Amazon.com Inc. plans to build and expand Whole Foods stores across the country to put more customers within range of the e-commerce giants two-hour delivery service, according to a report from the New York Times. The push would bring Whole Foods to more suburbs and other areas where Whole Foods is quickly adding customers since Amazon bought Whole Foods in 2017 for roughly $13.5 billion.

It is expected that some of the new stores will be about 45,000 square feet, slightly larger than the average Whole Foods store.  The supermarket chain is using extra space in its stores to accommodate Amazon delivery and pickup from online orders.

The build out would also intensify competition among grocers that are already fighting to retain customers.  Supermarkets have been holding down prices and adding new services as customers shift more of their shopping online.  Other retailers are also widening the range of goods they sell, from discount grocers like Aldi and Lidl to pharmacy chains and convenience stores. “Strategic investments to improve Whole Foods will only increase the already intense competitiveness in the grocery space,” said Bob Golding, co-founder of consulting group Pentallect Inc.

Amazon offers Prime Now a two-hour delivery option to members of its Prime subscription service in more than 60 cities, and online grocery pickup from Whole Foods stores in as little as 30 minutes from nearly 30 cities. Amazon plans to expand those services to nearly all of its roughly 475 Whole Foods stores in the United States.

Investing heavily to boost growth is part of Amazon Chief Executive Jeff Bezo’s well-worn playbook.  The idea is that more product selections and growth leads to lower costs and prices, which gives customers reasons to keep shopping. Amazon lost money or made a meager profit for years.  The company this year reported record profitability, including $2.88 billion on $56.58 billion of revenue in its latest quarter.

 

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