According to a recent report in Wall Street Journal, Amazon is considering opening dozens of grocery stores across the U.S. at a cheaper price point than Whole Foods. The first one is slated to be opened in Los Angeles by the end of 2019. Other stores will be opened in shopping centers based in San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia.
With this news, existing grocery stores like Walmart (WMT), Kroger (KR), Target (TGT), BJs (BJ), Costco (COST), and Sprouts (SFM) have all taken a hit.
Amazon has already signed two more leases for other grocery locations by early 2020. It’s not yet confirmed whether these stores will be called Amazon markets, but it will definitely be separate from Whole Foods.
The new stores will have a smaller area of 35,000 square feet than a typical grocery of 60,000 square feet of space. Amazon may also take the route of regional grocery chain acquisition, but it’s unclear if it will follow through.
In 2017, Amazon had announced its plans to buy Whole Foods. But this current move will actually offer products at more affordable prices which do not have to compete with the Whole Foods brand directly.
Previously, Amazon has had retail locations like Amazon Go cashier-less convenience stores. This current move marks another shift in the company’s plan to go from the digital to the physical market.