Amazon is closing its physical Amazon Go and Amazon Fresh stores
TL;DR
Amazon is closing its Amazon Go and Amazon Fresh physical stores to focus on same-day grocery delivery and expanding Whole Foods Market. The company will license its cashierless technology to third parties instead.
Key Takeaways
- •Amazon is shutting down its Amazon Go and Amazon Fresh brick-and-mortar stores due to economic challenges and lack of distinctive customer experience.
- •The company will expand same-day grocery delivery services and open over 100 new Whole Foods Market stores in coming years.
- •Amazon will continue developing its Just Walk Out cashierless technology but will license it to third-party businesses rather than using it in its own stores.
- •Whole Foods Market has seen strong growth (40% sales increase since 2017) and has stronger brand affinity than Amazon's grocery stores.
- •These closures don't affect Amazon's grocery delivery services, and the company remains committed to physical retail through Whole Foods.
Tags
RIP, Amazon convenience stores: gone and probably soon forgotten.
Amazon announced on Tuesday that it will close its brick-and-mortar Amazon Go and Amazon Fresh stores and will instead expand its capacity for same-day grocery delivery, as well as its Whole Foods Market footprint.
These stores were used to grow Amazon’s cashierless Just Walk Out technology, which tracks what items customers grab, allowing them to pay for their groceries without a more formal checkout process. The company is instead focusing on offering that technology to third parties, like concession stands at sports stadiums.
“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 wrote in a blog post.
These retail closures will not impact customers who use Amazon for grocery delivery.
It’s not surprising that Amazon will divest from its branded retail stores, given that Amazon has been cutting down on its physical retail presence over the last few years. Upon closing down some stores in 2024, an Amazon spokesperson said that the company “couldn’t make the economics work with the lease cost.”
Amazon isn’t giving up on the brick-and-mortar side of its business, though. Instead, it will embrace the fact that people have a stronger brand affinity with Whole Foods Market than the Amazon Go convenience store.
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Amazon will open more than 100 new Whole Foods stores over the next few years. The company says Whole Foods has seen over 40% sales growth and expansion to 550 stores since it was acquired by Amazon in 2017.
Amazon also plans to open more Whole Foods Market Daily Shop locations — a smaller version of the grocery store with an emphasis on convenience and grab-and-go meals. These seem similar to the idea behind Amazon Go and Amazon Fresh stores, but people probably feel better about grabbing a salad from Whole Foods than the Amazon Fresh store… even though they’re the same company.