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As any local store owner will tell you, running a brick-and-mortar business in the age of Amazon a heavy battle. That’s a lesson Amazon knows firsthand.
The e-commerce giant said Tuesday it was closing its “Fresh” grocery stores as well as its automated grab-and-go “Go” stores, adding to the list of failed brick-and-mortar experiments.
“While we are seeing encouraging signals in our Amazon-branded physical stores, we have not yet created a truly differentiated customer experience with the right economic model necessary for massive expansion,” Amazon explained. in a post on its website.
The move comes a day before Amazon’s announcement Wednesday of 16,000 corporate layoffsincluding some related Go and Fresh closures. That’s more than 14,000 layoffs last year as part of Amazon CEO Andy Jassy’s campaign to curb what he sees as bureaucracy that stifles creativity. The company is also shifting resources to building AI data centers.
Amazon’s 550-story Whole Foods chain, which it bought in 2017, will remain open with plans to expand. But the 58 Amazon Fresh stores, launched in 2020 as small 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 track each item a shopper chooses from a shelf and automatically charge the customer when he leaves the store. But the dazzling technology isn’t enough to camouflage how blah the merchandise is.
These failures have precedents: In 2015, Amazon launched a small chain of bookstores that closed a few years later. Other Amazon retail flops: Amazon 4-Star (a kitchen appliance, toys and electronics store); electronics kiosks in shopping malls; and a short-lived Amazon clothing store chain called “Estilo” that it closes in 2023 after only two years.
As Amazon has shown the many retailers it has disrupted over the years, standing out from the competition — whether on price, on service, or on merchandise — is important, and on that front, Go and Fresh is struggling.
These failures illustrate a weakness in Amazon’s retail concepts: In brick-and-mortar retail, logistical and operational excellence is not enough by itself. Creating an engaging in-store experience requires sales and presentation skills. “The blunt truth is that no Fresh or Go stores offer this,” Neil Saunders, managing director of GlobalData said.
But even if they don’t survive, Amazon’s brick-and-mortar marketing concepts probably reflect the strength of Amazon’s company culture: A pragmatic approach to allowing failure but also cutting losses and continuing with new lessons learned. Using insights gained from Go and Fresh, Amazon is refining and expanding the new five-store, small-format Whole Foods Market Daily Shop, which will serve as a mini-convenience store. It will also stock more produce and perishables in same-day shipping warehouses and in many Whole Foods stores.
And these failures show why Amazon is ultimately successful in almost everything it does: “Just Walk Out” cashier-less systems may not be enough to save Amazon’s 14 Go stores, but its technology is now sold as a service in more than 360 third-party locations.
To describe the company’s relentless approach, Saunders referenced the catchphrase of Arnold Schwarzenegger’s killer robot in the 1984 sci-fi. Terminator. “In our view,” he said, “one way or another, Amazon’s physical grocery mantra is: We’ll be back.”
This story was originally featured on Fortune.com
