Why it matters: Amazon is looking to capitalize on its Prime Now success by expanding the number of Whole Foods stores across the United States. The company hopes to increase the number of people subscribed to Prime Now which poses a challenge to other established grocery chains.
The Wall Street Journal is reporting that Amazon plans to roll out more Whole Foods stores in United States suburbs and other places. The goal is to expand Amazon's Prime Now subscription which is their two-hour delivery service that has gotten more popular in recent months.
An anonymous person familiar with the plans to expand into the Rocky Mountain region said that potential locations include parts of Idaho, southern Utah, and Wyoming which do not currently have Whole Foods stores. These locations could see stores about 45,000 square feet with the extra space being used to accommodate Prime Now deliveries.
Amazon itself perfected and popularized online shopping and that has affected other grocery and retail chains. As more people shop online for groceries, Amazon thinks it's uniquely positioned to compete with other established grocery chains that are struggling to adapt to a changing consumer environment.
For the moment, Amazon is looking to growing its subscription strategy which trades big profitability for an increased customer base. If you make food easier to buy, more people will use that service to buy their food. According to the WSJ:
"Amazon said it delivered more turkeys than ever through Prime Now and the company’s AmazonFresh service this past Thanksgiving, while Whole Foods broke a record for Thanksgiving bird sales. Data firm Numerator found in a recent survey of about 1,200 shoppers that nearly half said they were shopping at Whole Foods more because of Prime promotions."
Of course, another possible reason for this expansion is to have more places for Amazon to test its cashier-less stores, Amazon Go. While six stores were originally planned for 2018, the company only managed to open a second store in Seattle in August. That's not to say that Whole Foods will turn into Amazon Go stores but this could be an interesting opportunity for Amazon to revolutionize how in-store and online shopping is conducted.