Amazon Reassesses Physical Grocery Footprint
Amazon said it will close its Amazon Go and Amazon Fresh physical stores, framing the move as a shift toward online grocery delivery and expansion of the Whole Foods Market brand. Select locations will be converted into Whole Foods stores, while others will be shuttered.
"While we've seen encouraging signals in our Amazon-branded physical grocery stores, we haven't yet created a truly distinctive customer experience with the right economic model needed for large-scale expansion," the company said. "After a careful evaluation of the business and how we can best serve customers, we've made the difficult decision to close our Amazon Go and Amazon Fresh physical stores, converting various locations into Whole Foods Market stores."
The store closures come amid broader workforce reductions at Amazon, which recently announced plans to cut about 16,000 corporate jobs globally, as well as a growing consumer preference for online delivery. The company now delivers groceries to more than 5,000 U.S. cities and towns, with many customers able to get same-day delivery of fresh produce and other perishables.
Amazon Go was the company's first physical retail concept and a showcase for its cashierless "Just Walk Out" technology. The concept debuted publicly in Seattle in 2018 after a yearlong employee pilot, offering a convenience-store format that allowed shoppers to scan into the store, select items and leave without stopping at a checkout. Amazon later expanded the format across major U.S. metros and tested variations, including Amazon Go Grocery, while also licensing the technology to third-party retailers.
Amazon Fresh followed as a larger-scale grocery experiment. Originally launched as a grocery delivery service, the Fresh brand expanded into brick-and-mortar stores beginning in 2020. The stores combined a traditional supermarket assortment with digital features such as Dash Carts, app-based pricing and, in some locations, cashierless checkout, aiming to integrate Amazon's online and in-store shopping ecosystems.
Both concepts struggled to scale consistently. Amazon Go faced reduced foot traffic following shifts in office usage after the pandemic, while Amazon Fresh contended with rising costs, competitive pressures and challenges delivering a differentiated in-store experience. Amazon has periodically paused store openings, adjusted formats and closed select locations as it searched for the right strategy.
Since Amazon's purchase of Whole Foods Market in 2017, the chain has seen more than 40% sales growth and expanded to over 550 locations, the company said. It plans to open more than 100 new Whole Foods Market stores over the next few years.
The closures come as Amazon simultaneously explores the other end of the spectrum with a recently approved 230,000-square-foot concept in Orland Park, Illinois.
Source: GlobeSt/ALM