Amazon said Monday it plans to open its first brand of grocery store in California next year in a move to boost its ambitious efforts to become a big brand in the food industry, foreign media CNET reported. A spokesman for Amazon confirmed to CNET: “Amazon will open a grocery store in Woodland Hills in 2020. Soon after, the company released four new hiring messages. Woodland Hills is a community in Los Angeles.
The company said the store would be different from Amazon’s Whole Foods supermarket. The company did not say whether it would open more stores in those locations, what its options or pricing would be, or what the brand would be. But in the hiring message, the company described Woodland Hills’ location as “Amazon’s first grocery store,” suggesting it would own Amazon’s brand name and expand to multiple locations.
The store will not use the company’s Amazon Go technology, which allows customers to check out without having to queue. Instead, the company said, the checkout process will be like other grocery stores.
In addition to buying Whole Foods, which owns more than 500 stores, for about $13.7 billion in 2017, the company also offers grocery delivery services through Amazon Fresh, Amazon’s main website and Prime Now, as well as food delivery services on Amazon Go.
The Wall Street Journal wrote in March that Amazon would have a new form of grocery store, and the company didn’t confirm the news until Monday. Last month, the Wall Street Journal reported that Amazon had opened other stores in Los Angeles, Chicago and Philadelphia.
The new store, which currently has only one confirmed location, signals Amazon’s ambitions in the roughly $800 billion U.S. grocery market, where rival Wal-Mart is the leader and not even after acquiring Whole Foods. The expansion of the grocery industry will help Amazon, the world’s largest online retailer in many ways: it will increase customer loyalty because people tend to shop at local stores every week, allowing the company to continue its rapid revenue growth.
In addition, the new line of products could allow Amazon to enter a more mainstream grocery business, while keeping Whole Foods as a high-end store for organic and specialty foods. The work could create new competition for Kroger, SuperValu and many other supermarket chains.
While Amazon is known for its expertise in new markets, the new stores face many risks. Amazon’s other store line-ups, including Amazon Go and Amazon Books, have yet to turn a profit. The company also closed store kiosks, which sell Amazon and smart home devices. In addition, the company will have to spend years building new chains. In addition, grocery stores are making small profits, so there is little room for Amazon to try to make a profit while lowering prices.
On Monday, Amazon released job postings from store managers, grocery store employees and food service employees at its Woodland Hills store. The store, formerly known as Toys R Us, is reported to be about 35,000 square feet. Asked if the new store would compete with Whole Foods or say it would no longer invest in the brand, Amazon declined to comment.
An Amazon spokesman said: “When shopping at the grocery store, we know that customers like to choose, and this new store offers another grocery option, which, unlike Whole Foods, is growing and remains a leader in premium natural and organic foods.” Whole Foods is understood to have opened 17 new stores this year and has more plans. Amazon will continue to partner with Whole Foods to invest in grocery delivery, the spokesman said.
In another sign of growing interest in the grocery business, Amazon announced last month that it would no longer charge Amazon Fresh $14.99 a month for Prime users. The change weakens rival Wal-Mart’s new Delivery Unlimited program, which costs $12.95 a month and was launched in September.