Amazon is launching an affordable grocery store so Whole Foods doesn’t have to

Retail is going high-tech.
Retail is going high-tech.
Image: AP Photo/Elaine Thompson, File
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Amazon is getting into the grocery business—again.

The Wall Street Journal reported on March 1 (paywall) that Amazon is planning to open dozens of grocery stores in major US cities, starting with a location in Los Angeles that could open its doors by the end of this year. The company has also signed two additional retail leases and is negotiating for more in San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia, the Journal reported.

The stores will be distinct from Whole Foods, which Amazon acquired 2017. Unnamed sources told the Journal that the new stores will offer a greater variety of products at a lower price point.

The fate of Whole Foods’ prices in a post-Amazon world has been the subject of much speculation. Amazon reduced prices on popular Whole Foods items like avocados and organic rotisserie chickens after purchasing the grocer, but in the past few months prices on more than 500 items have crept back up by an average of $0.66.

According to the Journal, Amazon’s grocery operation will be as different from typical big-box grocery chains, like Walmart and Krogers, as is it from Whole Foods. Still, stock prices for large grocers that include Walmart, Kroger, Target, BJs, Costco, and Sprouts fell following the news. Amazon’s stock rose more than a point.

The retail spaces Amazon has been eyeing average around 35,000 square feet, slightly more than half the square footage of a typical grocery store, and the company seems to be keeping its options open in terms of inventory. Sources told the Journal Amazon wants the option to also sell health and beauty products.

Amazon has made clear that its acquisition of Whole Foods is part of a larger plan to incorporate itself into Americans’ physical lives. The company currently has 10 cashier-less Amazon Go stores in US cities, where it largely sells convenience foods and items. Earlier this week Amazon announced its entry into the dairy business, in partnership with Happy Belly, a privately owned brand that sells milk, cheese, and eggs.