Whole Foods and Amazon May to Coming for Those Empty Sears Stores

"There are plenty of Sears/Kmart boxes surrounded by high quality demographics"

April 12, 2019

© Jefferson Graham, USA Today

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Don't be surprised if Whole Foods or another Amazon grocery chain pops up where an old Sears used to be.

Hundreds of former Sears and Kmart locations around the country could be attractive fits for Whole Foods or a potential new Amazon supermarket concept, analysts at BMO Capital Markets said in a research report this week.

Moving into former Sears or Kmart sites may be the quickest and the cheapest way for Whole Foods or a different Amazon concept to grow, the analysts said. Amazon reportedly wants to launch a separate line of lower-priced supermarkets than Whole Foods.

Sears, which bought Kmart in 2004, filed for bankruptcy last year. It has already closed around 170 stores in recent years and plans to close another 260. Sears said in bankruptcy court that it expects to raise at least $650 million from real estate sales in the next three years.

Despite Sears' struggles, hundreds of its vacant or soon-to-close stores are located in appealing neighborhoods for retailers, according to BMO analysts. Amazon reportedly has been eyeing former Sears and Kmart sites for new Whole Foods' stores.

The analysts identified 110 Sears and Kmart locations without a Whole Foods within three miles that they believe would fit the upscale chain's demographic criteria for new stores, particularly in suburban areas.

Whole Foods targets wealthier shoppers in urban areas. Its shoppers have a median income of around $72,000, compared to $55,000 at Walmart, according to BMO Capital Markets.

"There are plenty of Sears/Kmart boxes surrounded by high quality demographics," BMO analysts said in the report.

The analysts also found more than 320 Sears and Kmart spaces with surrounding demographics that a cheaper grocer, such as a new Amazon concept, might find attractive.

Both Amazon and Whole Foods declined to comment.  Sears did not immediately comment.

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