Whole Foods' owner Amazon launching lower-price grocery chain: Report

By Food and BeverageFOXBusiness

Amazon reportedly planning to launch grocery store business

Strategic Resource Group Managing Director Burt Flickinger on reports Amazon is planning to launch grocery store business very different from Whole Foods.

Amazon, which owns the upscale Whole Foods Market grocery stores, plans to launch a distinct grocery-store chain that will offer less-expensive items, according to a report.

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The Wall Street Journal, citing people familiar with the matter, said Amazon is planning to open dozens of grocery stores in several major U.S. cities over the next few years.

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The as-yet-unnamed chain will be distinct from the company's upscale, health-oriented Whole Foods Market brand, which it acquired in 2017 for $13.7 billion.

The first store of the new chain is reportedly set to open in Los Angeles as early as the end of the year. There also are plans to open two other locations in early 2020.

Shortly after news of the initiative became public, Amazon shares rose but those of rival grocers like Kroger, Walmart and Sprouts Farmers Markets, fell.

TickerSecurityLastChange%Chg
AMZNAMAZON.COM INC.1,861.69-3.13-0.17%
WMTWALMART INC.103.18+0.02+0.02%
KRKROGER25.78+0.24+0.94%
SFMSPROUTS FARMERS MARKET21.57+0.01+0.05%

Amazon is eyeing shopping centers in San Francisco, Seattle, Chicago, Washington, D.C., and Philadelphia as possible locations. The e-commerce giant is also exploring acquisitions of regional grocery chains to help launch the project.

The sources told the Wall Street Journal that the new locations aren't meant to compete with Whole Foods but instead offer "a wider variety of products" than what the healthy grocer currently has on its shelves. Since launching in the 1980s, Whole Foods has been adamant about not selling products with artificial flavors, colors or preservatives.

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Big brands such as Coca-Cola or Pepsi are not sold at any of its locations. Over the years, however, Whole Foods has added brands such as Honey-Nut Cheerios and Michelob beer to its shelves.

An Amazon spokesperson told FOX Business that it "doesn’t comment on rumors or speculation."