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An article in the Wall Street Journal documents the shortcomings Amazon has faced across numerous experiments with brick-and-mortar retail, questioning why the dominant global e-commerce player “can’t seem to make its physical stores work.”
The article noted that Amazon Go, the convenience store concept launched in 2018 and supported by the company’s “Just Walk Out” technology, now has 16 stores after cutting around half of its original store base since early 2023. The closures of Amazon Books, Amazon 4-star, and Amazon Style concepts over the last three years were also cited as examples of ineptness in non-digital retailing.
“I don’t think they really understand retail,” Nick Egelanian, president of retail-advisory firm SiteWorks Retail, told the WSJ. “Running warehouses and shipping stuff efficiently is not the same as greeting a customer and saying, ‘May I help you?’”
In its first public setback around physical retail, Amazon in March 2022 confirmed it was closing all 68 of its Books, 4-Star, and pop-up stores.
In a RetailWire discussion at the time, Neil Saunders, managing director of GlobalData Retail, said the smaller concepts “lacked a real purpose. They were designed for people to pop in and browse rather than as a destination.” Assortments were “disjointed and unfocused,” according to Saunders, with the stores surprisingly lacking an online connection, such as options to pick up online orders or check stock levels before leaving home.
The broadest criticism has been piled on Amazon’s Just Walk Out technology, which allows customers to shop and leave the store without going to a register. Critics of Just Walk Out in the past have questioned the costs and structural challenges related to placing video cameras and other hardware in store ceilings. Privacy advocates have also raised concerns about the technology’s access to customers’ data.
In April 2024, Amazon announced plans to remove its Just Walk Out technology from Amazon Fresh stores, saying customers preferred its Dash Cart smart shopping cart devices.
In apparel, a setback was the closing in November 2023 of its two tech-infused Amazon Style stores after a two-year test. Amazon Style featured a less-cluttered array of display items on selling floors. Shoppers scanned the QR codes of items they liked, leading staff to gather the garments in the proper color and size for shoppers to try on in fitting rooms.
Specifically around grocery, Amazon in early 2023 indicated it was closing some Amazon Fresh supermarkets as well as Go convenience stores in a cost-cutting move while pausing expansion on Amazon Fresh to rethink its grocery approach. Amazon CFO Brian Olsavsky said on a quarterly earnings call, according to USA Today, “We’re continuously refining our store formats to find the ones that will resonate with customers, will build our grocery brand, and will allow us to scale meaningfully over time.”
Amazon appears to earn credit for generally maintaining the status quo of Whole Foods following its 2017 acquisition while driving growth and finding some success in reducing the chain’s “whole paycheck” reputation for high prices.
Newer experiments include testing a smaller Whole Foods Market Daily Shop and reconfiguring some fulfillment centers to allow Prime members to add goods from Amazon.com, Amazon Fresh, and Whole Foods in one cart to support a one-stop shopping solution.
An opinion article in the Financial Times last year concluded that not being able to extend Amazon’s online benefits, including low prices and expansive offerings, to physical stores is the conundrum.
“Whole Foods is a high-end U.S. chain with prices to match. Go and Fresh convenience stores are too small to offer shoppers a huge number of options. Nor are they considerably cheaper than rivals. It is still difficult to see exactly what distinguishes Amazon on the high street,” the FT stated. “Online, it is known for being cheap, fast and comprehensive. Physical stores should take a similar approach.”