping down on spending, Jassy said.
And while Amazon’s holiday revenue beat Wall Street’s expectations, the company believes sales growth in its long-lucrative cloud business will slow for the next few quarters, its chief financial officer told reporters.
The remarks show how Amazon, which just a year ago said it would close its bookstores to focus on grocery, has yet to dominate brick-and-mortar retail since its closely watched acquisition of Whole Foods Market in 2017. Amazon has long viewed grocery as a key to unlock more consumer spending.
Michael Pachter, an analyst with Wedbush Securities, said Amazon has itself to blame, having drawn consumers to online shopping decades ago.
“Retail is a tough business,” he said. “They are flushing money down a toilet pursuing Amazon Fresh stores” and thinking “they can brand a new concept and capture share from retailers who have been successful for decades.”
Jassy said the future of grocery was both online and offline, or omnichannel.
He said Whole Foods is growing and remains on top for premium, organic grocery, but Amazon’s mass-appeal offering needed work.
The company has a few dozen Amazon Fresh stores so far, Jassy said. It has also experimented with technology that bills shoppers for what they take from a store without having to pass by a cash register.
To use this website you must be aged 18 years or over. Please verify your age before entering the site.
