Amazon is closing eight physical stores in the United States: all of them cashless Amazon Go stores, which use very expensive technology. The retailer downplays the importance of the closures: “We are optimising our store portfolio”.
Expansion on pause
On 1 April, Amazon will close two Amazon Go convenience stores in New York and four in San Francisco permanently. Two stores in Seattle closed earlier, giving rise to many questions among observers about the future of the cashless shops. The retailer put the expansion of the store format on hold early this year, pending the development of a more successful format. In London, a cashierless Amazon Fresh supermarket closed as well. Last year, the retailer also discontinued non-food formulas Amazon Books and Amazon 4-Star.
Amazon denies that the future of Amazon Go is in doubt: “Like any physical retailer, we periodically assess our portfolio of stores and make optimization decisions along the way”, a spokesperson told Geekwire. “We remain committed to the Amazon Go format, operate more than 20 Amazon Go stores across the U.S., and will continue to learn which locations and features resonate most with customers as we keep evolving our Amazon Go stores.” Amazon Go recently opened a new store in Puyallup, south of Seattle.
However, there is no denying that Amazon Go is facing economic headwinds: its Just Walk Out technology is very expensive but consumers are keeping a sharp eye on their budgets due to inflation. In food, the retail giant seems successful only with the acquired Whole Foods Market supermarkets. However, those are niche organic supermarkets with limited market share.
A few weeks ago, CEO Andy Jassy said that he continues to believe in the potential of physical supermarkets. He even announced a new offensive later this year: “We are hopeful that by 2023 we will have a format we want to go big on.”