The two grocery properties are in the same Washington, D.C., neighborhood. But the stores are on such different trajectories it may not matter.
On a July day in Washington, D.C., the latest Amazon Fresh store opened. The checkout-free grocery concept allows customers to enter through a QR code tied to their Amazon app, place items in bags while shopping and walk out of the store, with items charged to their accounts. The D.C. location also processes Amazon returns and has lockers where orders can be retrieved.
A second Amazon grocery property is close by. A Whole Foods Market sits only 0.3 miles away from the new Fresh store, only about a six-minute walk between the two locations.
Amazon is seemingly making moves to take over a larger portion of the grocery market. But, why are there two different company properties in the same neighborhood? Can the two survive, or will it cannibalize its own audience? Also, can the sister stores thrive as they face unique sets of challenges as Amazon races to capture larger portions of the grocery industry?
Different stores, different audiences
The Amazon Fresh concept, which launched less than a year ago in California, is the e-commerce giant’s high-tech answer to a streamlined shopping experience. It positions itself as having consistently low prices as it competes in the conventional grocery space.
This is different from its Whole Foods offering, which Amazon purchased in 2017 for $13.7 billion. That arm is focused on natural and organic foods and tends to have a higher price point than its sister company.
“Whole Foods is a small, small segment of the overall grocery [market],” said Brian Yarbrough, senior analyst of equity research at Edward Jones. Amazon bought Whole Foods, Yarbrough said, “to try and get a better understanding of the grocery industry, the distribution and how it all works.”
Amazon Fresh, on the other hand, “is going after more mainstream grocery, which is a lot bigger market than just organics,” he said.
RetailDive.com, Kaarin Vembar