Dive Brief:

• Amazon is interested in buying four Fairway Market stores in New York and New Jersey through an auction for the bankrupt supermarket chain that has been taking place this week, the New York Post reports.​ 
• The fate of Fairway’s stores has been unclear since the iconic chain sought Chapter 11 bankruptcy protection in January. Fairway is trying to reorganize under bankruptcy court supervision for the second time in four years.
• Fairway has also received competing bids for some of its assets from Bogopa Enterprises, operator of the New York-based Food Bazaar chain, and ShopRite operator Village Super Market.

Dive Insight:

Amazon’s reported interest in some Fairway Market stores shows its continuing to take steps to become a major player in the traditional grocery space, and its deep pockets mean the company will be a formidable competitor in the bidding war that started at the beginning of the week. Already this year, Amazon has launched its Go Grocery format in Seattle and has plans to open a brick-and-mortar in Woodland Hills, California. 

If Amazon were to walk away with these locations, it could use them as an anchor for a presence in the coveted New York grocery market and be a threat to established grocers in the region. The retail giant's competitors for Fairway's stores include Village Super Market, which announced a $70 million stalking horse bid for five Fairway stores and a distribution center in January around the same time Fairway filed for bankruptcy, as well as Bogopa Enterprises, which last week offered $75 million for six stores and the distribution facility.

Village Super Market and Bogopa both already have a sizable presence in the New York area, so for either chain, acquiring some of Fairway’s locations would be more of an incremental change than a major shift in their strategies for reaching consumers. But for Amazon, acquiring existing grocery stores in or near new New York City could be a way to really enter the New York market. Currently it serves the New York City market with Amazon Fresh and has an Amazon Go store in the city.   

On the other hand, the very issues that got Fairway into trouble in first place serve as a cautionary tale for any grocery company trying to operate in the competitive and diverse New York market. Fairway built a loyal following in the city over many decades, thriving because it was in tune with what urban consumers wanted in a grocery store. But when the company tried to take its concept beyond the city limits, it ran into trouble drawing suburban consumers used to a different grocery scene.