Why Amazon's bigger Go grocery stores matter

With the opening of its first large-format cashier-less grocery store in Seattle on Tuesday, Amazon is on its way to further expanding its physical footprint across U.S. cities.

The big picture: Amazon’s 2017 purchase of Whole Foods was never the end of its grocery ambitions — or its fight to win a bigger share of the whopping $700 billion per year American grocery industry. With its own network of stores, Amazon could attract shoppers looking for cheaper prices than Whole Foods and dramatically grow its brick-and-mortar reach.

Background: Walmart has long been the dominant player in the grocery business, with 50% of greater market share in 203 American cities and towns.

• And while Amazon has made recent moves in the industry — buying Whole Foods' 470 stores and opening a handful of Go stores in big metros — its footprint doesn't come close to rivaling Walmart's network of 4,700 stores.

Now, Amazon has figured out how to scale its cashier-less technology to work in a new Seattle location that — at over 10,000 square feet — is five times the size of a typical Go store.

• The stores will help Amazon get even further ahead of its competitors on speedy delivery, as they can serve as warehouses for fresh food.

• The bigger, tech-infused stores will also be data collection machines for Amazon, feeding the tech giant information on how different neighborhoods shop and what they eat.
• And Amazon has already said it will work on packaging and selling its cashier-less tech to other stores.

The bottom line: We shop for food more often than anything else, and grocery stores are essential in every city. Walmart's ubiquitousness in American life is thanks to the relationship it has built with its shoppers through groceries — and now Amazon may begin to shake that dominance.