Amazon Fresh: Is it a Bar or a Restaurant??

Amazon is simply exceptional at executing strategy. Please note, I did not say a great company. When Sam Walton created the first Walmart, which opened in 1962 (Bentonville, AR.), the same year as Target (Roseville, MN.) and K-Mart (San Fernando, CA.) was founded, few could foresee the crumbling of small-town retail infrastructure that would occur in the decades that followed. Year after year, as Walmart and Target and Kmart sucked the marrow out of small towns as these newer and larger stores built on cheap(er) land on the outskirts of these same towns.

Don't get me wrong; it takes two to tango. Shoppers LOVED the convenience of browsing one store, with one shopping cart, with one car trip while taking kids out of and placing them back into cars just one time. Driving to multiple locations with all of the stops and starts and traffic and...you get the idea.

Competition drives 4% of the world's population (USA) to have dominated world affairs for the last 100+ years. You may dislike the notion of American exceptionalism or supremacy or imperialism or the foisting democratic values, but no one can deny its influence.

Now we have an upstart, well, a 25-year old (ish) one, named Amazon, that appears to be seeking to take all that it can see, much as Mufasa as the 'King of the Pride Lands' from The Lion King.

When I started shopping at Amazon in the mid-1990's it was for books not available to me at Barnes and Noble (or B. Dalton or Waldenbooks). I look at their website today, and I see Books and Prime Video and Whole Foods and Kindle Books and Amazon Home (not sure what this is) and Pharmacy. This does not mention Amazon Web Service (AWS), which you might be using right now to read this article or watch Netflix or play Fortnite.

My point is that Amazon breaks into markets quickly, recreates iteratively, and invests strategically. It also is willing to cut its losses when something is not working.

Our community in Glenview, Illinois, is the envy of most Chicago suburbs. Just taking ABT as the prime example, nearly $1 billion in sales per year flows through their facility. We have numerous grocery store chains (Jewel-3, Mariano's-2, Heinens, car dealerships, a Target and Costco, a Home Depot, Dick's Sporting Goods, each dropping Sales Taxes into our Village coffers. Glenview has a top-notch bond/credit rating which accrues benefits to every resident here.

No one should be surprised that Amazon sees Glenview as strategically crucial to its future. Amazon will be here in Glenview with a brick-and-mortar solution at some point. It should NOT be at the currently undeveloped corner of Willow-Pfingsten. This corner is exactly the wrong place to iterate a new concept.

Take a moment and close your eyes, and envision the following. Autonomous vehicles dominate the roadways—Amazon trucks with a dozen drones built-in with delivery packages attached. The automated delivery truck senses an imminent collision. In an instant, the delivery drones launch into the air to protect the precious cargo and wait until the danger passes to be captured by the truck OR sets off for the nearest friendly delivery 'port.'

If I told you that Amazon has a vision whereby every one of its retail facilities has a drone port, just as all Level 1 Trauma centers have a heliport for Flight for Life, would you be surprised?

Let's get back to the bar and restaurant analogy. As a rule, for bar and restaurant establishments, community standards have evolved. If a bar/restaurant generates more than 50% of revenue from alcohol sales, it is considered a bar. In my local town of Glenview, Illinois, our government offers twelve different categories of liquor licenses and another five sub-categories under Class 'F'.

To take one example, a Class' F3' license will authorize the consumption of alcohol on-premises as long as: 'such sales shall be limited to members of a group assembled on the premises for the purpose of attending art or crafts classes offered by an art studio, arts and crafts school, or similar leisure/entertainment business.'

Further, 'At least 65 percent of the facility's total annual revenue shall be derived from sources other than the sale of alcoholic beverages and the sale of alcohol shall not be permitted except when the licensee is conducting classes. A certified record of the annual revenue shall be included with the annual liquor license renewal application and shall be considered by the Liquor Commissioner as a basis for non-renewal.'

By now, at least some of you are saying, what in the heck does this have to do with Amazon? The new Amazon Fresh grocery concept is taking shape at recently opened Illinois stores in Bloomingdale (404 W Army Train Road), Naperville (3116 S Route 59), and Schaumburg (16 E Golf Road). These are early iterations. Some have claimed these new concept stores will act as last-mile delivery hubs for Amazon delivery services, similar to Instacart or some future Uber delivery variant. I think that this is a reasonable assumption.

Retail is changing yet again. It might be hard to remember, but Peapod grocery delivery came to market in 1989. In 1996 Peapod became one of the earliest internet start-ups. How cool it all seemed. If you don't drive or have a busy career, or don't want to take screaming children to the grocery, here was Peapod. Sadly. just over a year ago, Peapod announced that it was ceasing operations in the Midwest.

I think of Amazon Fresh as the Apple iPad standing on the shoulders of the Amazon Kindle. Amazon Fresh is standing on the shoulders of Peapod. Amazon has learned, iterated, and re-iterated.

Did you know that Amazon currently has the following retail brick and mortar concepts open TODAY, with Illinois outlets noted:

• Amazon Books – Chicago Southport Corridor
• Amazon 4-star – Oakbrook Center and Old Orchard
• Amazon Fresh – Bloomingdale, Naperville, Schaumburg, Oak Lawn (coming soon)
• Amazon Go – Chicago
• Amazon Go Grocery – Seattle area only
• Amazon POP UP – Old Orchard

Here are the questions on my mind as I think about an Amazon Grocery Store in our community:

• What percentage of sales will be walk-up/drive-up, direct to consumer sales?
• What percentage of sales will be consumer deliveries of product inventory through Instacart or their delivery service(s)?
• Should Amazon and/or Instacart drivers be required to take defensive driving courses or to validate required vehicle insurance coverages? Or, should the Village require delivery drivers to get a permit to operate in our community. Online driver training awareness courses are not burdensome for Amazon or Instacart.
  • (Note: Before the libertarians amongst us take up pitchforks against government regulation, our Village already regulates Businesses, Contractors, Liquor establishments, Peddlers, Special Events & Banners, and Tree Removal. I am simply asking the question.)
• Will or should Amazon (or any similar service in Glenview) be required to report vehicular & pedestrian traffic collisions involving their drivers to police authorities for tracking and annual reporting purposes.
• Should the community have a say in the delivery radius? For example, if a Glenview-based Amazon Fresh delivers past 'the last mile,' say to Kenilworth or Glencoe, or Winnetka or Wilmette are we OK with those sales and added delivery traffic flowing through our roadways. As an aside, few of us seem to object to ABT delivering elsewhere; we gladly accept those tax revenues.
• What is the future of drone delivery? Should the local community have the option to develop a 'code' for allowing, or not, rooftop drone delivery operations in a neighborhood?

My point in all of this is that we do not yet know the future of retail in America, let alone Glenview. As part of the development process, we should be asking forward-thinking questions. Our governmental laws, regulations, and codes will NEVER be able to keep up with the pace of technological evolution. At the same time, we should not simply be spectators in our community as these new forms of commerce, and service delivery come about.

At some point, Amazon will need to answer the question, are you a bar or a restaurant? Or, are you a direct-to-consumer sales entity, OR are you a last-mile warehouse operation with a retail store in the front, or both! Whatever you are, it is in your best interest to not let your developers represent your possible intents. Eventually, Amazon Executives will need to be present in our communities to answer these tough questions. Let's start that effort in the Village of Glenview, Illinois!!

About the Author: Mike Korman is a Father & Husband, retired US Navy Master Chief Seabee and former retail construction executive for Target Corporation.