Amazon Reportedly Considering Grocery Chain Separate from Whole Foods

Moving above and beyond the game-changing Whole Foods acquisition, Amazon is considering creation of a new hybrid grocery chain that would combine aspects of a pickup and delivery operation with a smaller retail space for shopping fresh items, according to a report in the New York Times.

This comes as Amazon continues to wrestle with the difficult logistics of grocery fulfillment, especially fresh items, since its branded delivery service AmazonFresh never took off as expected.

These new stores could possibly be located close to Whole Foods outlets as Amazon has been scouting properties nearby, according to the Times, indicating that inventory could be shared between the locations.

Amazon is also reportedly looking to hire store designers to create “multiple customer experiences under one roof.”

The Times reports how Amazon has been having difficulty integrating Whole Foods, including cultural differences and pricing challenges. Average prices at the upscale grocery chain have fallen about 2.5% since the 2017 acquisition, according to Gordon Haskett Research Advisors, as Amazon has increased sourcing from major distributors and cut back on local farms. The company now offers home delivery from Whole Foods in 90 cities.

An internal memo from 2017 that laid out the basis of this new concept said Amazon would need 2,000 stores to be competitive in the grocery space, the Times reported. Whole Foods has about 500 U.S. stores, compared to 5,000 Walmart locations, 2,800 for Kroger and 1,200 for Publix.

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