Amazon is planning to open a new grocery chain, the Wall Street Journal reports. If the project goes as planned, the first location of the new chain could open in Los Angeles as early as this year. The chain would be distinct from Whole Foods Market, which Amazon acquired in 2017 for $13.7 billion.
“Since its marquee grocery acquisition, Amazon has pushed down prices at Whole Foods stores in an effort to net more customers,” writes Grocery Dive. “But refashioning a store commonly known as ‘Whole Paycheck,’ at which analysts noted prices were typically 15 percent higher than the competition, has proven difficult.”
Analysts predict that Amazon’s new chain will be more in line with a traditional supermarket than the natural foods chain.
“If I'm Amazon, I'm thinking of opening a store more conventionally driven, more price-oriented than Whole Foods,” said Neil Stern, senior partner with McMillanDoolittle, tells Grocery Dive.
Analysts note that a brick-and-mortar store will help Amazon carry more big-name brands and build out AmazonFresh. It may also be the prime way for Amazon to collect even more consumer data.
“Amazon has had mixed results with its food-delivery business, and it wants to better understand how it can cater to grocery shoppers,” reports the Wall Street Journal.
The move will also allow the company to roll out more cutting-edge shopping technology, such as the cashierless shopping experience launched at Amazon Go or 30-minute grocery pickup, available at some Whole Foods stores for Amazon Prime customers.
“It is unclear whether these new stores will be cashierless, but they will be heavily tilted to customer service and pickup capabilities,” the Wall Street Journal reports. “Amazon is also looking to have some control over the attached parking lot to speed shoppers’ ability to get groceries.”
Amazon plans to acquire regional grocery chains with at least 12 stores to accelerate growth, note sources close to the company. Stores in the new chain may soon come to major cities including San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia.
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