It’s not every day that you hear the phrase “grocery store paired with innovation.”
Most grocers and food-staple shops are large legacy retailers that’ve stood the test of time for being stable and reliable. One need only look at the recent self-checkout backlash that’s hit every brand, from Target to Safeway, to determine that customers are pretty resistant to major overhauls.
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The truth of the matter is it’s not that grocery stores resist change; they’re just notoriously thin-margin businesses, so it’s tough to make a buck.
The average brand-name grocer stocks an inordinate amount of individual products (the industry term is stock-keeping units). Often your local grocery store keeps 16,000 and 60,000 SKUs on hand at any time, and since many of those are perishable, it’s crucial that grocery stores get them out the door quickly and restock.
Pair that with typically higher costs of operation (it’s not cheap to leave your freezer section open and running all day long) and changing tastes among consumers, and it’s an expensive operation.
That leaves little time and resources for scale, growth and iteration. Even Costco (COST) and Kroger (KR) , the third and fourth largest retailers in the U.S. respectively, tend to put more effort toward keeping costs low — and customers coming through the door — than they do on making swanky new store innovations.
Trader Joe’s takes on Amazon in new project
That is, of course, unless you’re Amazon (AMZN) , which may technically be considered a grocery company thanks to its 2017 acquisition of Whole Foods Market and its continuing efforts to disrupt grocery both in stores and online.
Its latest efforts have included its Amazon Go and Amazon Fresh stores, which are meant to function like friendly and convenient markets and offer new technology. The tech includes Just Walk Out, which uses artificial intelligence to scan customers’ purchases without them needing to enter a checkout line.
Those efforts have been largely dimmed by consumer resistance to any change to the checkout process, though, and Amazon said on Tuesday it would be largely abandoning its Just Walk Out technology in its new stores.
That has not dissuaded Trader Joe’s, the popular privately owned budget grocery store, from trying its hand at a similar innovation.
Trader Joe’s has opened a first-of-its-kind grab-and-go store, called Pronto, in New York City to replace its 14th Street wine-store location, which shuttered in 2022.
Instead of wine and other alcoholic beverages, Pronto offers a wider variety of convenience items like sandwiches, salads, yogurts, beverages and prepared snacks. Similar to Amazon Go stores, it functions more like a corner store or bodega for busy New York commuters looking to grab just a few items on their way home, for example.
“Trader Joe’s Pronto is a one-of-a-kind extension of our store in Union Square,” a spokesperson for Trader Joe’s said. “This additional space allows us to carry more of the products our customers in this neighborhood purchase daily.”
And unlike most Trader Joe’s outlets, shoppers report “basically no lines” for checkout, since the entire shopping process is streamlined.
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Not everyone is happy, however, about the opening of Pronto. After the wine shop closed in 2022, the United Food and Commercial Workers union filed an unfair labor practice charge, alleging Trader Joe’s shuttered the shop to prevent a union and calling the new Pronto shop a “a giant slap in the face.”
The National Labor Relations Board general counsel has scheduled a hearing for later in 2024. Trader Joe’s, for its part, said that the Pronto shop isn’t slotted to expand elsewhere, at least not yet.
“We do not have plans to open additional Trader Joe’s Pronto markets in New York or elsewhere in the country,” a TJ’s spokesperson said.
