Additional Coverage:
- Amazon is closing its futuristic Go and Fresh stores—showing logistics and tech aren’t enough to make old-school retail work (fortune.com)
Amazon Pumps the Brakes on Physical Stores, Shifts Focus Amid Layoffs
In a move that highlights the ongoing challenges of brick-and-mortar retail, even for an e-commerce giant, Amazon announced Tuesday it would be closing its Amazon Fresh grocery stores and its automated grab-and-go Go shops. This decision adds to a growing list of physical retail experiments that the company has ultimately deemed unsuccessful.
“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 stated in an online post, explaining the closures.
This announcement came just a day before Amazon revealed plans for 16,000 corporate layoffs, some of which are tied to the Go and Fresh store shutdowns. These job cuts follow 14,000 layoffs last year as CEO Andy Jassy continues his efforts to streamline operations and combat what he describes as creativity-stifling bureaucracy. The company is also redirecting resources towards the development of AI data centers.
While its 550-store Whole Foods chain, acquired in 2017, will remain open and is slated for expansion, Amazon’s 58 Fresh stores, launched in 2020 with a focus on the mass market, struggled to find their footing. Similarly, the Go convenience stores, a brainchild of founder Jeff Bezos launched in 2018, offered a futuristic cashier-less shopping experience powered by cameras and sensors. However, the innovative technology wasn’t enough to overcome what critics described as uninspired merchandise.
These recent closures are not Amazon’s first foray into brick-and-mortar setbacks. The company previously closed a small chain of bookstores launched in 2015, along with Amazon 4-Star stores (featuring kitchen goods, toys, and electronics), electronics kiosks in malls, and the short-lived Amazon Style clothing store chain, which shuttered in 2023 after just two years.
As Amazon has demonstrated to countless retailers it has disrupted, differentiation-whether through pricing, service, or merchandise-is crucial for success. On this front, the Go and Fresh concepts reportedly fell short. Neil Saunders, managing director at GlobalData, observed, “The blunt truth is that neither Fresh nor Go stores offered this,” highlighting a perceived weakness in Amazon’s physical retail strategy: logistical and operational excellence alone are insufficient without strong merchandising and an appealing in-store experience.
Despite these setbacks, the company’s approach also showcases a key strength of Amazon’s corporate culture: a pragmatic willingness to experiment, learn from failures, and strategically cut losses. Armed with insights from Go and Fresh, Amazon is now refining and expanding its new five-store, small-format Whole Foods Market Daily Shop, designed as a mini-convenience store. The company also plans to increase the stock of produce and perishables in its same-day delivery warehouses and at more Whole Foods locations.
Moreover, while the “Just Walk Out” cashier-less systems may not have saved Amazon’s 14 Go stores, the underlying technology has found new life, now being sold as a service to over 360 third-party locations. This adaptability underscores why Amazon often finds success even after initial missteps.
Saunders encapsulates Amazon’s persistent approach with a familiar cinematic reference: “In our view,” he stated, “in one way or another, Amazon’s physical grocery mantra is ‘We’ll be back.’”