Markets

Amazon Is Turning Some Whole Foods Markets Into 'Dark Stores'

Online grocery shopping demand is so great during the coronavirus pandemic that Amazon.com (NASDAQ: AMZN) is closing off some of its Whole Foods stores to customers and turning them into fulfillment centers.

A number of supermarkets have been forced to create so-called "dark stores," or physical stores that are only open to employees who work to fulfill orders for delivery and pickup from other nearby stores.

Whole Foods employees picking online orders

Image source: Amazon.com.

Prioritizing online demand

In an update on Amazon's company blog, Vice President of Grocery Delivery Stephenie Landry said Amazon's Woodland Hills, California, Whole Foods store has instead converted into a dark store. Originally scheduled to open in February, Landry says the store is now "a temporary online-only store, focused exclusively on fulfilling grocery delivery orders."

Other grocery stores have been forced to make similar moves due to the increased demand and new limitations like reduced store hours and customer capacity that govern the way consumers can shop physical stores.

Kroger (NYSE: KR), for example, recently converted one of its Cincinnati, Ohio, stores to a dark-store fulfillment center, while Giant Eagle has switched over several of its grocery stores to online order fulfillment.

Amazon has seen such a large uptick in online grocery shopping that it has begun putting new customers on a waiting list so it can catch up with existing customer orders.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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