Amazon Exits Experimental Grocery Stores, Will Focus On Whole Foods, ‘Supercenters’

Amazon is shutting down its Amazon Go and Amazon Fresh grocery stores, marking a significant retrenchment from its most ambitious efforts to reinvent brick-and-mortar food retail. The move reflects the company’s conclusion that, despite years of experimentation, it has not yet found a physical grocery model that can scale profitably under the Amazon brand.

According to the company, Amazon Go and Amazon Fresh locations will all be shuttered by Feb. 1, with the exception of California locations which will remain open longer to comply with state requirements. Some of the shuttered locations will be converted into Whole Foods Market stores, underscoring where Amazon now sees durable value in physical grocery retail.

In short, Amazon is closing physical stores, but you can still order Amazon Fresh online for same-day delivery if they serve your address. 

“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,” Amazon’s PR zoomers vomited forth in a blog post announcing the decision.

At the time of the announcement, Amazon operated 57 Amazon Fresh stores and 15 Amazon Go locations. The closures mark a sharp contrast with the performance of Whole Foods Market, which Amazon acquired in 2017. Since the acquisition, Whole Foods has delivered more than 40% sales growth and expanded to over 550 locations. Amazon said it plans to open more than 100 additional Whole Foods stores in the coming years.

The retreat does not signal an exit from groceries. Instead, Amazon is consolidating around areas where it believes it holds a structural advantage; online ordering, rapid delivery, and logistics at scale. The company said customers will continue to be able to shop Amazon Fresh online, with grocery delivery now available in roughly 5,000 U.S. cities and towns, including thousands with same-day delivery of produce and perishables alongside household staples. Amazon said it plans to expand same-day fresh grocery delivery further this year, citing strong customer feedback.

Amazon’s physical grocery experiments were closely watched as a test of whether technology could meaningfully reshape a notoriously low-margin business. Amazon Go stores, which debuted in Seattle in 2018, eliminated traditional checkout lines by using cameras and sensors to automatically charge customers as they left the store. Amazon Fresh stores, launched in 2020, combined national brands, fresh food and technology-enabled shopping features in a more conventional supermarket format.

While customers responded positively to some of these innovations, Amazon acknowledged that the stores did not yet deliver a compelling economic model. Grocery retail remains highly sensitive to real estate costs, labor, pricing pressure and operational complexity – factors that even Amazon’s technology could not easily overcome.

Importantly, Amazon is not abandoning the technology developed for these stores. The company said its Amazon Go locations served as “innovation hubs” for its “just walk out” checkout system, which is now deployed in more than 360 third-party locations across five countries. Amazon is also expanding the technology internally, with more than 40 North American fulfillment centers using it in employee breakrooms to speed food purchases, with additional locations planned.

At the same time, Amazon said it will continue to test new physical formats. The company revealed plans for a “new supercenter” concept that would allow customers to shop fresh groceries, household essentials and general merchandise in a single location, though it did not provide details on timing or scale. It is also piloting a new “Amazon Grocery” format embedded within select Whole Foods stores, allowing customers to shop for Amazon household essentials alongside traditional grocery items.

h/t Capital.news