Amazon Shifts Grocery Focus To Online And Whole Foods As It Closes All Fresh And Go Stores

Topline

Amazon is calling it quits on its Fresh grocery and Amazon Go convenience store concepts as it realigns its grocery strategy around online delivery and Whole Foods, the company announced.

Key Facts

Key Background

Where groceries are concerned, Amazon has found itself in unfamiliar territory: playing catch-up to category leader Walmart, which holds a dominant 21% market share. Amazon aims to narrow the gap by leaning into its ability to drive online sales and quick delivery, while also building up its natural and organic Whole Foods Market business. Amazon acquired Whole Foods for $13.7 billion in 2017—its first major move into brick-and-mortar grocery. Both online grocery and Whole Foods businesses have proven scalable. Whole Foods sales have grown over 40% since the acquisition. With 550 locations now, Amazon sees room to add 100+ more Whole Foods stores in the next few years, including small-scale Whole Foods Market Daily Shops. Whole Foods is also testing store-within-a-store integration with Amazon. On the online front, Amazon says it served over 150 million grocery customers last year, generating $150 billion in gross grocery and everyday-essentials sales. It also introduced same-day delivery in over 5,000 U.S. cities and towns last year, enabling online sales and rapid delivery of perishable groceries along with other items. It will expand same-day delivery to more communities in 2026.

Amazon Go Technology Proves Scalable, But Not The Stores

Amazon Go convenience stores launched in 2018 with the intention of reinventing the convenience store concept, making it even more convenient with “Just Walk Out” technology. By activating the Amazon app, customers could walk in, pick up their items and leave the store immediately, with all purchases charged automatically—no checkout required. While the Go concept never gained enough traction to warrant continued retail expansion, Amazon has successfully licensed the Just Walk Out technology to over 360 third-party locations, including a sports arena, where getting patrons in and out of the concession stand quickly is paramount.

Amazon Fresh Stores Never Took Hold

Amazon Fresh was first introduced as an online grocery delivery service in 2007, then Amazon Fresh supermarkets followed in 2020 as a more budget-friendly alternative to Whole Foods. But unlike Whole Foods, which had a well-defined identity and positioning in the marketplace, Amazon Fresh supermarkets couldn’t distinguish themselves from mainstream grocery stores. While the Amazon name carries enormous weight online, it never translated into a compelling advantage in physical grocery retail. However, Amazon will continue to support the Amazon Fresh delivery service, only the Fresh stores are closing.

Crucial Quote

“Amazon is prudent to step back from rolling out an expensive fleet of suboptimal stores and to divert its investments to areas where it can have more impact and generate a better return—of which there are plenty. It is to these areas that Amazon will direct its immediate focus. Initiatives like integrating perishable groceries into the mainstream e-commerce operation, expanding fast delivery options and growing online assortments are all proven ways to increase grocery sales,” said Neil Saunders, GlobalData’s managing director. “Whole Foods also has significant potential, mainly because it has a clear point of differentiation in the market—one that Amazon is now intent on sharpening to include more food innovation.”

Further Reading

ForbesAmazon Bets Big On Brick-And-Mortar With A Mega-Store Outside ChicagoBy Pamela N. DanzigerForbesJeff Bezos Retakes World’s No. 3 Richest Title—Passing Sergey Brin After Amazon Shutters Retail StoresBy Ty RoushForbesAmazon Will Cut 16,000 Jobs In Latest LayoffsBy Siladitya Ray