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Are Amazon's Brick-and-Mortar Plans in Trouble?

Amazon's (NASDAQ: AMZN) takeover of Whole Foods stunned many brick-and-mortar retailers, which feared that merging Amazon's e-commerce ecosystem with hundreds of physical stores could render traditional supermarkets and superstores obsolete.

Amazon already slashed prices at Whole Foods, started selling Echo speakers in stores, and plans to add pickup lockers to some locations and Whole Foods products to Prime Now, its two-hour delivery program. Those plans should pay off as Whole Foods stores become pickup and delivery hubs for groceries and online orders.

That combo would make Prime memberships even more attractive with special discounts. However, big box retailers aren't sitting idly by waiting for their greatest rival to take over the market.

Instead, they could rely on real estate agreements to limit what Amazon can do with nearby Whole Foods stores. Landlords stuck in the middle.

Real estate companies generally lease out large properties like strip malls to a wide range of retailers. Their profits can only keep growing if those tenants stay in business and keep paying the rent.

Many Whole Foods stores are located in strip malls and shopping centers, and analysts expect Amazon to shrink many of those stores, only using them to sell fresh produce or other products that need to be seen and touched.


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