Amazon's Grocery-Store Plan Moves Ahead With Los Angeles Leases
October 01 2019 - 7:29AM
Dow Jones News
By Esther Fung
Amazon.com Inc. is advancing a plan to open a chain of U.S.
grocery stores with early outposts in Los Angeles, Chicago and
Philadelphia, according to people familiar with the matter.
In the Los Angeles area, it has signed more than a dozen leases,
the people said. The first few stores are likely to be in the dense
suburban locations of Woodland Hills and Studio City, while another
grocer is slated for the city of Irvine, in nearby Orange County, a
person familiar with the matter said. These stores could open as
early as the end of the year.
Amazon is planning to operate dozens of grocery stores in cities
across the country, part of the online giant's increasing focus on
a bricks-and-mortar presence to find more ways to reach
consumers.
Many of the proposed locations are outside urban cores and cater
to middle-income consumers. Apart from prepared foods, they will
stock mainstream groceries such as soda and Oreos, people familiar
with the matter said.
The company now has 16 Amazon Go stores, where customers can
grab ready-to-eat food and grocery purchases checkout-free. It also
has four Amazon 4-star stores, which stock products rated 4-stars
and above on the Amazon site, and 18 Amazon Books stores.
Revenue from these bricks-and-mortar businesses is small but
edging up. In the second quarter, net sales from Amazon's physical
stores rose 1% to $4.3 billion from a year earlier, compared with
16% growth recorded in its online stores, according to Amazon's
earnings statement. Sales in its physical stores include items that
customers select in the store, but exclude purchases made online
and picked up at a store.
One of Amazon's first grocery locations will be on N. Topanga
Canyon Boulevard, at a strip center in the Woodland Hills
neighborhood of Los Angeles, the people said.
Local building and safety departments recently granted
contractors hired by Amazon permits to change the facade, start
electrical work on light fixtures and fire sprinklers, and to
install an espresso machine and kitchen equipment at the property
there. Filings show that there will be a substantial kitchen,
indicating that the store will offer prepared foods.
The roughly 35,000 square-foot store was previously occupied by
Toys "R" Us, and its neighbors are Citibank, Office Depot and
Sharky's Woodfired Mexican Grill. There is a Costco wholesale
market half a mile away.
Paragon Commercial Group, the owner of the strip center, didn't
respond to requests for comment.
Amazon doesn't comment on rumors or speculation, said an Amazon
spokeswoman.
Amazon is also looking at grocery spaces in the New York
metropolitan area, New Jersey and Connecticut. Many of these
locations are in strip centers and open-air shopping centers and
would occupy about 20,000 to 40,000 square feet, the people
said.
In March, The Wall Street Journal reported that Amazon's new
grocery chain isn't intended to compete directly with the company's
upscale Whole Foods Market chain, which doesn't sell products with
artificial flavors, preservatives and sweeteners, among other
quality standards.
The Journal was unable to determine what the new stores would be
called or whether they will use a similar cashierless technology
used by its chain of convenience stores, Amazon Go.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
October 01, 2019 07:14 ET (11:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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