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Amazon (AMZN) to Expand Cashierless 'Go' Store in New York

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Amazon.com Inc.’s (AMZN - Free Report) expansion strategy has been in full swing to take on the grocery retail space. The company plans to expand its checkout-free grocery store, Amazon Go, in New York.

Though much detail has not been released yet, the convenience store will offer all kinds of perishable items and grocery.

It started bolstering its presence in the grocery market following the Whole Foods acquisition. Notably, the first Amazon Go was established in Seattle in the beginning of this year. Reportedly, the company is planning to set up more Amazon Go stores in cities like Los Angeles, San Francisco and Chicago.

Markedly, the latest move of Amazon will expand its market share in this rapidly growing grocery space.

Stock Performance

Amazon is one of the largest online retailers in the world, with extensive operations in North America. Although its primary product line was of books, it has diversified into a host of other product categories and now wants to establish a global presence.

Shares of Amazon have outperformed its industry on a 12-month basis. The stock has registered a gain of 99.6% compared with the industry’s growth of 38.1% in the said period.

 

Cashierless Store Technology Gains Momentum

With the expansion of its brick-and-mortar grocery stores, Amazon aims at making an average office goers’ life easier in today’s fast-paced world by allowing them to grab whatever food item they want.

Its“Just Walk Out” technology uses machine learning and cameras to automatically detect the picked-up products. Once the shopping is done, one can simply leave the store. After a while, money will be charged online from the Amazon account of the customer.

The technology has been gaining a lot of momentum as it eliminates checkout queues, one of the frustrating parts of shopping in store, saving shoppers a lot of time and effort. The company definitely has first-mover advantage with this system.

Amazon’s efforts to bolster its physical presence in the retail space are providing it with a competitive edge against the local stores. Notably, these local stores are already reeling under competitive pressure related to price and delivery, owing to Amazon’s online presence.

We believe the company is wellpoised to rapidly penetrate into the U.S. grocery retail market with the aid of the above-mentioned endeavors.

Moreover, Amazon strengthened its physical presence by opening its third bookstore in the Bay Area a few months ago. The company has around 15 offline stores, while three have a work-in-progress status.

Strong Market Growth

Per a report from Statista, revenues in the U.S. food and beverages market are expected at a CAGR of 12.5% between 2018 and 2022, and to reach $25.98 billion by 2022. Further, revenues in this particular market are projected at $16.2 billion for 2018.

In addition, according to the latest report from Mordor Intelligence, the global retail industry is anticipated to record a CAGR of 5.3% between 2018 and 2023, and to reach $31.9 trillion by 2023.

Amazon’s focus on expanding its physical presence, robust fast delivery services and improving product offerings will continue to strengthen the company’s market share in the highly growing retail market.

Amazon.com, Inc. Price and Consensus

 

Amazon.com, Inc. Price and Consensus | Amazon.com, Inc. Quote

Zacks Rank & Other Stocks to Consider

Amazon currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same industry include Infineon Technologies AG (IFNNY - Free Report) , ON Semiconductor Corporation (ON - Free Report) and Rambus Inc. (RMBS - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Infineon Technologies, ON Semiconductor and Rambus is currently projected to be 7.5%, 13.2% and 10%, respectively.

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