Dive Brief:
- Amazon announced Tuesday it will close all of its brick-and-mortar Amazon Fresh and Amazon Go stores.
- An unspecified number of these storefronts will be converted into Whole Foods Market locations, as Amazon plans to open more than 100 new Whole Foods stores over the next few years.
- The company will shift focus to its same-day perishable groceries delivery offering, expanding the reach of the service to more communities in 2026.
Dive Insight:
Amazon’s decision to abandon its physical grocery store business comes about five years after the company entered the conventional supermarket space with the opening of the first Amazon Fresh store.
But while Amazon has opened dozens of stores under the banner since its debut in Woodland Hills, California, in 2020, the chain has struggled to attract shoppers and compete with established grocers.
In early 2023, the company temporarily stopped growing the chain as it looked for ways to better differentiate the stores and improve their financial performance, with executives acknowledging that Amazon had gotten ahead of itself in its zeal to grab market share from more seasoned grocers.
“There are some clear fundamentals that every grocer needs to get right. And we need to improve on that,” Claire Peters, then-vice president of retail for Amazon, said during a tour of the Woodland Hills store later in 2023.
Amazon expanded stores’ assortment, refreshed decor and doubled down on low prices while also highlighting high-tech features such as Dash Carts. But the e-commerce giant made clear in Tuesday’s announcement that it was not able to accomplish its goal of turning Amazon Fresh into a viable traditional supermarket chain.
“[W]e haven’t yet created a truly distinctive customer experience with the right economic model needed for large-scale expansion,” Amazon said in announcing that it was pulling the plug on the chain.
Amazon disclosed what it called a “difficult decision” to close down the Amazon Fresh and Amazon Go chains in the context of a broader announcement that played up the company’s vast reach in the online grocery space. The company highlighted its grocery delivery service, which is available in more than 5,000 communities, and noted that it has more than $150 billion in gross grocery sales.
Amazon also said that Whole Foods’ experiment with its small-format Daily Shop concept has been successful so far, adding that it intends to add five more Daily Shop locations by the end of 2026. The company noted that customers can continue to shop Amazon Fresh online for delivery.
“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. Nor does it mean that Amazon has failed in grocery,” GlobalData Managing Director Neil Saunders wrote in emailed comments.
“In our view, in one way or another, Amazon’s physical grocery mantra is: we’ll be back,” he added.
