Amazon retreats from physical retail, closes 72 Fresh and Go stores
Strategic pivot to Whole Foods expansion and online delivery as grocery strategy resets after decade of experimentation
Amazon is shuttering all 72 of its Amazon Fresh and Amazon Go stores, marking a decisive retreat from physical retail after a decade of experimentation. The closure, announced Tuesday, represents the most significant recalibration of the retail giant's grocery strategy since its $13.7 billion acquisition of Whole Foods Market in 2017.
Most locations will close by February 1, with stores in California remaining open for an additional 45 days due to state labor notification requirements. According to GeekWire, the decision affects 57 Amazon Fresh supermarkets and 15 Amazon Go convenience stores nationwide. The company is offering affected employees 90 days of full pay and benefits as part of its severance package.
Amazon shares rose 1.4% to $241.68 in afternoon trading, as investors welcomed the strategic refocusing. The stock has gained 50% over the past 12 months, though it remains below its 52-week high of $258.60. Analysts maintain an overwhelmingly positive outlook, with 64 analysts rating the stock a buy or strong buy and an average price target of $295.61, according to market data.
The closure stems from Amazon's inability to develop "a truly distinctive customer experience with the right economic model needed for large-scale expansion," according to an official company statement. The company will instead concentrate resources on its highest-performing grocery assets: Whole Foods Market, which has seen sales increase more than 40% since acquisition, and its rapidly growing same-day delivery service.
"Although we're closing these stores, the impact of your work will shape our next generation of store concepts and customer experiences," Jason Buechel, Amazon's Worldwide Grocery Stores vice president and Whole Foods chief executive, wrote in an internal memo obtained by GeekWire. The Amazon Fresh brand will continue to exist as an online delivery service.
The strategic pivot includes ambitious expansion plans for Whole Foods, with more than 100 new stores planned over the next several years. The company is also expanding its smaller "Whole Foods Market Daily Shop" format, which offers grab-and-go meals and everyday essentials, from five to ten locations by the end of 2026. Some former Amazon Fresh locations will be converted and reopened as Whole Foods stores.
Amazon's same-day grocery delivery service, which now reaches 2,300 U.S. cities and towns, has emerged as the company's most successful grocery initiative. Perishable grocery sales through the service have grown 40-fold since January 2025, according to company data. The service integrates fresh items from Amazon's fulfillment network with general merchandise, creating a competitive advantage against traditional grocery chains.
During an October earnings call, Chief Executive Officer Andy Jassy signaled the strategic shift when asked about the need for physical Fresh stores given the traction of online delivery. "We're on to something very significant with what we're doing with perishables from our same-day facilities," Jassy told Evercore ISI analyst Mark Mahaney.
The closure represents the latest in a series of physical retail retreats for Amazon. The company previously shuttered its Amazon Books, 4-star, and Pop-Up store formats in 2022 after slow sales growth. In March 2023, Amazon closed select Amazon Go locations in what the company described as "optimization decisions."
The grocery retreat comes as Amazon undergoes a broader efficiency push under Jassy, who has implemented multiple rounds of corporate layoffs aimed at streamlining operations and improving profitability. The company is also developing a 230,000-square-foot "supercenter" concept in Orland Park, Illinois, scheduled to open in 2027, which would combine groceries with general merchandise.
Despite the store closures, Amazon remains committed to physical grocery through Whole Foods, which continues to outperform in the premium segment. The dual strategy—premium physical locations through Whole Foods combined with mass-market online delivery—represents Amazon's attempt to capture different segments of the estimated $1.1 trillion U.S. grocery market while maintaining profitability.