Amazon to close Fresh, Go stores, expand Whole Foods

Jan 27 (Reuters) – Amazon said on Tuesday it would shutter its Amazon Go and Amazon Fresh physical stores and convert a number of those locations into Whole Foods Market, the latest push in the company’s efforts to beef up its grocery business.

The move is part of Amazon’s plan to open more than 100 new Whole Foods stores over the next few years as it bets on the upmarket grocery brand to help it compete better with retailers such as Walmart and Kroger, as well as delivery services like Instacart.

Amazon said it would also expand its same-day delivery service to more U.S. cities this year to cash in on the surging demand for household essentials on its platform, where more than 150 million customers shop for groceries annually.

The Amazon Fresh banner – known for allowing customers to skip the checkout line when picking up groceries at brick-and-mortar stores – will continue to operate online in available areas, the company said.

“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 said in a statement.

The closures were meant to “prioritize investment in growth areas”, the tech giant said.

Outside of Fresh stores, Amazon has also tried multiple different brick-and-mortar concepts including bookstores and clothing, as well as stores stocking only the highest-rated items on its retail website.

The cashier-less convenience store brand Amazon Go, rolled out in 2018, offered customers prepared foods and snacks along with groceries.

The pivot follows a similar move by Amazon in the UK, where it closed all of its Amazon Fresh stores and converted some of them into Whole Foods locations.

Amazon has been working to integrate Whole Foods more closely within its operations. Last year, it extended its corporate staff programs, including pay structure and benefits, to the Whole Foods corporate workforce.

The company has invested heavily in speeding up delivery timelines to cater to customer demand for perishables and now offers online grocery delivery in over 5,000 cities and towns in the United States. It recently started testing 30-minute deliveries in Seattle and Philadelphia.

Amazon did not share the number of employees that would be impacted by the store closures. However, it said it was working to help associates find other roles elsewhere within Amazon.

(Reporting by Deborah Sophia in Bengaluru; Editing by Arun Koyyur and Pooja Desai)