Amazon Bidding on Four Fairway Market Locations, Report Says
Amazon has bid on four Fairway locations during a bankruptcy sale of the grocery chain’s 14 outposts that started on Monday, the New York Post reported. While the auction process hasn’t completed, sources told the Post that Amazon was expected to win.
The locations Amazon has its eyes on are in Pelham, New York, Woodland Park and Paramus, New Jersey and one in Brooklyn, according to the Post. Fairway has two outposts in Brooklyn — including its large one on the Red Hook waterfront — and it’s unclear which Amazon is targeting.
A spokesperson for Amazon did not immediately respond to a request for comment.
The move to purchase outposts from Fairway makes sense for Amazon as it has made a push in recent years into the brick-and-mortar grocery business. In 2017, Amazon bought Whole Foods Market for $13.7 billion and last year the Wall Street Journal reported it planned to open dozens of Amazon-branded grocery stores around the country that would be separate from Whole Foods.
“It just expands their footprint,” said retail consultant Kate Newlin. “There aren’t that many [Fairway locations], they’re in a highly-populated area and for a lot of time, until Fairway loaded itself up with debt, they knew how to make money on that kind of Whole Foods-Esque proposition.”
And with the coronavirus epidemic forcing people to stay in their homes, Amazon has had a crush of orders forcing it to hire 100,000 new warehouse workers and delivery drivers to keep up with demand, as Commercial Observer previously reported. Newlin said that Amazon could also be looking to use the Fairway locations as distributions centers for its grocery delivery service during this time.
“As more people rely on Amazon to get them goods via Amazon Prime and Amazon Fresh, they might well need a distribution system for food and consumer products,” she said. “The acquisition makes sense no matter what, but Amazon may feel when they look at consumer data in light of [coronavirus], they may feel a distribution center is a higher and better use immediately.”
The beloved New York City-based Fairway — long a staple on the Upper West Side — struggled in recent years due to competition from Whole Foods and Trader Joe’s and its private-equity owners who loaded the company with debt. It filed for bankruptcy for the second time in four years in January with plans to unload its stores.
Fairway agreed to sell five of its Manhattan locations and its Bronx distribution center to ShopRite-owner Village Super Market for $70 million and put its other nine outposts up for sale. Village Super Market plans to continue to operate the stores as Fairways.