Amazon Could Open Its Own Brand Of Grocery Stores This Year

Amazon is inching closer to opening its own line of grocery stores, separate from Whole Foods.

The e-commerce giant has already signed at least 12 leases in the Los Angeles area for grocery stores, with one in the suburban neighborhood of Woodland Hills already under construction, The Wall Street Journal reports. Its next target markets are reportedly Chicago and Philadelphia.

In Woodland Hills, Amazon will occupy a 35K SF space vacated by Toys R Us in a neighborhood shopping center owned by Paragon Commercial Group, WSJ reports. Its co-tenants include an Office Depot and a Citibank, and its construction permits include ample kitchen space, suggesting that prepared foods will be offered.

In general, Amazon grocery stores will have footprints between 20K and 40K SF, located mostly outside of urban cores to target more middle-income consumers, based on lease data reported by WSJ. They will carry brand-name items like Oreos and Coca-Cola, distinguishing the chain from Amazon-owned Whole Foods, which sells mostly private labels and caters to a largely upscale consumer base.

While Amazon still plans to add Whole Foods locations to keep up with larger trends in the industry, the as-yet-unnamed original concept will be a greater area of focus as the online shopping industry leader looks to ramp up its brick-and-mortar business.

In the second quarter, Amazon-branded brick-and-mortar stores — 18 Amazon Books locations, four Amazon 4-Star stores and 16 cashier-less Amazon Go stores specializing in prepared foods — saw a 1% year-over-year growth in sales, far behind the 16% its online sales operation grew over the same period, WSJ reports.

Amazon already has plans for further LA-area locations in the neighborhood of Studio City and the Orange County city of Irvine, WSJ reports. No indication was given on whether any of its forthcoming stores will include warehouse space to facilitate Amazon Prime grocery delivery services.