Amazon to launch new grocery store brand; steps up competition in brick-and-mortar space

Fresh grocery is one of the areas that the e-commerce giant has been trying to explore for a while now but is yet to break through with the Amazon brand

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Amazon Go opens in Seattle
Shoppers enter the Amazon Go store located in Amazon's "Day 1" office building in Seattle, Washington, US, January 18, 2018 REUTERS/Jeffrey Dastin

E-commerce giant Amazon confirmed on Tuesday that it has plans to launch a new grocery store brand in Los Angeles early next year. This is in a move to expand the company's footprint in the brick-and-mortar landscape.

The company said that the store in Woodland Hills neighbourhood will be quite unlike its upscale Whole Foods stores across the country, and its smaller cashier-less Amazon Go convenience stores. However, they didn't share the details on how different the store will be.

The stores, according to Amazon, will have a traditional check-out system and not like the cashier-less Amazon Go. This move will give Amazon further scope to explore the massive US grocery business that is expected to grow at a rapid pace over the next few years.

The new stores will not have a complete focus on natural-food like Whole Foods. Instead, the new locations are likely to stock brand-name sodas, cereals and sweets provided that grocery is an area where brand loyalty is strong and customers don't easily change their tastes and habits.

Will it be a game-changing move?

Over the last few years, Amazon has been more aggressive towards the brick-and-mortar stores and opened physical bookstores and pop-up stores in multiple locations. The e-commerce company's latest move will now make them directly compete with the likes of other retail giants like Walmart, Kroger, Target Corporation, Dollar Tree and Dollar Store.

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An "Amazon Fresh" delivery truck is seen parked in Brooklyn, New York, 28 August 2015 Brendan McDermid/Files/Reuters

Amazon initially tried to explore the physical store space but later changed the entire retail landscape by prompting an increasing number of people to shop online. Moreover, its Amazon Prime membership service has helped the company's revenues grow over the past few years. This made it one of the undisputed leaders in the online shopping space.

However, fresh grocery is one of the areas Amazon has been trying to explore for a while now. The e-commerce giant acquired Seattle-based Whole Foods for $13.7 billion in 2017. The American supermarket chain now has 506 stores across the United States. Amazon is yet to break through in the grocery business with their brand.

Moreover, in order to grab more customers and boost its grocery sales, the e-commerce giant in 2018 started free two-day delivery of its Whole Foods grocery for the Prime members. And last month it announced free two-hour grocery delivery for Prime members in 2,000 US cities ahead of the all-important holiday season.

While Amazon's staggering growth as an e-commerce giant has prompted all major retailers to shift focus to online, the e-commerce giant seems to be taking the war back to them by penetrating the physical store space.

Related topics : Amazon prime