Feb 2, 2023
Amazon Halted Fresh Grocery Store Rollout for Review, CEO Says
(Bloomberg) -- Amazon.com Inc. has paused expansion of its line of Amazon Fresh grocery stores as it evaluates how to make the chain stand out to shoppers, Chief Executive Officer Andy Jassy said on Thursday.
Amazon has owned Whole Foods Market since 2017, but in recent years much of its energy has been devoted to Amazon Fresh, a line of mainstream grocery stores that now number in the dozens after a rapid expansion during the pandemic. The effort to crack the grocery market has long been one of Amazon’s biggest bets — and struggles.
“We’re doing a fair bit of experimentation today with those stores to find the format that we thinks resonates with customers, is differentiated in some meaningful fashion, and where we like the economics,” Jassy said.
He added that the company had decided not to expand physical Fresh stores until they complete that evaluation. “We’re optimistic that we’re going to find that in 2023,” and expand more quickly, he said.
The stores struck grocery analysts as an effort to compete with mainstream supermarkets and discounters in a way that a more upscale Whole Foods cannot.
Some Fresh stores are equipped with Amazon’s cashierless Just Walk Out technology. They also emphasize in-store pickup of online orders with a prominent customer-service counter.
Jassy made the comments on Amazon’s fourth-quarter earnings call with financial analysts. He said Amazon, which has sold food under the Fresh brand online since 2007, had a “a very large” grocery business. He went on to highlight strengths in packaged food, paper products, pet and personal care items, but acknowledged the company has less market share in perishable goods that shoppers often like to eyeball in person.
Jassy said he was pleased by Whole Foods’ “progress” on profitability in the last year. “It’s a significant business, and it’s a good business for us,” he said.
UBS analysts said recently that Amazon accounted for about 4% of the US grocery market. Last week the company informed customers that it would start charging for most grocery deliveries, rolling back a previous offer of free delivery for Prime members on orders of more than $35.
News site The Information reported in December that Amazon appeared to be letting new Fresh stores sit empty and unopened.
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