Amazon, the world’s largest online retailer, plans to open brick-and-mortar grocery stores in select cities in the United States, likely by the end of the year, The Guardian is reporting.
Reports emerged this week that the company, which already owns upscale grocer Whole Foods, is “in talks” with owners of shopping centers to open dozens of grocery stores in major U.S. cities such as San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia. Already, the company hopes to have a store open in Los Angeles by the end of this year and has signed leases for two more stores to be open by early next year.
The Amazon grocery store is not expected to compete against Whole Foods, reports say. Whole Foods is an upscale grocer with high price points, putting it out of reach for many American consumers. It remains unclear if Amazon intends to mimic the Whole Foods strategy of offering expensive goods in an upscale environment, or if it plans to go after its biggest competitor, Walmart, in offering its products at discount prices.
Already, Walmart is preparing for the competition, according to an anonymous source within the company. Specifically, the company has been aware of Amazon’s plans for as much as two years and has been making moves to be able to counter the competition.
“Their [Amazon’s] ambitions in this space have been known for a long time.”
Amazon plans to open a grocery store in Los Angeles before year-end, a new push into the food business that's distinct from its upscale Whole Foods chain https://t.co/JBbQstC3uq— The Wall Street Journal (@WSJ) March 1, 2019
To that end, Walmart is not only moving things around to accommodate the competition but is also updating its purchase and delivery options to keep up with the changing ways in which customers shop. Specifically, the company plans to offer BOPIS (Buy Online Pick Up In Store) grocery shopping at 3,100 stores by January. Further, the company plans to increase the number of stores that provide delivery by 800, bringing the total number of Walmart stores across the country that have delivery options to about 1,600.
Meanwhile, it’s not just its own stores that Amazon plans to open. The company is also reportedly looking into purchasing smaller, regional grocery chains that operate at least a dozen stores. It remains unclear, as of this writing, if those stores will be rebranded under the Amazon brand, or will, like Whole Foods, retain their own names while owned by Amazon.
After over a decade dominating the online retail industry, Amazon in 2018 made the move into brick-and-mortar stores, seemingly bucking the trend of moving away from shopping done in a physical space. As Forbes reported in December 2018, there were several reasons for this, including allowing the retailer to move into the fashion game.