After a year of retrenching and reflection following the ebb of its pandemic growth, Amazon appears to be growing again.
Amazon.com Inc. CEO Andy Jassy said in May during the company's annual shareholders meeting that Amazon would be using its cash hoard to invest in its cloud services and retail, rather than paying dividends.
Jassy said "the best use of this cash for customers and the business and shareholders right now is investing" in areas that Amazon (Nasdaq: AMZN) is already pursuing.
Sacramento appears to be on track for some of that retail expansion. Amazon has been picking up properties locally, and there are some locations that may see Amazon Fresh retail locations.
Amazon Fresh has been in Sacramento since 2016 as a grocery delivery service.
In early 2022, Amazon representatives told the Business Journal that it would be bringing its physical grocery store concept to the Sacramento area, but the company did not share additional details or timelines.
One location has been confirmed since then, at 7530 Elk Grove Blvd. in Elk Grove's The Ridge retail center. Kelly Rule, senior vice president of leasing for Pappas Investments, which owns the center, told the Business Journal in May that Amazon has indicated it plans to open the store before the end of this year.
That appears to be a turnaround for the Amazon Fresh retail strategy. In February of 2023, Jassy said he was freezing the Amazon Fresh grocery expansion to “tinker with the format.” That statement came as the company reported its 2022 financials, which included the largest annual loss in the company’s history as a public company.
Then in February this year, Jassy said during a conference call with analysts to discuss quarterly earnings: “On grocery, we're pleased with the progress we're making there.”
He said that Whole Foods Market, which Amazon owns, is seeing a strong profitability trajectory.
And Jassy went on to give a progress report on physical Amazon Fresh format stores.
“If you want to serve as many grocery needs as we do, you have to have a mass physical presence,” he said. “And that's what we've been trying to do with Fresh over several years.”
Griffin Buch, an Amazon spokesman in Seattle, said he could not confirm any store locations or timelines in the Sacramento region.
“Our goal is to build a best-in-class grocery shopping experience — whether shopping in store or online — where Amazon is the first choice for selection, value and convenience,” he said.
Buch said Amazon has a large online grocery business with millions of products available for fast delivery, “and the next step is to continue building out our physical presence — which will require significant innovation and persistence.”
Part of that physical presence includes new Whole Foods Market locations, and selective locations of Amazon Fresh stores. "We’re encouraged by early signs of our new store design in Chicago and Southern California, and will proceed adaptively,” Buch said via email.
Amazon Fresh locations in the works
Sites that have been eyed or put under contract locally by Amazon potentially for Amazon Fresh stores include the Elk Grove site, as well as locations Roseville, Citrus Heights and Arden-Arcade. In January 2022, the city of Roseville received a sign application for an Amazon Fresh at 6780 Stanford Ranch Road, a former Toys R Us store. That site remains vacant, but includes the Amazon Fresh color scheme.
Sacramento County records have shown an unnamed grocery store is also planned at Country Club Centre at Watt and El Camino avenues in Arden-Arcade, using the the name "Mendel," which Amazon has used as a code name for locations elsewhere in past. The building at 3460 El Camino Ave. was painted two years ago with the color scheme of white, green and gray consistent with Amazon Fresh stores. No signage has been posted.
And In Citrus Heights, an unnamed grocery store is also planned as part of the redevelopment of the Sunrise Village retail center. For years, the center's brochure included an image of a building with the Amazon Fresh color scheme. In April this year, Redwood City-based general contractor W.L. Butler Construction Inc. began work on several buildings in that center, including the grocery anchor store. Merlone Geier Partners, owner of the center at 5425 Sunrise Blvd., didn't return calls about the grocer tenant. Marisa Brown, spokeswoman with the city of Citrus Heights, said there is no name on the application for that store location.
Outside of Amazon Fresh, Amazon’s online and delivery business is also expanding again, including a new location in the Sacramento region and three massive fulfillment centers nearby.
In an April letter to shareholders, Jassy said Amazon has been focused for some time on faster delivery times, made possible in part by an increase in localized facilities.
“In 2023, Amazon delivered at the fastest speeds ever to Prime members,” he wrote, in the letter. “In the U.S., this result is the combination of two things. One is the benefit of regionalization, where we re-architected the network to store items closer to customers. The other is the expansion of same-day facilities, where in 2023, we increased the number of items delivered same day or overnight by nearly 70% year-over-year.”
Amazon invests in industrial
In May, Amazon bought 84 acres of land in Rancho Cordova for a 629,000-square foot fulfillment center in that city. The property is within the Rio Del Oro master plan, 3,800 acres on Rancho Cordova's east side, and on the southwest corner of future extensions of Rancho Cordova Parkway and International Drive.
While she declined to discuss specific locations, Natalie Banke, Amazon spokeswoman for California, said that the company “is excited to see some really exciting projects that are coming forward and creating good jobs and helping us offer our customers better service.”
Amazon already operates 2.86 million square feet of fulfillment centers, distribution centers and last-mile delivery stations in the four-county Sacramento region, where it employs more than 5,000 people, Banke said. That figure doesn’t include Whole Foods or Amazon Web Services.
The addition of that Rancho Cordova property will bring Amazon to 3.5 million square feet of warehouse and industrial space in the Sacramento region.
While it just bought the land, Amazon was working on it as far back as 2021.
In March 2022, Panattoni Development Company Inc. on behalf of Amazon got approval for plans for that development from the city of Rancho Cordova.
Like many things Amazon, the scale is enormous, including 132 dock doors, a mezzanine platform, 702 big-rig trailer parking stalls and 1,008 car parking stalls.
And yet, by Amazon standards, the 629,000-square-foot Rancho Cordova project is on the small side, considering that Amazon has seven locations within 80 miles of Sacramento in the Central Valley that are 1 million square feet or larger.
One of those 1 million-square-foot buildings is next to Sacramento International Airport, less than a mile down the road from a 855,000-square-foot Amazon fulfillment center in the Metro Air Park commercial center.
Outside of Sacramento, mostly on the Interstate 5 corridor in Stockton, Tracy and Manteca, and also on Interstate 80 in Vacaville, Amazon has six buildings larger than 1 million square feet.
Going out to Tracy, Stockton, Vacaville, Patterson and Manteca, Amazon has 10 million square feet of fulfillment and distribution centers, and 3.4 million square feet of that was just added in the past nine months in only three massive locations in Vacaville, Tracy and Patterson.
