Amazon (AMZN +0.69%) owns Whole Foods, so it might seem a bit odd that it's planning to open a second grocery chain. It makes more sense, however, when you consider how much data the online retailer has that it can't use at those upscale stores.
The company may know, for example, exactly which soda and candy brands are most popular in a certain market. That information can't benefit Whole Foods, because the chain does not sell most national brands.
With a chain of traditional grocery stores, Amazon could better capitalize on its ability to sell consumers what it knows they want.
Amazon's grocery stores will also provide additional hubs for its shipping infrastructure. Image source: Amazon.
The company has been tight-lipped about its plans, but it has been working on a prototype location in Los Angeles. That store, which is about 33,000 square feet, looks fairly conventional, according to Bloomberg, which got a sneak peek at some photos and construction plans.
It has traditional aisles, an area for selling ready-made foods, and it does not use wireless payment technology like Amazon's Go convenience stores. It does have digital price tags for inventory tracking and a prominent window for pickups and returns.
Whole Foods serves a niche audience, but Amazon wants to go after all consumers. A more traditional chain of grocery stores will give it a brick-and-mortar platform to sell more products to more people, and is unlikely to take much revenue away from its natural and organic food chain.
