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Dec 31, 2019

Amazon gains on report it plans to expand Whole Foods stores

The logo is displayed outside the company's fulfillment center in Kenosha, Wisconsin, U.S.

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See Full Stock Page » Inc. (AMZN.O) shares gained Monday after a report said the company plans to expand its Whole Foods grocery stores in the U.S.

The e-commerce giant aims to add locations to suburbs and other areas where the organic grocer is adding more customers since it was bought by Amazon last year, according to the Wall Street Journal, which cited a person familiar with the plans. The move would allow more customers to tap into Amazon’s Prime Now two-hour delivery service.

The company's shares gained 1.62 per cent - or US$23.95 to close Monday at US$1,501.97.

Amazon has been pushing to expand in the US$840 billion grocery business since buying Whole Foods for US$13.7 billion in 2017. Amazon has used discounts to lure Prime members to physical Whole Foods stores. Now, it needs more stores that are closer to more people, according to a report over the summer by Sense360. Amazon’s Prime Now service offers delivery from Whole Foods in as little as an hour in more than 60 cities.

Amazon intends to expand its delivery and pick-up services to almost all of its more than 400 Whole Foods stores in the U.S., the WSJ said.

Despite Amazon’s investment in Whole Foods, the number of Amazon Prime members who shop for groceries at least once a month declined in 2018 compared with 2017, according to an annual consumer survey by UBS.

The WSJ reported that Whole Foods employees have looked at potential retail locations in the Rocky Mountain region, including in Idaho, southern Utah and Wyoming. Some of those spaces were about 45,000 square feet, according to the report.