All Amazon Fresh stores in the UK are set to close just five years after the chain, best known for its "Just Walk Out" technology, launched, marking a bricks-and-mortar retreat for the ecommerce giant.
Amazon announced on Tuesday afternoon that it had started a consultation with employees regarding plans to close 14 stores under the Fresh brand and convert five into Whole Foods Market shops, its premier supermarket label stocking organic food.
The group explained its decision to axe the entire portfolio of UK Fresh stores is part of a plan to take advantage of "very substantial growth opportunities" in online grocery delivery in the country.
It does, however, intend to have 12 Whole Foods Market supermarkets open by the end of 2026, having launched one in Chelsea earlier this year and confirmed the arrival of another in Greater London.
John Boumphrey, Amazon UK country manager, said in a statement: "Since 2008, we've worked hard to innovate to help our customers save time and money when shopping for groceries and household essentials.
"We continue to invent and invest to bring more choice and convenience to UK customers, enabling them to shop for a wide range of everyday essentials and groceries with low prices and fast delivery through Amazon.co.uk, Amazon Fresh, and Whole Foods Market stores, alongside our third-party grocery partners, including Morrisons, Co-op, Iceland, and Gopuff."
Grand plans
Amazon opened its first Fresh store at British Land's Ealing Broadway Shopping Centre in March 2021. It followed this with a second London store in Wembley, before expanding outside of the capital at Bligh’s Meadow shopping centre in Sevenoaks, Kent, owned by Aberdeen.
Reports in 2021 suggested that Amazon was planning to expand its Fresh brand in a big way, with an internal memo cited by various media indicating that it was looking to open a total of 260 shops.
But Fresh store numbers failed to reach even 10% of this target, with the portfolio understood to have peaked at around 20 stores at the brand's height. The remaining portfolio of Fresh stores totalled 19 sites at the time of yesterday's announcement.
They include: Aldgate, Angel, Chingford, East Croydon, Euston, Holborn, Hounslow, Hoxton, Kensington, Liverpool Street, Moorgate, Monument, Notting Hill Gate, Southwark, Sevenoaks, Wembley, West Hampstead, White City and Wood Wharf.
Part of the appeal of the Fresh stores brand was its "Just Walk Out" technology, with customers scanning into stores using a smartphone and walking out of the shop without having to visit a cashier.
One of the last stores to launch was a circa 2,500-square-foot unit at 20 Gracechurch Street in Monument, adding to its cluster of central London premises, a favourite destination for the supermarkets. Its UK stores were typically around 2,500 square feet in size.
Amazon argued its proposals would "provide UK customers with expanded options for shopping with us for their groceries and household essentials," citing PwC data that shows Britons are expected to conduct more than a quarter of their food spending online by 2030.
The retailer also plans to introduce perishable groceries alongside its regular products on Amazon.co.uk with Same-Day Delivery in the UK, having recently launched this service in the US, which allows customers to buy perishable items, such as food, alongside other items.
US strategy unchanged
The UK closings have no impact on Amazon Fresh's fleet in the United States, according to the parent company. But the rollout in the States has also had its challenges. In February 2023, Amazon announced it was shutting down some US Amazon Fresh supermarkets and halting the chain's expansion to retool the concept. It then revamped some Fresh locations in suburban Chicago and Los Angeles, making the stores airier and brighter.
Last year, Amazon resumed and stepped up Fresh's US rollout. The fledgling chain now has more than 60 stores. The most recent opening was in August in Philadelphia at 555 Spring Garden Street in the Northern Liberties neighbourhood.
Shoppers are responding to the US Fresh redesigned stores, with the average monthly customer spend-in-store rising by more than 20%, according to Amazon.
Boumphrey added: "We're deeply invested in the UK's economic growth and creating opportunities for both customers and employees. We’ll be working hard to support any potentially impacted teams throughout these planned changes and are deeply grateful for their dedication.
"If the proposal moves forward, we’ll support our employees by offering alternative employment opportunities within Amazon wherever possible."
'Underestimated competitors'
Natalie Berg, retail analyst and founder of consultancy NBK Retail, argued that Amazon "underestimated the competition" in a post on LinkedIn, labelling the UK grocery market one of the most competitive in the world.
"If Amazon was going to disrupt the status quo, they needed to offer something truly special," Berg said. "If the tech was meant to be the differentiator, and everyone else is now testing their own version of it, what is it that makes Amazon special?
"And that’s the crux: it’s never been clear what Amazon stands for in grocery. Are they cheaper than Sainsbury’s? Higher quality than Tesco? More convenient than Aldi? I honestly have no idea and I’d be willing to bet most shoppers didn’t either.
"On top of that, adoption of the tech was slower than expected. Turns out what shoppers value at the checkout is choice. They don’t want tech forced on them. Even other retailers who trialled autonomous checkout have shifted toward hybrid models."
She added: "Amazon succeeded in shaking up the industry and pushing incumbents to raise their game – which ultimately benefits consumers. But they failed to crack bricks-and-mortar grocery retail because they lacked a clear identity, a clear purpose, and a clear reason for shoppers to choose them in one of the most cutthroat markets in the world."
'Very costly mistake'
Jonathan de Mello, chief executive and founder of consultancy JDM Retail, told CoStar News that Amazon's Fresh stores had been a "very costly mistake" for the group.
He added: "These Amazon Fresh store closures are as I predicted back in 2023, and will come at a cost given they will have signed up for relatively long leases on these sites. Amazon’s failure is down to poor location strategy – locating in highly competitive areas already saturated by other – more established – grocers, and poor in-store execution.
"As a result, Amazon weren’t able to achieve the kind of sales volumes they needed, given already thin gross margins. This – coupled with the high fit out costs associated with opening such tech-intensive stores – means that Amazon’s foray into physical grocery stores has proved to be a very costly mistake."
CoStar News reporter Linda Moss contributed.