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Amazon to Expand Grocery Retail With More Whole Foods Stores

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Amazon (AMZN - Free Report) does not want to restrain itself when it comes to making advances in the grocery retail space.

Reportedly, Amazon is planning to set up additional Whole Foods stores across more U.S. cities and suburbs in a bid to facilitate strengthening its fast delivery services to more grocery shoppers.

This strategic move is in sync with the company’s aggressive efforts to expand its footprint in the grocery market with the aid of Whole Foods Market, which it acquired in 2017.

Per Wall Street Journal, the employees of Whole Foods have already earmarked Wyoming, southern Utah and some parts of Idaho for new stores.

Prime Adoption to Accelerate

The amalgamation of Amazon Prime and Whole Foods has enabled the company to gain momentum in the grocery retail business on the back of Prime benefits.

Deep discounts and a cash back offer related to Prime continue to help shoppers save significantly on shopping at Whole Foods. Further, robust delivery and pickup grocery services associated with Prime Now app is aiding the company in delivering a better shopping experience.

Extension of Whole Foods stores in new locations along with these Prime benefits will allow Amazon to expand its customer base and attract new members to join Prime, which in turn, will boost the Prime user base.

Both benefits are likely to drive the company’s top line.

Moreover, the latest decision will add stimulus to Amazon’s strong focus on ramping up Prime Now and its two-hour delivery service to around 475 Whole Foods stores.

Gaining Competitive Edge

Amazon’s new plan is likely to provide it with a competitive edge against the companies, such as Walmart (WMT - Free Report) , The Kroger (KR - Free Report) and Target (TGT - Free Report) in the U.S. grocery retail market, which per a report from IGD, is expected to reach $1.7 trillion by 2022 at a CAGR of 3.6% between 2017 and 2022.

Although the above three companies are quite popular as big retailers in the U.S. grocery market but Amazon’s deepening focus on this market coupled with its strong retail strategies is making the situation difficult for the same.  

The e-commerce giant’s rapidly expanding grocery pickup and delivery services along with availability of Prime Savings at all Whole Foods Stores and Whole Foods Market 365 stores nationwide remain the key growth catalysts.

This will consistently shore up the company’s market share.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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