As any local store owner will tell you, running a brick-and-mortar business in this day and age Amazon It’s an uphill battle. It’s a lesson Amazon itself has just learned.
The e-commerce giant said Tuesday it will close its “Fresh” grocery stores and its automated pickup “Go” stores, adding to its list of failed brick-and-mortar experiments.
“While we’re seeing encouraging signals in Amazon-branded brick-and-mortar grocery stores, we haven’t yet created a truly unique customer experience with the right economic model required to scale at scale,” Amazon explained. In a post on its website.
The move comes a day before Amazon’s announcement. Businesses cut 16,000 jobs on Wednesdayincluding some related to Go and Fresh closing. Last year, Amazon CEO Andy Jassy launched a campaign to rein in what he saw as layoffs, cutting 14,000 jobs. Bureaucracy that stifles creativity. The company is also shifting resources to building artificial intelligence data centers.
The 550-store Whole Foods chain, which Amazon acquired in 2017, will remain open with plans to expand. But the 58 Amazon Fresh stores the brand launched in 2020 were small grocers that focused on the mass market and never found their niche. Amazon’s Go convenience stores, launched in 2018 and a top priority for founder Jeff Bezos, use an array of cameras and sensors to track every item a shopper picks off the shelves and automatically charge customers as the item leaves the store, eliminating the need for customers to wait in checkout lines. But the dazzling technology isn’t enough to hide the blandness of the merchandise.
There is precedent for these failures: In 2015, Amazon launched a small chain of bookstores that closed a few years later. Other Amazon retail failures: Amazon Four Star (a store for kitchen supplies, toys, and electronics); electronic kiosks in shopping malls; and the short-lived Amazon Clothing chain store called “Style” After just two years, it closed in 2023.
As Amazon has shown to many of the retailers it has disrupted over the years, standing out from the competition — whether in pricing, service or merchandise — is crucial, and in that regard, Go and Fresh have struggled.
These failures illustrate the weakness of Amazon’s retail philosophy: In brick-and-mortar retail, logistics and operational excellence alone are not enough. Creating an engaging in-store experience requires excellent merchandising and presentation skills. Neil Saunders, managing director of GlobalData, said: “The plain truth is that neither Fresh nor Go stores offer this service.”
But even if they don’t survive, Amazon’s brick-and-mortar retail concept arguably demonstrates the strengths of Amazon’s corporate culture: a pragmatic approach that allows for failure but also limits losses and learns new lessons. With insights gleaned from Go and Fresh, Amazon is refining and expanding its new five smaller Whole Foods Everyday stores, which will serve as mini-convenience stores. The company will also stock more produce and perishable food items at its same-day delivery warehouses and more Whole Foods stores.
These failures show why Amazon ultimately succeeds at just about everything: The “Just Walk Out” cashierless system may not have been enough to save Amazon’s 14 Go stores, but its technology is now sold as a service to more than 360 third-party stores.
To describe the company’s tireless approach, Sanders referenced the catchphrase of Arnold Schwarzenegger’s killer robot from the 1984 science fiction novel Terminator. “In our view,” he said, “Amazon’s mantra for brick-and-mortar grocery is, in a way,: We’ll be back.”