As any local shop owner will tell you, running a brick-and-mortar business in the age of Amazon is an uphill battle. That’s a lesson that Amazon itself has just learned.
The e-commerce giant said on Tuesday that it was closing its “Fresh” grocery stores as well as its automated grab-and-go “Go” shops, adding to its list of failed brick-and-mortar experiments.
“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 explained in a post on its website.
The move came a day ahead of Amazon’s announcement on Wednesday of 16,000 corporate layoffs, including some related to the Go and Fresh closures. That was on top of 14,000 layoffs last year as part of Amazon CEO Andy Jassy’s campaign to rein in what he sees as creativity-stifling bureaucracy. The company is also shifting resources to building AI data centers.
Amazon’s 550-store Whole Foods chain, which it bought in 2017, will remain open with plans to expand. But the brand’s 58 Amazon Fresh stores, launched in 2020 as smaller grocery stores focused on the mass market, never found their niche. Amazon’s Go convenience stores, launched in 2018 and a major priority for founder Jeff Bezos, allow consumers to avoid checkout lines thanks to an array of cameras and sensors that tracked each item a shopper picked from a shelf and automatically charged the customer for it when it left the store. But the dazzling tech was not enough to camouflage how blah the merchandise was.
These failures had predecessors: In 2015, Amazon launched a small chain of bookstores that it closed a few years later. Other Amazon retail flops: Amazon 4-Star (a kitchen goods, toys and electronics store); electronics kiosks in shopping malls; and a short-lived Amazon clothing store chain called “Style” that it closed in 2023 after only two years.
As Amazon showed the many retailers it has disrupted over the years, standing out from the competition—whether on pricing, on service, or on merchandise—is essential, and on that front, Go and Fresh struggled.
These failures illustrate a weakness in Amazon’s retail concepts: In brick-and-mortar retail, logistical and operational excellence isn’t enough on its own. Crafting an appealing in-store experience requires merchandising and presentation prowess. “The blunt truth is that neither Fresh nor Go stores offered this,” Neil Saunders, managing director at GlobalData said.
But even if they didn’t survive, Amazon’s brick-and-mortar retail concepts arguably show a strength of Amazon’s company culture: A pragmatic approach of allowing failure but also of cutting losses and moving on with new lessons learned. Armed with the insights gleaned from Go and Fresh, Amazon is refining and expanding its new five-store, small format Whole Foods Market Daily Shop, which will serve as mini-convenience stores. It will also stock more produce and perishables in its same-day delivery warehouses and at more Whole Foods stores.
And these failures show why Amazon is ultimately successful at almost everything it does: The “Just Walk Out” cashier-less systems may not have been enough to save Amazon’s 14 Go stores, but its tech is now sold as a service to more than 360 third-party locations.
To describe the company’s indefatigable approach, Saunders referenced the catchphrase of Arnold Schwarzenegger’s killer robot in the 1984 sci-fi Terminator. “In our view,” he said, “in one way or another, Amazon’s physical grocery mantra is: We’ll be back.”
This story was originally featured on Fortune.com
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