Amazon.com Inc. plans to open dozens of grocery stores in U.S. cities, The Wall Street Journal reported Friday, a move that would expand the retail and technology giant’s grocery footprint beyond its Whole Foods Market chain.
The first of these stores will open in Los Angeles as early as the end of 2019, and Amazon is in talks to open locations in shopping centers in San Francisco, Seattle, Chicago, Philadelphia and Washington, D.C., the Journal reported, citing people familiar with the matter. The stores would have a lower price point than Whole Foods.
The company is also exploring the idea of purchasing regional grocery stores, the paper said.
The Seattle-based company, which has been experimenting with online delivery of groceries for more than a decade, got into brick-and-mortar food retail with its 2017 purchase of Whole Foods. Amazon has also expanded Amazon Go, its cashierless convenience store concept, to 10 stores. People familiar with the matter said last year that the company planned to open as many as 3,000 of the so-far small-format stores, including up to 50 in 2019.
Amazon declined to comment on the Journal report.
Shares of food retailers all fell on the news. Kroger Co., the nation’s biggest traditional grocery chain, dropped as much as 6.4 percent, while Walmart Inc. and Costco Wholesale Corp. also declined. Target Corp., which gets about 25 percent of its sales from food, also fell before recouping its losses.
Amazon’s $13.7 billion purchase of Whole Foods signaled the company’s intent to break into the $840 billion grocery market, but left it at a scale well below the likes of market leader Walmart Inc., which operates 4,750 grocery stores.
Some analysts saw Whole Foods, which stocks a limited selection of items in contrast to Amazon’s preference for selling a wider range of items, as a starting point for Amazon in physical grocery retail. The company has since started delivering groceries from the shelves of Whole Foods locations across the United States.