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Amazon Bolsters Retail Focus with New Grocery Store Plans

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Amazon (AMZN - Free Report) is firing on all cylinders to expand its footprint in the retail sector on the back of its strengthening grocery business and growing physical presence.

Reportedly, the e-commerce giant is aggressively pursuing inauguration of a new chain of grocery stores, with the intention of disrupting the retail space further. The company is planning to spread the new chain across all the major cities of the United States including San Francisco, Seattle, Chicago, Washington D.C. and Philadelphia. Notably, the first one set to open in Los Angeles.

Notably, these stores will be stocking a wider variety of items from different categories such as grocery, health and beauty products, compared with Whole Foods stores. This in turn will provide customers with more options.

Further, Amazon is likely to focus more on the grocery services, especially on pick-up services with its new concept.

Deepening Retail Focus

Amazon’s latest plan bodes well for its strengthening retail strategies which includes bolstering retail presence, strengthening distribution strength and enhancing shopping experience for the customers.

Per the report, the company may consider acquiring another grocery chain in the United States in order to accomplish its new plan.

Apart from this, Amazon is also planning to set up additional Whole Foods stores across more U.S. cities and suburbs in a bid to facilitate its fast delivery services to more grocery shoppers. This remains a tailwind.

Additionally, growing footprint of Amazon Go which is a cashier less store of the company remains a major positive. The company intends to take the number of these stores to a record of 3,000 stores by 2021 and aims at opening 50 by the end of 2019.

Further, Amazon is gearing up to open a new kind of physical store called “Amazon 4-star” which will be located at Manhattan's SoHo neighborhood on Spring Street. Notably, the store will only stock four-star or beyond rated products from the categories like kitchen appliances and other items, home stuffs, toys, books, devices, consumer electronics and games.

Moreover, Amazon bookstores have expanded to a dozen of U.S. cities, strengthening its retail presence.

Intensifying Retail Battle

Amazon’s aggressive stance on core retail industry, especially on grocery retail, continues to put competitive pressure on brick-and-mortar stores as well as big retailers like Walmart (WMT - Free Report) , Target (TGT - Free Report) and Kroger (KR - Free Report) , to name a few. These big retailers are already bearing the brunt of Amazon’s well-performing online retail platform and robust grocery services.

However, in order to counter Amazon’s competitive threat, Walmart and Target have also ramped up their initiatives to strengthen their delivery and pick-up services.

Walmart is already offering grocery pick-up and delivery services at 21,00 locations and 800 locations, respectively. Further, Target is leaving no stone unturned to expand its in-store pickup and next-day delivery services.

Nevertheless, Amazon’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 across the United States remain the key catalysts.

Further, its growing number of offline retail stores is likely to sustain Amazon’s momentum in this intensifying battle.

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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