Amazon’s Brick-and-Mortar Struggles Hit Convenience Stores

Amazon Go’s footprint continues to shrink, the latest unsuccessful venture into brick-and-mortar retail for the tech giant.

The latest store closure for the convenience store brand means Amazon Go’s portfolio is about half of what it was two years ago, the Wall Street Journal reported. The brand will soon be down to 16 stores in four states.

Amazon’s quest to bring its online dominance to the world of physical retail has been a challenge. The company in recent years shuttered all of its storefront bookshops, pop-ups, and toy and home-goods shops.

“I don’t think they really understand retail,” said SiteWorks Retail president Nick Egelanian. “Running warehouses and shipping stuff efficiently is not the same as greeting a customer and saying, ‘May I help you?’”

The company’s Amazon Go convenience store concept isn’t a total loss for the e-commerce giant. The checkout-free locations helped hone “Just Walk Out” technology, which allows customers to skip the payment line and be charged electronically. The company has licensed the technology to more than 200 retailers.

It opened a store in Bellevue, Washington last summer and reportedly continues to invest in existing locations.

One area of physical retail where Amazon is seeing success is the grocery store category; Amazon’s brick-and-mortar sales have grown annually since 2021, pushed along by Whole Foods Market, which Amazon acquired in 2017 for $13.5 billion. In the third quarter, net sales from Amazon’s brick-and-mortar holdings hit $5.2 billion, according to financial filings, a fraction of what the company’s sales were online.

A couple of years ago, the promise of Amazon Fresh grocery stores went stale in the minds of communities waiting for them to open. Properties became zombies, lacking clear direction towards opening or being abandoned.

But Amazon has plans to open more of the stores, slated to sell cheaper goods than Whole Foods, after revamping the shopping experience.

— Holden Walter-Warner