“Is This the Future of Grocery Shopping – Or Just Hype?” is the question that a Coupons in the News article posed nearly a decade ago, about Amazon’s high-tech entry into the low-tech physical grocery space.
It now appears to have been the latter.
Amazon is officially abandoning its effort to operate Amazon-branded grocery stores, announcing the permanent closure of all of its 14 Amazon Go and 58 Amazon Fresh stores. The stores not only represented Amazon’s attempt to plant its flag in the brick-and-mortar grocery business, but an effort to revolutionize the very concept of in-store grocery shopping.
While Amazon has had limited success with the technology it embedded in both store formats, their revolutionary promise may have been just hype after all. The stores’ tech tools are far from widespread, and the future of grocery shopping now will no longer include grocery stores with the Amazon name out front.
“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 acknowledged in announcing the closures. “After a careful evaluation of the business and how we can best serve customers, we’ve made the difficult decision to close our Amazon Go and Amazon Fresh physical stores, converting various locations into Whole Foods Market stores.”
Amazon’s first Amazon Go prototype store, which opened back in 2016, predated the company’s purchase of Whole Foods a year later. That purchase led many to believe that Amazon would redirect its physical-store focus to Whole Foods, while perfecting grocery delivery via Amazon.com.
Instead, Amazon kept tinkering with its own Amazon-branded stores, launching two different formats that existed awkwardly alongside Whole Foods and Amazon’s own grocery delivery service.
Amazon Go stores feature what Amazon calls “the world’s most advanced shopping technology,” allowing you to grab what you need and “just walk out” without having to scan anything or stop to pay. That technology proved to be better suited to small convenience-type stores than a full grocery store, so a few years later, Amazon launched the separate Amazon Fresh chain of more conventional grocery stores. These feature Amazon’s “smart” grocery carts, which still require you to scan your items as you shop, but you don’t have to unload them all to pay at a traditional checkout.
And now, the company appears to have come full circle, doing exactly what it seemed likely to do after acquiring Whole Foods. By “prioritizing our investments,” as Amazon now puts it, the company will redirect its physical grocery store focus to Whole Foods, while perfecting online grocery on its own website.
Grocery delivery has certainly grown since 2016, and Amazon says it’s now “doubling down on online grocery delivery.” It plans to expand same-day delivery of packaged and perishable groceries to more communities in the year ahead, and is testing an “ultra-fast delivery option” that will bring groceries to your door in 30 minutes or less.
As for physical stores, in addition to the dozens of former Amazon stores that will be converted to Whole Foods, Amazon plans to open more than a hundred brand new Whole Foods stores over the next few years, “increasing our investment in our physical stores that are resonating with customers,” as the company put it.
“Amazon is prudent to divert its investments to areas where they can have impact and generate a stronger return,” Neil Saunders, Managing Director and Retail Analyst at GlobalData Retail, wrote on LinkedIn. When it comes to physical stores, “grocery shopping is extremely habitual, and getting shoppers to switch where they buy requires clear and compelling differentiation,” he continued. “Neither Fresh nor Go stores offered this.”
But never say never, when it comes to Amazon succeeding in traditional retail. “Over the coming years, we plan to introduce new store concepts that we think customers will be excited about,” Amazon promised. While giving up on Amazon-branded traditional grocery stores, it’s thinking big – and small. Small, in the form of mini-stores offering a small selection of groceries sold under the Amazon name inside or alongside existing Whole Foods locations. And big, in the form of a Walmart-like supercenter that it’s currently planning to build near Chicago.
“Through it all, our goal remains: to make grocery shopping easier, faster, and more affordable for customers,” Amazon pledged. So Amazon may not have revolutionized grocery shopping in its ten years of trying. But “easier, faster and more affordable” may be a far more achievable goal – and for shoppers who aren’t wowed by technology and bold promises, a far more desirable one.
Image source: Amazon
