SEATTLE – Amazon.com Inc. is expanding its reach into the food business by opening new grocery stores. The Wall Street Journal reports that the first store is set to open in Los Angeles, with rumors of other locations in San Francisco, Seattle, Chicago and Philadelphia.
The new grocery stores would offer a larger variety of products than those at Whole Foods and prioritize pick-up and customer service. The new chain, which may or may not hold the Amazon name in its title, pursues the company’s mission to build out a physical grocery presence.
Sources say that Amazon is looking to acquire regional grocery chains with at least a dozen stores in operation that could support the new chain’s launch, as well as occupied stores with leases ending soon. And it wouldn’t compete with Whole Foods, and instead, offer a greater variety of options at lower prices without restrictions.
The grocery industry is worth $750 billion—and Amazon is increasingly encroaching on that market, especially with its purchase of Whole Foods and fast release of cashless Amazon Go stores. “The Whole Foods purchase gave Amazon the education it needed to expand,” said Bob Phibbs, CEO of consultancy The Retail Doctor, to USA Today.
“Ninety percent of groceries are still sold in brick-and-mortar,” Phibbs said. “Now, they can take that (information) and leverage that. It’s taking all their knowledge and data and having more of a laboratory that makes them more money ... If I were Kroger, I wouldn’t be sleeping tonight.”