The first of the stores will open in Los Angeles as early as the end of 2019, and Amazon is in talks to open locations in shopping centers in San Francisco, Seattle, Chicago, Washington D.C. and Philadelphia, the Journal reported.
Amazon plans to open dozens of grocery stores in U.S. cities, The Wall Street Journal reported, citing unnamed sources, a move that would expand the retail and technology giant’s grocery footprint beyond its Whole Foods Market chain.
The first of these stores will open in Los Angeles as early as the end of 2019, and Amazon is in talks to open locations in shopping centers in San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia, according to people familiar with the matter cited in the Journal report. The company is also exploring the idea of purchasing regional grocery stores, the paper said.
The Seattle-based company, which has been experimenting with online delivery of groceries for more than a decade, got into brick-and-mortar food retail with its 2017 purchase of organic grocer Whole Foods. Amazon has also expanded Amazon Go, its cashierless convenience store concept, to 10 stores. People familiar with the matter said last year that the company planned to open as many as 3,000 of the so-far small-format stores, including up to 50 in 2019.
Amazon declined to comment on the Journal report.
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Shares of food retailers all fell on the news. Kroger, the nation’s biggest traditional grocery chain, closed down 4.5 percent Friday, while Walmart declined 1.1 percent. Target and Costco Wholesale also fell before recouping their losses. Amazon stock closed up nearly 2 percent.
Amazon’s $13.7 billion purchase of Whole Foods signaled the company’s intent to break into the $840 billion grocery market but left it at a scale well below the likes of market leader Walmart, which operates 4,750 grocery stores.
Some analysts saw Whole Foods, which stocks a limited selection of items in contrast to Amazon’s preference for selling a wider range of items, as a starting point for Amazon in physical grocery retail. The company has since started delivering groceries from the shelves of Whole Foods locations across the U.S.
Lisa Sedlar, former president and CEO of the Portland-based New Seasons Market chain and a Whole Foods purchasing director before that, said Amazon is missing out on a significant portion of the grocery market with Whole Foods. New Seasons, with two Seattle-area locations, stocks local and organic products alongside mainstream items.
“Just purely natural and organic can be polarizing, and you miss trips. You don’t necessarily satisfy the eater,” said Sedlar, who is founder and CEO of Portland-based Green Zebra Grocery, a small-format retail concept with three stores in Portland and plans to expand to Seattle. “Coke and Diet Coke sell very well in my little store format, and we are mostly natural and organic,” she added.
Repositioning Whole Foods to carry more mainline products “would be a disaster” that could alienate the chain’s core customers, Sedlar said.
With Amazon’s apparent move toward a second, more conventional grocery brand, big mainstream grocers “should be scared,” Sedlar said. “The big stores have been doing the same thing for the last 10 years basically,” she said, calling the in-store experience “kind of boring.”
Food has not been a strength for Amazon thus far, she said. But if Amazon can replicate something like the bricks-and-mortar shopping experience of its physical bookstores in the new grocery brand, “they have a good chance of taking a lot of business away from the other big boxes,” Sedlar said.
Seattle Times business reporter Benjamin Romano contributed to this report with the interview with Green Zebra’s Lisa Sedlar.