In a bid to bolster presence in the grocery retail space, Amazon (NASDAQ:AMZN) has rolled out its second cashierless store, Amazon Go, in Seattle. Notably, the first Amazon Go was also established in Seattle in the beginning of this year.
The new store will stock ready-to-eat food items like salads, sandwiches and wraps as well as Amazon meal kits. Further, there will be racks of quick eatables like candies, chocolates, chips and other snack items.
Per a report from Statista, revenues in the U.S. food and beverages market are expected to grow at a CAGR of 12.5% between 2018 and 2022 and to reach $25.98 billion by 2022. Further, revenues in this particular market are projected at $16.2 billion for 2018.
We note that the latest move of the company will strengthen its footprint in this rapidly growing market.
Coming to the price performance, shares of Amazon have returned 64.9% on a year-to-date basis, outperforming the industry’s rally of 33.4%.
Strengthening Physical Presence
Amazon’s efforts to bolster physical presence in the retail space are providing it with a competitive edge against the local stores. Notably, these local Amazon stores are already reeling under competitive pressure related to price and delivery owing to AMZN’s online presence.
With the second brick-and-mortar grocery store, Amazon aims at making an average office goers’ life easier in today’s fast-paced world by allowing them to just grab whatever food item they want.
The company wants to provide hassle-free food items which are ready-to-eat and can be purchased without standing in a queue due to its cashierless facility. This will consequently save a lot of time.
Reportedly, the company is planning to set up more Amazon Go stores in cities like Los Angeles, San Francisco and Chicago.
The company started bolstering its presence in the grocery market following the Whole Foods acquisition.
We believe the company is well-poised to rapidly penetrate the U.S. grocery retail market with the aid of the above-mentioned endeavors.
Further, Amazon recently clinched a partnership deal with Best Buy (NYSE:BBY) for its Fire TV. This will provide a brick-and-mortar showroom to Amazon, and will aid in providing a better hands-on experience to customers for its latest smart TV.
Moreover, the company strengthened its physical presence by opening its third bookstore in the Bay Area few months ago. The company has around 15 offline stores, while three have a work-in-progress status.
The e-commerce giant’s aggressive retail strategies will help it in reaping benefits from the rapidly growing retail market.
According to the latest report from Mordor Intelligence, the global retail industry is anticipated to witness a CAGR of 5.3% between 2018 and 2023 and to reach $31.9 trillion by 2023.
Expanding physical presence, robust fast delivery services and improving product offerings will continue to strengthen its competitive position against the retail giants such as Walmart (NYSE:WMT) and Target (NYSE:TGT).
Moreover, this will continue to strengthen its market share in the highly growing retail market.
Currently, Amazon sports a Zacks Rank #1 (Strong Buy).
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