business news in context, analysis with attitude

by Kevin Coupe

The New York Post has a story saying that Amazon CEO Jeff Bezos is contemplating the creation of "a two-story, automated grocery store in which a staff of robots on the floor upstairs grabs and bags items for shoppers below."

The story goes on: "The ground level of the futuristic prototype — a supermarket-sized version of its recently unveiled 'Amazon Go' convenience store, with a bigger layout that could span anywhere between 10,000 and 40,000 square feet — would be devoted to goods that shoppers typically like to touch ... Those could include as many as 4,000 items, spanning fresh fruits and vegetables, eggs, meats and cheeses, and grab-it-and-go stuff like beer and wine, the sources said. Pharmacies might also might spring up at some of the high-tech locations, as Amazon looks to break into the lucrative sector, insiders said.

"But for many, the most striking feature of the bigger stores is that they could operate with as few as three employees at a time. Sources said the plans call for staff to max out at 10 workers per location during any given shift." All because robotics will be employed wherever and whenever possible, taking on jobs that in the past might've been occupied by actual people.

And, the Post writes, "With the bare-bones payroll, the boost to profits could be huge. Indeed, the prototype being discussed calls for operating profit margins north of 20 percent. That compares with an industry average of just 1.7 percent, according to the Food Marketing Institute. Labor accounts for the lion’s share of a supermarket’s operating costs. In 2015, the industry employed 3.4 million workers nationwide, with an average grocery store employing 89 workers to generate annual sales of more than $2 million, according to the trade group."

All of which may scare the hell out of some folks.

Except for one thing. Amazon denies that it is planning any such store. (The Post is standing by its sources.)

I actually think both may be truthful. It is entirely possible that some of the folks at Amazon, at Bezos' behest, have envisioned such a store ... but that there are no actual plans to build one.

The key lesson here is that Amazon always is thinking about the next frontier, trying to figure out new ways to connect with the customer and disrupt old ways of doing business. Some will be pipe dreams, and some will involve the laying of actual pipe.

But it is always looking forward. That's the Eye-Opener.
KC's View: