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Kennedy: Amazon Go stores unlikely to kill convenience stores

Kennedy: Amazon Go stores unlikely to kill convenience stores

Kennedy: Amazon Go stores unlikely to kill convenience stores
Photographer: Rocky Grimes / Shutterstock.com

Cue the ominous theme song from “Jaws” (duun-dun … duun-dun … duun-dun duun-dun …) as another industry looks over its shoulder to see whether Amazon is gaining.

This time, retail observers say it’s the convenience store sector on which the online behemoth – with brick-and-mortar designs – has a bead.

They cite a Bloomberg report last fall that Amazon Go plans 3,000 cashier-less food stores by 2021, and the analyst note last week that suggested gas stations would give Amazon additional locations for Go stores or customer pickup “lockers,” while providing a reliable new revenue stream in gasoline.

Replicating the quick-food and fuel sales central to convenience stores would take a giant shark-sized bite out the sector, they say.

An industry spokesman, though, is more sanguine.

“The movement of Amazon and all the other entrants into convenience … shows the value of convenience [stores],” said Jeff Lenard, vice president of strategic industry initiatives for NACS, founded as the National Association of Convenience Stores.

“Brick-and-mortar is still faster than the Internet to quench a thirst or feed a hunger.”

The trade group, based in suburban Washington, D.C., counts some 155,000 convenience stores nationwide. Together, they sell more than three-quarters of the fuel purchased in the country.

For 2018, both fuel gallons sold and in-store sales increased, according to NACS, making 85 percent of convenience store operators surveyed optimistic about 2019 first-quarter revenue – the highest showing in five years. Food led the strong in-store growth last year.

Lenard said the “cool technology” from Amazon – the new Go stores rely on a smartphone app to check you in, tally your purchases and let you leave at will, later charging your Amazon account for what you bought – has everyone’s attention.

But he said Go stores are different from convenience stores because they have limited daily hours, some are closed on weekends, and they don’t sell fuel or tobacco and other restricted products.
To Lenard, they’re more akin to a quick-service restaurant, a view shared by other Amazon-watchers.

Indeed, RBC Capital Markets, in a research report this earlier week, pronounced Go more of a threat to urban “quick eateries” than to suburban convenience stores, according to a story in Supermarket News.

Right now, Go stores operate in Seattle, San Francisco and Chicago; New York City is on tap, too, although no timetable has been announced.

If nothing else, Lenard said, Amazon’s technology shows “that things are changing and that retail is alive and well.”

But he cautioned that “boring retail will be in trouble.”

Lenard, who hails from eastern New York, said he was familiar with Stewart’s Shops, the homegrown convenience chain that has been investing heavily of late in new stores and expanded food offerings.

“Stewart’s and every other retailer will succeed by making the shopping experience fast, interesting and convenient,” he said.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

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