“We regularly test new experiences designed to make customers’ lives better and easier every day, including physical stores,” an Amazon spokesperson said. (Photo by Smith Collection/Gado/Getty Images)
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Amazon is making a bold move to try to transfer its e-commerce dominance into physical retail. Even as roughly 80% of retail still happens in physical stores, Amazon remains a small player in one of the country’s biggest and most essential retail categories: grocery, which is rapidly approaching a $1 trillion business.
Currently, Amazon holds only about a 3% share in the grocery market, even after its $13.7 billion Whole Foods acquisition—1.6% for Amazon and 1.6% for Whole Foods, according to Numerator. By contrast, Walmart commands a 21% share, with 4,600 U.S. stores, including 3,500 superstores and 600 Sam’s Clubs. However, Amazon generated over $100 billion in grocery sales in 2024, so presumably that would be a larger share of the segment’s sales. Yet, regardless of how it’s measured, Amazon is still playing catch-up to the retail giant.
Now Amazon is making its most aggressive brick-and-mortar move yet. In 2027, it plans to open a 230,000-square-foot mega-store outside Chicago—a footprint that dwarfs a typical 173,000-square-foot Walmart supercenter. It will sell a mix of groceries, household essentials and general merchandise, just like a Walmart. According to the Wall Street Journal, more Amazon big-box stores are in the works.
Setting The Stage
Amazon has secured zoning approval to begin construction of the new store in Orland Park Village, a Southwest suburb of Chicago. The yet-to-be-named Amazon store will be located at the corner of 159th Street and LaGrange Avenue, on a 35-acre former restaurant site. It’s a heavily trafficked intersection with Walmart Supercenter, Target and Costco stores close by. The location will include some 800 parking spots and provide 500 new jobs to the community.
It took only about two weeks for the zoning board’s approval, with Orland Park Mayor Jim Dodge all in on the plan. “Projects like this have the potential to generate substantial sales tax revenue that directly benefits residents while strengthening one of our most important corridors,” he said.
A number of local residents opposed the development, mainly due to concerns about traffic congestion. To alleviate that issue, Amazon will install multiple turning lanes and will schedule truck deliveries in off-peak hours.
Despite some negative feedback, the board approved the project without any tax or other incentives, on the condition that the location be used as a consumer-facing retail store, not as a fulfillment center for e-commerce. Given that requirement, it’s ultimately too big to fail, since if retail doesn’t work, Amazon can’t easily repurpose it into a fulfillment warehouse.
Battle In The Grocery Aisle
While details of the store remain sketchy, Amazon told the WSJ that the store will be designed for customers to buy “fresh groceries, household essentials and general merchandise—all in one trip.”
Presumably, it will accept online returns and serve as a pickup hub for some online orders, since buy-online-pickup-in-store (BOPIS) has become an industry standard and such services are available at Whole Foods.
Approximately half of the new store will be designed for customers to browse the aisles, and the back half will be used to fulfil same-day grocery orders as well as orders generated from the front of the store.
For example, a customer can place an order for a particular item at an in-store kiosk and have it delivered to checkout. Bulky items, such as large bags of dog food or kitty litter, can also be ordered and delivered to the shopper’s car.
A new store-within-a-store concept at the Whole Foods store in Plymouth Meeting, PA provides a hint of what might be coming. The back of the store includes a 10,000-square-foot automated micro-fulfillment center, which carries over 12,000 items, including name-brand groceries and popular everyday essentials from Amazon, allowing customers to order additional products with QR codes. It also offers multiple online delivery and pickup options.
“We regularly test new experiences designed to make customers’ lives better and easier every day, including physical stores,” an Amazon spokesperson shared with me. “The site in question is our planned location for a new concept that we think customers will be excited about.”
Consumer Intelligence Research cofounders Michael Levin and Josh Lowitz observed that the model for the new store leans heavily on Walmart-inspired ideas. “It reveals a degree of Walmart jealousy that we didn’t expect,” they shared with Business Insider.
There’s apparently jealousy on both sides. While Amazon is playing catch-up in the grocery aisle, it holds a dominant 40% share of e-commerce sales among the nation’s top 2,000 online retailers, while Walmart trails at 11%, per Digital Commerce 360.
Through the first three quarters of the current fiscal year, Amazon.com generated $299.3 billion in North America segment sales compared with Walmart U.S. at $353.8 billion.
Priming The Pump
For years, Amazon has tried to crack the code in brick-and-mortar retail, where Walmart continues to rule. Following founder Jeff Bezos’ belief that innovation comes from constantly testing new concepts, Amazon tried a bookstore concept that fell flat. After acquiring Whole Foods, it tested an Amazon 4-star concept to sell highly rated general merchandise products in-store, and that too was shuttered in 2022. It also tried an Amazon Style concept for fashion that went nowhere.
It still operates 14 Amazon Go cashier-less convenience stores—after closing more than half— and 50 Amazon Fresh grocery stores, which have also experienced closures.
Getting brick-and-mortar retail right is becoming a critical necessity. With an estimated 75% of all American adults already Prime members, Amazon is hitting a ceiling online—a boundary that will be increasingly difficult to break through. It needs to find a successful physical retail concept to keep the pump primed, since consumers will always want to shop in stores.
“At this stage, the store is more experimental than anything else,” GlobalData’s retail managing director Neil Saunders shared with me, as he noted it will be a test to find out if a combined grocery and general merchandise concept works better than the stand-alone grocery, convenience and fashion store concepts it has tried in the past.
Ultimately, the new mega-store’s success will depend on whether it can entice existing Walmart, Costco and other local grocery store customers to transfer their loyalty to Amazon.
“Whether this works remains to be seen. Amazon’s track record of physical store concepts isn’t great because they tend to focus too much on technology and not enough on customers and differentiation—and given there are so many physical stores to choose from, those things are critical,” he concluded.