E-commerce giant Amazon is pulling the plug on all its Amazon-branded grocery stores, closing about 70 locations and saying it hasn't found the "right economic model" for large-scale expansion in yet another failed effort at brick-and-mortar retail.
The Seattle-based behemoth disclosed plans to shut down its Amazon Fresh supermarket chain and Amazon Go outposts in a blog post Tuesday. There are roughly 58 Fresh stores and about 14 Go convenience shops. The company didn't disclose a timetable for the closings. But in Chicago, at least one Amazon Go location was already dark Tuesday.
Amazon said that despite "encouraging signals" in its Amazon-branded stores, "we haven't yet created a truly distinctive customer experience." So, Amazon said it made the difficult decision to close the Fresh and Go locations, with plans to convert an unspecified number of them to Whole Foods Market stores, the Austin, Texas-based grocery chain it owns.
At various public forums, Amazon officials have said they are not afraid to experiment with, and risk failure, trying out different concepts. And that holds true when it comes to physical retail, where Amazon has pulled back on a number of forays.
In March 2022, the company pulled the plug on 68 stores representing three chains, namely its Amazon 4-star, Amazon Pop Up and Amazon Books locations in the United States and Great Britain. And last September, it announced it was closing all its Amazon Fresh stores in the United Kingdom.
"While Fresh and Go will no longer form part of Amazon’s grocery ambitions, this should not be taken as a signal that Amazon has given up on the category," Neil Saunders, a retail analyst and managing director at GlobalData, said Tuesday in a note.
"Nor does it mean that Amazon has failed in grocery," he said. "On the contrary, while it has struggled with its own-brand physical formats, Amazon has found huge success in online grocery and has found traction with Whole Foods. So much so that Amazon’s grocery operation is now a $100 billion business with a customer base of over 150 million shoppers. And it continues to take significant levels of market share across grocery."
Amazon declined to comment on Saunders' remarks.
The company touted the success of its Whole Foods chain, saying it plans to open over 100 of its stores in the next few years, and that it plans to focus its investment there.
"Whole Foods Market, a pioneer and leader in natural and organic foods, has seen strong success since our 2017 acquisition, with over 40% sales growth and expansion to more than 550 locations," Amazon said in its blog. "Customers are increasingly choosing Whole Foods Market for both everyday shopping and special occasions, as demonstrated by record-breaking customer traffic and year-over-year comparable store growth that is outpacing the broader industry."
Amazon also said it plans to continue to try out new brick-and-mortar concepts, including a 229,000-square-foot big-box location that it is planning outside Chicago.
"We will ... continue inventing on behalf of customers to develop a mass physical store format that brings customers distinctive selection, value and convenience," Amazon said. "Over the coming years, we plan to introduce new store concepts that we think customers will be excited about. For example, we are exploring a new supercenter physical retail concept designed for customers to conveniently shop Amazon’s broad selection and low prices across fresh groceries, household essentials and general merchandise."
Amazon launched a smaller-format Whole Foods Daily Market Shop concept in 2024 and now has five of them. "Based on strong performance," Amazon said it will open five additional Whole Foods Market Daily Shop locations by the end of the year.
"We will continue to invent for customers, including testing new physical store experiences like Amazon Grocery, which we launched alongside Whole Foods Market in Chicago, Illinois, or our ‘store within a store’ experience in the Whole Foods Market in Plymouth Meeting, Pennsylvania, where customers can also shop for groceries and household essentials from Amazon," the company said. "These experiences make it easier for customers to shop our extensive grocery selection, all in one place."