After dominating online retail for decades, e-commerce giant Amazon (AMZN) may take a critical step in its offline expansion by opening physical supermarkets that are larger than typical Costco warehouses or Walmart Supercenters.
According to the latest reports, Amazon plans to open its first super-sized supermarket in Orland Park, a suburb of Chicago, with an area of 225,000 square feet (approximately 20,900 square meters). This figure far exceeds the average size of traditional large retailers: the typical Costco or Walmart store is around 150,000 square feet, and even the larger Walmart Supercenters are only about 179,000 square feet.
For Amazon, known for its efficient e-commerce operations, diving deeply into asset-heavy and high-cost physical retail may seem puzzling. However, analysts note that this well-funded tech giant is cautiously exploring new growth avenues. Unlike traditional retailers that have struggled due to reckless expansion in the past, Amazon possesses the unique advantage of synergizing physical formats with its online business.
In fact, this is not Amazon’s first foray into physical retail. Its acquisition of Whole Foods in 2017 provided it with operational experience in the fresh groceries sector. The new supermarket plans to sell groceries and various household goods, and if this model is expanded in the future, it may further capture market share from traditional retail giants. Currently, the Orland Park project is still in its early stages of development, but its innovative format has already attracted investor attention.
Notably, the exploration of physical retail is only one part of Amazon’s diversified growth strategy. Against the backdrop of its continuous efforts in core businesses such as artificial intelligence, cloud computing, and online marketplaces, this move further highlights its keen sense of growth opportunities. Although new ventures carry risks, Amazon is poised to leverage resource integration to create a physical experience that enhances its e-commerce ecosystem.
From a valuation perspective, Amazon’s current price-to-earnings ratio is around 34 times, which is lower than historical levels. As it advances its strategy in new areas such as physical retail, this trillion-dollar market cap company, built on online business and cloud infrastructure, may be outlining a broader growth vision for investors.
