The Real Deal New York

Amazon plans brick-and-mortar grocery stores

E-commerce giant began rolling out Fresh service to NYC, other cities in 2013

October 11, 2016 04:00PM

An Amazon Fresh truck

Get ready to go grocery shopping at an Amazon store near you.

The e-commerce giant is expanding its grocery business with brick-and-mortar grocery stores and drive-in pickup locations designed to complement its same-day grocery delivery service, sources told the Wall Street Journal.

The stores and curbside pickup locations will offer current subscribers of Amazon’s same-day deliver Fresh service more ways to get their goods, particularly those who prefer to choose their own groceries. 

This expansion puts Amazon directly in competition with grocery discounters like Walmart, which recently expanded its own pickup sites. Amazon recently dropped its $299 annual price for Fresh, and made the service available to Prime subscribers for $15 a month.

Groceries account for about a fifth of consumer spending, with online grocery sales make up only about two percent of that, the Journal reported, citing Morgan Stanley Research. Walmart controls 17.3 percent market share of grocery sales in the United States, with close to $140 billion in revenue, more than double than Kroger which is next in line. Amazon has 1.1 percent of market share, comparable to Whole Foods 1.7 percent, according to the newspaper.

Amazon’s been taking the slow and steady route into fresh and consumables. It tested Fresh for six years in its hometown of Seattle before rolling out in cities like New York, Boston and San Francisco starting in 2013.

Amazon has made its initial foray into brick-and-mortar locations in Seattle, where it opened a bookstore, and has plans to open more throughout the country.

In May, South Korean investment fund Korea Post acquired a minority stake in Vornado Realty Trust’s TRData LogoTINY 477,000-square-foot property at 7 West 34th Street that Amazon occupies as its New York City office headquarters. [WSJ]Chava Gourarie