Amazon Fresh store in Los Angeles neighborhood of Woodland Hills
In February, Amazon CEO Andy Jassy said his company was hitting pause on opening up new Fresh supermarkets and Go convenience stores while closing some underperforming locations.
It was all part of a broader belt-tightening campaign at Amazon and seemed to point to a pullback in the company’s multiyear and multibillion-dollar foray into brick-and-mortar grocery stores.
But Claire Peters says there’s no retreat underway.
Peters, a 28-year veteran of the retail industry who most recently served as an executive at Australian supermarket giant Woolworths, was hired in February as vice president of retail at Amazon. Peters now oversees Amazon Fresh and reports to ex-Tesco executive Tony Hoggett, who leads Amazon’s physical stores business.
Peters was in Los Angeles this week for the grand reopening of three Amazon Fresh stores, a brand the company launched during the Covid pandemic to reach more of a mass-market audience than Whole Foods. For the revamp, Amazon put in about 3,000 new products to expand the selection after hearing from customers that it was falling short in some categories.
In an interview with CNBC, Peters acknowledged that Amazon has “more work to do” to win over customers, but that it’s laser focused on making the grocery shopping experience more enjoyable and delightful for people. She said the company is as committed as ever to winning its share of the $1.32 trillion U.S. grocery market. Amazon is currently second in the online grocery market, behind only Walmart.
To succeed in a business that’s far afield from its online retail roots, Amazon can’t just rest on its brand recognition, but has to provide services that give consumers a reason to choose its stores over the competition.
Shoppers check out the sale items as they wait in line for the new Amazon Fresh store to open on E. Colorado Blvd in Pasadena, CA Thursday, September 15, 2022.
Medianews Group/los Angeles Daily News Via Getty Images | Medianews Group | Getty Images
“I’m not naïve in that people are going to love Amazon,” Peters said, at the reopening of the Fresh store in the L.A. neighborhood of Woodland Hills. The store is at a former Toys R Us location in a strip mall with a Citibank branch and an Office Depot.
“But do I want them to love us as in actually, ‘They take all that pain out of my shopping,’ ‘They must be reading my mind,’ ‘Gosh that’s such an irritation to take my returns back after Christmas,'” Peters said. “I want us to get rid of all of them, and if there’s one company who can do that, it’s this one.”
As part of Amazon’s broader grocery strategy change, some key executives were moved to other parts of the company. Dilip Kumar, who previously oversaw physical retail and technology, moved to oversee retail technology within Amazon Web Services. And Stephenie Landry, a former vice president of grocery, moved to the sustainability organization.
In addition to the Woodland Hills Fresh store, Amazon reopened locations in nearby Pasadena and Irvine this week, after redesigning two Chicago-area Fresh stores in August.
With Thanksgiving just around the corner, Peters gave an example of how the stores had been limited prior to the upgrade. Customers could buy a turkey, Peters said, but struggled to find other key menu items like cranberry sauce or pumpkin pie filling.
Some of its new assortment of products came from the company’s robust portfolio of private-label brands. Many of those brands, such as Happy Belly English muffins and Aplenty potato chips, have been sold online by Amazon for years,
The store revamps weren’t just about adding popular items. Amazon had also heard from some customers that the Fresh stores were cold and uninviting, Peters said. So, it redesigned the look and feel, adding better signage and things like recipe tips near products.
In the Woodland Hills store, the company removed the meat and seafood counter in favor of more packaged options based on customer feedback, Peters said. It also added self-checkout lanes and Krispy Kreme donut and coffee stalls near the front of the store.
Amazon Fresh store in Los Angeles neighborhood of Woodland Hills
‘Where’s the butter located?’
Amazon’s grocery push has been many years in the making. The company first launched its Fresh grocery delivery service in 2007, then introduced a smattering of concepts over the next decade, some of which didn’t survive. Its boldest step came in 2017, when founder Jeff Bezos spearheaded the $13.7 billion purchase of Whole Foods. A year later, Amazon launched a line of Go cashier-less convenience stores.
On Thursday, Amazon said it’s opening the Fresh grocery delivery service to everyone in the U.S., after trials in a handful of cities. Amazon plans to expand delivery and free pickup from Whole Foods stores soon. Delivery fees for non-Prime members range from $7.95 to $13.95, depending on order size.
Amazon has brought aspects of its online stores to the Fresh locations. Walking down the snack aisle in Woodland Hills, there’s a digital sign guiding shoppers to the crackers section. The sign has the word “Sponsored,” like a display ad on the website, and features a promotion for Annie’s Honey Grahams. Members of Amazon’s $139-a-year Prime loyalty club can now get special discounts on items throughout the store, after that benefit was limited to some product categories.
Other uses of Amazon technology include Alexa-powered smart displays, which answer questions like, “Where’s the butter located?” or “What are the bestselling items in the store?” Shoppers can use Amazon’s tech-enabled Dash Carts to skip the checkout line.
Peters said Amazon is also testing another concept, called micro-fulfillment centers, or micro FCs. Featuring a range of products across all of Amazon’s retail offerings, the small, automated warehouses are bolted onto a physical store, allowing for quicker online order fulfillment and a broader range of inventory.
For now, Peters said, Amazon is focused more on nailing the basics.
“We have to make sure we really dial up our fresh credentials because we wouldn’t want customers to think our steak, our milk, our eggs, all our very strong food safety standards, were placed next to a book in the same distribution center,” she said. “My vision is actually the omnichannel vision of how we bring that together.”
WATCH: Amazon links One Medical to Prime offering
Don’t miss these stories from CNBC PRO: