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Amazon looks to grocery as ‘big growth opportunity’ amid growth concerns

Supermarket News, Brian Wilson

Company’s CEO tells investors it will get through tough time like it did in 2008-2009

Tough times appear to be the first sign of good times for Amazon. The mega company’s CEO Andy Jassy wrote a letter to investors comparing the financial crisis to today’s challenges.

During the financial crisis of 2008-2009 Amazon leaned hard on the cloud computing sector, and to get through trouble waters now Jassy told investors the keys will be grocery, healthcare and satellites.

Jassy said Amazon Web Services is generating $85 billion annually and continues to be profitable, and he is optimistic Amazon will emerge from “this challenging macroeconomic time” in a stronger position.

As for the grocery sector, Jassy wrote in the letter that the company is working hard to identify and build the right mass grocery format for Amazon scale. “Grocery is a big growth opportunity,” he said.

Jassy also addressed the Whole Foods network of stores, stating that it is on an encouraging path but for the company to have a larger impact on physical grocery a mass grocery format needs to be discovered.

Yahoo! Finance interviewed Poonam Goya, who is a senior e-commerce and athleisure for Bloomberg Intelligence. Goya pointed out that Amazon owns a tiny piece of the grocery sector and could be looking to grow their footprint through acquisitions, organically or through a partner. Goya said Amazon just does not have the expertise to build the grocery business with scale.

In late March, Amazon announced it was going to layoff 9,000 employees, which would increase the number of pink slips to 27,000 since the start of the year. Back in January, the delivery company set a personal record with 18,000 layoffs at one time. The dark milestone hit Amazon’s grocery sector particularly hard, as a number of layoffs were issued to those linked to Amazon Go and Amazon Fresh.

Amazon also announced that it would permanently close eight of its Amazon Go convenience stores — including two in Seattle.

“Like any physical retailer, we periodically assess our portfolio of stores and make optimization decisions along the way,” an Amazon spokesperson said in an emailed statement. “We remain committed to the Amazon Go format, operate more than 20 Amazon Go stores across the U.S., and will continue to learn which locations and features resonate most with customers as we keep evolving our Amazon Go stores.”

In February, Amazon said it was pausing the rollout of its Amazon Fresh retail stores while it re-evaluated the concept’s economics.



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