Amazon launches its own grocery chain, and things look not-so-super for supermarkets

Amazon will launch its own chain of inexpensive grocery stores, threatening other national grocery chains.

March 3, 2019

According to a report from The Wall Street Journal, Amazon is planning to open a chain of grocery stores across major US cities. 

Supermarkets have had to compete with Amazon since it acquired Whole Foods in 2017. But this news that Amazon will be expanding its physical food-print is enough to wilt any grocer’s lettuce.

Turns out Whole Foods wasn’t the whole story

Since its $13.7B acquisition of Whole Foods, Amazon has expanded several supermarket services, adding Prime discounts and delivery at Whole Foods and launching a line of cashierless Amazon Go stores. 

But this new expansion is by far Amazon’s biggest grocery gamble. Amazon plans to launch its first grocery store in Los Angeles this year, with locations in San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia to follow.

Unlike Whole Foods (AKA ‘Whole Paycheck’), these new stores will offer low prices and a wider variety of different brands and products, positioning Amazon to compete with other grocery chains 

Cleanup on aisle 7. And 8. And 9…

After the Journal broke the news, stock in Kroger, Costco, BJ’s, Sprouts, and Target all dropped noticeably (Kroger fell by about 4.5%).

Amazon also plans to expand its network of Whole Foods stores and has said that it hasn’t ruled out the option of buying smaller, regional grocery chains, either.

Amazon hasn’t announced whether its new stores will be cashierless, but spokespeople have said Amazon would like to control the parking lots adjacent to its stores to streamline the grocery shopping process.

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