Amazon’s reported plan to open its own supermarket chain in the US sends rival grocery retailers’ stocks plunging
- Amazon is reportedly planning to launch a low-cost supermarket chain in the US
- The first store could open in Los Angeles this year, with others on the way soon
- The news sent shares of retailers Walmart, Kroger, Costco and BJ’s down sharply
- Amazon made its first move into grocery with its $13.7 billion Whole Foods deal
Reports of Amazon planning to open its own low-cost supermarket chain across the country have sent rival grocery retailers’ stocks sharply lower.
The tech behemoth is doubling down on its move into the grocery industry with plans to launch dozens of stores across several major cities in the U.S., The Wall Street Journal reported, citing sources familiar with the matter.
Amazon acquired grocer Whole Foods Market for $13.7 billion in 2017 and, since then, has ramped up its focus on brick-and-mortar stores, as well as the grocery industry as a whole.
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Amazon is doubling down on its move into the grocery industry with plans to launch dozens of stores across several major U.S. cities. The news sent rival grocery retailers’ stocks lower
The news of Amazon expanding its grocery footprint pushed shares of the tech giant higher as much as 1.9 percent on Friday.
Amazon’s new grocery chain will open its first location in Los Angeles by the end of this year, the Journal said.
Additional stores will open in 2020 and the firm is reportedly considering locations based in San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia.
The reaction was less-than-stellar among supermarket stocks, however, with shares of Cincinnati-based retailer Kroger sliding 4.4 percent, while Arizona-based grocery chain Sprouts Farmers Market saw its stock drop 0.5 percent.
Retail giant Walmart’s stock also declined 1 percent, while other retailers’ stocks, including Costco and BJ’s, slid lower earlier in the day but had recovered by the market’s close.
The reaction from the Amazon news was less-than-stellar among supermarket stocks, however, with shares of Kroger sliding 4.4 percent and Walmart down just over 1 percent
Amazon’s competitors in the grocery industry have a right to be scared.
The new chain would be ‘distinct’ from the Whole Foods brand, which is known for being upscale, gourmet and largely centered around metro areas.
It’s not yet clear whether the new chain will include Amazon’s name or branding, the Journal said.
Additionally, its expansion might not take very long, as Amazon is reportedly considering acquiring regional grocery chains that oversee at least a dozen stores.
Amazon’s new grocery chain will reportedly open its first location in Los Angeles by the end of this year. Other locations are being scouted in San Francisco, Seattle, Chicago and other areas
The Whole Foods brand shuns products with artificial flavors, colors, preservatives and sweeteners.
But Amazon’s new chain would likely incorporate more of those items, allowing it to work with bigger brands, the Journal explained.
Amazon hasn’t commented on the Journal report, saying it won’t ‘comment on rumors or speculation.’
The company has broadened its reach into physical stores in the last few years, most notably through its acquisition of Whole Foods.
It has also opened a ‘4 Star’ store in New York City, which offers the highest-rated products from its site in store.
Additionally, Amazon now operates 10 of its cashierless Go stores around the country, which allow shoppers to peruse and purchase items without having to pay for them in front of a cashier.
HOW DO AMAZON’S GO STORES WORK?
In December 2016, Amazon unveiled a convenience store in downtown Seattle that replaced cashiers with technology found in self-driving cars.
It opened to the public in January 2018.
To start shopping, customers must scan an Amazon Go smartphone app and pass through a gated turnstile.
Ready-to-eat lunch items greet shoppers when they enter.
Deeper into the store, shoppers can find a small selection of grocery items, including meats and meal kits.
An Amazon employee checks IDs in the store’s wine and beer section.
Amazon’s first Go Store opened in Seattle earlier this year and are looking to expand and open stores in Chicago and San Francisco
Sleek black cameras monitoring from above and weight sensors in the shelves help Amazon determine exactly what people take.
If someone passes back through the gates with an item, his or her associated account is charged.
If a shopper puts an item back on the shelf, Amazon removes it from his or her virtual cart.
Much of the store will feel familiar to shoppers, aside from the check-out process.
Amazon, famous for dynamic pricing online, has printed price tags just as traditional brick-and-mortar stores do.
