Marcus & Millichap

Special Report

Amazon Steps Into Real World Retail, Third Quarter 2017

Special Research Report

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Amazon Reinforces Importance of Brick-and-Mortar Presence, Leaps Into Grocery Business With Acquisition of Whole Foods

Amazon enters grocery business with $13.7 billion purchase of Whole Foods. After testing a variety of concepts to enter the grocery store segment, Amazon recently announced an agreement to acquire Whole Foods Market for $13.7 billion. The purchase gives the e-commerce giant instant access to the grocery store business, which accounts for consumer spending of more than $636 billion per annum. More importantly, the purchase highlights the importance of omnichannel platforms, which incorporate a blend of brick and-mortar establishments with an online footprint to drive traffic and sales. In addition, grocery stores are typically retail center anchors, underscoring the importance of strip and neighborhood centers in the retail landscape.

Growth of e-commerce highlights necessity of omnichannel strategies. E-commerce sales have increased by 148 percent over the past 10 years and now comprise 13.2 percent of core retail sales. This trend is shaking up traditional retail, causing stores that fail to offer unique services and an integrated online channel to falter. Stores offering unique positioning that blends online capabilities such as Domino’s, Home Depot and Ulta have outperformed in this climate. Amazon’s move into the brick-and-mortar space through pop-up stores in malls, physical bookstores and now through the acquisition of Whole Foods reinforces the importance of having both an online and real world presence.

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