Amazon recently reported that it is moving forward with plans to open a new grocery store chain in 2020, with the first store set to open in Woodland Hills, California.
Amazon’s initial step into the grocery industry was in 2017 with the $13 billion acquisition of Whole Foods. With over 500 stores throughout the country, the acquisition expanded Amazon’s footprint into this new arena.
As a part of the acquisition, customers are able to order online for home delivery in more than 60 cities, and Amazon Prime members are able to gain benefits and discounts from shopping at Whole Foods. The addition of Amazon into the grocery space has also forced existing chains to upgrade their services to compete. Alternative retailers have made changes such as providing home delivery or implementing pickup services for customers.
Amazon’s New Strategy
However, even after this successful strategy, Amazon remains a minor player in the overall grocery industry, where Walmart continues to be the leader of the roughly $800 billion market.
Amazon’s new strategy is to create an additional chain of grocery stores that is distinct from the Whole Foods brand. The company indicated that these new stores will offer a larger variety of products at lower price points. In addition to the announced location in Woodland Hills, Amazon has signed leases for several other Los Angeles locations, as well as locations in Chicago and Philadelphia.
The combination of online speed and efficiency with existing brick and mortar business models continues to be an ever changing component of the food and beverage industry.
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