Amazon says it plans to open a new type of grocery store in Los Angeles next year, marking another attempt by the Seattle company to enter one of the few retail segments it does not yet dominate, it was reported Tuesday.
The store in Woodland Hills neighborhood will be distinct from Whole Foods, the higher-end chain specializing in natural and organic groceries, Amazon said.
Amazon declined to say how the new store would differ, what it would be called or whether it planned to open additional stores under the same banner. It said the store would have traditional checkout stands rather than the high-tech, cashier-less system used at Amazon Go, its 16-location chain of smaller convenience stores.
The planned store is the latest example of the patient march into the grocery world that the Seattle company has taken since its $13.7 billion purchase of Whole Foods, which now has 506 stores, including 35 in the Greater Los Angeles area.
Although the Whole Foods stores appear largely the same as they did two years ago — and remain a relatively small player in the Southern California market against such leaders as Albertsons Cos., which owns Vons and Pavilions, and Kroger Co.’s Ralphs chain — they have done three rounds of price cuts on selected items. Whole Foods deals now target Amazon Prime members, who for $119 a year get fast shipping of products they buy on Amazon.com, as well as access to streaming video and other benefits.
Meanwhile, Amazon is “mining data, experience and knowledge about the grocery business” through Whole Foods and its other projects, Juozas Kaziukenas, founder of the research firm Marketplace Pulse, told the Los Angeles Times. “They’re trying to understand what you need to run a grocery supply chain and how to take that supply chain and, in particular, apply it to online grocery delivery.”
Last month, Amazon began offering Prime members two-hour grocery delivery for free in 2,000 U.S. cities. Whole Foods stores also serve as part of Amazon’s “locker” system where online orders can be picked up.
Amazon Go — with stores in San Francisco, New York, Chicago and Seattle — is another part of the effort. In those stores, the company uses cameras, sensors and other technology tied to Amazon’s phone app, enabling customers to pick up ready-to-eat food and beverages and leave without waiting in line for a cashier.
With the new type of store in Woodland Hills, analysts expect Amazon will attempt to build off what it has learned from its other brick-and-mortar forays to bring new innovation to the grocery industry, according to The Times.
“Grocery spending is one of the major parts of consumer spending,” Kaziukenas said, “and as it moves online, Amazon doesn’t want to be left out of the transformation.”
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