Amazon is planning to open 260 checkout-free Just Walk Out grocery stores in the UK by the end of 2024, according to a report from Business Insider.

“In 2023 and 2024, we are planning 100 store launches per year, in line with more aggressive opening programmes achieved by convenience stores in the UK in the last five years. Tesco, Sainsbury’s and Co-op have all exceeded 100 openings per year,” Amazon internal documents cited by BI say.

It’s “a typically aggressive and calculated move” says Ross Hindle, retail analyst at Third Bridge. Indeed, adds Miya Knights, co-author of a book about Amazon, setting ambitious targets is “the way it operates”.

But is its lofty expansion plan too hopeful?

Amazon is “highly unlikely” to meet the target, reckons Knights, given it has only opened six Fresh stores in the UK to date (though more are on the way). The rate since launch is one new Fresh store every four weeks. 

“I would contend that Amazon is unlikely to roll out its UK and EU Fresh stores much faster than it has already,” Knights says.

That’s especially unlikely considering this is a relatively new area for Amazon, in which it has had mixed results. Despite dominating e-commerce, its forays into physical grocery haven’t always gone so well. Its acquisition of Whole Foods Market has hardly been a roaring success. According to retail analyst Brittain Ladd, “Amazon has failed to improve Whole Foods, and I believe Amazon should divest the company. Whole Foods has no value to Amazon. Zero.”

The online giant still “needs to learn the merchant curation smarts of the likes of a multiples or department store retailer” adds Knights.

“The Amazon grocery team have made a number of miscalculations that only reflects their relative immaturity when it comes to establishing and running a food store-based business,” she says, “Amazon has proven itself to be a pretty slow learner when it comes to food retail.”

Furthermore, Amazon’s hope that the cost of its Just Walk Out technology will drop by 75% by 2023 – as per the documents seen by BI – also sounds a little optimistic. And its launch of ‘4-star stores’ in the UK and reported department store rollout in the US could be enough to “dilute its food focus”, Knights adds. Even online “the pace of sales growth [in grocery] hasn’t been as fast-paced as some might have expected” says Hindle.

Although the store rollout plan may be somewhat unrealistic, only the very brave would question Amazon’s commitment to and chances of success at anything, including grocery.

The appointment of Tesco veteran Tony Hoggett in July, to head up its international stores arm, will bring it some much-needed grocery experience and pragmatism.

That the company was first with Just Walk Out tech is “in all actuality, a massive embarrassment” to the big four, says Ladd. And “unfortunately for the grocery industry, Amazon is just getting started”.

Tesco and Sainsbury’s have only started to respond. Tesco with GetGo last month and today Sainsbury’s with soon-to-launch Smartshop Pick & Go (which reportedly uses tech supplied by Amazon).

Tech aside, consumer research by TWC indicates Amazon “could make a substantial share steal of the grocery market and that supermarkets may start to lose dominance, especially with the younger generation and more affluent shoppers”.

“Most impressive is the knowledge Amazon has on its customers, which all comes from an obsession to gather, analyse and interpret data. This is something which many people in retail overlook,” says TWC development director Tom Fender.

What’s more, unlike its competitors, Amazon doesn’t even need grocery to survive. There is no rush. It can take as much time as it needs.

“Growing a brick-and-mortar retail presence is Amazon’s way of bringing more people into their online ecosystem and ultimately driving overall sales,” says Hindle. “The data shows that when Amazon gains a customer through their grocery channel or an existing customer opts for grocery, those customers bring in, by far, the highest lifetime value for the business.”

Eventually, there is real potential Amazon could overtake Tesco in grocery sales, says Ladd: “Think it can’t happen? Think again.”

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