Amazon shuts Go and Fresh stores to focus on Whole Foods expansion

Amazon said on Tuesday it will close its Go and Fresh physical stores as it shifts its grocery strategy toward expanding Whole Foods and boosting online grocery delivery.

The Go and Fresh outlets had served as testing grounds for Amazon’s retail technology, including cashierless shopping systems that automatically charged customers as they left the store. While the technology demonstrated innovation, analysts said the formats failed to prove profitable.

“Go and Fresh showed what was technologically possible, but not what was viable economically,” said Zak Stambor, senior analyst at Emarketer. He added that Amazon is betting mass-market grocery sales can be handled more efficiently through same-day delivery, with Whole Foods as its main physical retail brand.

Amazon said grocery sales through its same-day delivery service surged fortyfold over the past year. The company is also testing ultra-fast delivery options, offering fresh food and other items in 30 minutes or less.

In a blog post, Amazon said it will continue developing new physical retail concepts that offer customers strong selection, value and convenience. Among the ideas under consideration is a large-format retail supercenter combining groceries, household essentials and general merchandise.

The company plans to open more than 100 new Whole Foods stores in the coming years, with some existing Go and Fresh locations set to be converted into Whole Foods outlets.

Since Amazon acquired Whole Foods in 2017 in a $13.7 billion deal, sales at the chain have grown 40 percent and the number of stores has expanded to more than 550 locations, Amazon said. The company now ranks itself among the top three grocery retailers in the United States.

“We believe Amazon’s reallocation of resources toward Whole Foods and fast delivery likely strengthens its logistics flywheel,” said Colin Sebastian, senior equity research analyst at Baird, noting that groceries remain a major growth opportunity for the company.