Everything we know about Amazon’s new grocery store in LA
Amazon’s highly anticipated new grocery store chain is likely to open in February, Yahoo Finance has learned.
A recent trip to the store in the Woodland Hills neighborhood in the San Fernando Valley region of Los Angeles suggests the grocery store is still a work in progress. The entire plaza is undergoing a massive renovation. The local Alcoholic Beverage Control department confirmed to Yahoo Finance that Amazon (AMZN) has yet to obtain a license to sell alcohol. The opening has been postponed from November to early 2020, likely February, according to a person who works for Amazon.
The new concept is located at 6245 Topanga Canyon Boulevard, in a building that used to inhabit a Toys “R” Us. It’s situated in a typical plaza found in suburbia, complete with a nail salon, See’s Candies, Citibank, Office Depot, AT&T, and a new deli called “Old New York Deli & Bakery.”
Although the new grocery store is only 1.7 miles from the closest Whole Foods store (also owned by Amazon), the neighborhood mirrors typical locations for the high-end grocery chain — on a highly trafficked street in an affluent community.
‘A much wider spread of customers’
The location choice shows Amazon’s desire to stay close to its core Prime members while experimenting with products Whole Foods can’t offer, according to Neil Saunders, managing director of retail at GlobalData.
“I think Amazon has probably looked to where its existing customers are and wanted to move into that area,” said Saunders. “So it's going to pull in a more affluent demographic, but it's going to be a much wider spread of customers than Whole Foods will probably attract.”
Woodland Hills’ median household income is $85,000, and the town’s median home value is $829,800, which is three and a half times that of the United States.
A massive luxury condo is under construction right next to the Amazon store, and Westfield has a shopping mall with luxury retailers like Cartier, Gucci, and Louis Vuitton as well as an outdoor shopping plaza called “The Village” complete with a spa, pressed juice store, seafood restaurant, yoga studio, and blowout bar across the street.
Since its $13.6 billion acquisition of Whole Foods in August 2017, Amazon hasn’t been shaking up the grocery industry as some had expected. There has been some integration between Amazon and Whole Foods, allowing Amazon customers to order online from Whole Foods and Prime members to enjoy discounts when they shop in Whole Foods stores. But the product categories at Whole Foods stores haven’t fundamentally expanded beyond the health-conscious chain’s original premise. In the latest earnings report, Amazon said its physical store sales have declined slightly, suggesting the efforts to grow its customer base may have stalled.
“I think overall, Amazon is a bit disappointed with what Whole Foods has done for it,” Saunders said. “I think there's a lot of people in those segments who don't shop at Whole Foods for various reasons. And a lot of them, even though they have money, still think Whole Foods is very expensive.”
Even targeting consumers with similar income level, the new grocery chain could lure non-Whole Foods shoppers with wider-ranging selections. Saunders expects Amazon to offer more mainstream products and more of Amazon’s private label products, including Amazon meal kits, in the new store.
“I think Amazon sees that there's a lot more inroads it could make with these important customer bases, but perhaps recognizes that they can't really do it just through Whole Foods,” said Saunders.
Krystal Hu is a reporter at Yahoo Finance, covering China and e-commerce. Follow her on Twitter: @readkrystalhu.
Melody Hahm is Yahoo Finance’s west coast correspondent, covering entrepreneurship, technology and culture. Follow her on Twitter: @melodyhahm.
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