Sears and Amazon are each symbols of the changing retail market in the past decade, and their divergent stories might become even more intertwined.
Amazon is investigating vacated Sears locations to convert into Whole Foods Markets, Yahoo Finance reports. Amazon recently announced its intention to carry out a nationwide expansion of the grocery store chain it acquired for $13B in 2017.
For the entirety of its existence to this point, Whole Foods has primarily focused on major cities and their suburbs, but Amazon indicated a desire to enter new markets to access more customers with its online grocery delivery service, Amazon Prime Now. While the chain has gained customers per store since its acquisition, it has not added many locations and lags far behind industry leaders Kroger and Walmart in that area.
Sears Holdings hangs on by a thread after years of losses and ballooning debt, as Chairman and former CEO Eddie Lampert fights to keep its last 425 locations open through its bankruptcy proceedings. Sears has closed hundreds of stores in the past few years to cut costs, trimming its least profitable locations first. That has often been in rural and tertiary markets, where it is the most difficult to find takers for the 100K-plus SF footprints left vacant.
Though Amazon has not confirmed the strategy publicly, the significant overlap between shuttered Sears or Kmart locations and areas that Amazon is looking to enter makes it a likelihood that at least a handful of Whole Foods stores could wind up backfilling those locations. Adding to that likelihood is the possible distressed nature of the property, which Amazon believes could mean a discount on rent, Yahoo reports.
Matthew Rothstein, Bisnow.