Amazon is moving to wind down its ambitious unmanned grocery store business, "Amazon Fresh." It is seen as a result of declining demand for cashierless checkout after the end of the COVID-19 pandemic and intensifying local competition.
According to the Financial Times (FT) in the U.K. and others on the 23rd (local time), Amazon plans to close 19 Amazon Fresh stores in the U.K. Five of them will be converted into Whole Foods Market, the organic grocery retail chain owned by Amazon. Amazon is currently discussing the timing of the Fresh store closures and other details with about 250 employees.
In 2016, Amazon unveiled its so-called "Just Walk Out" technology, which automatically charges customers if they simply leave a retail store with items, and then rolled out the unmanned convenience store "Amazon Go" and the unmanned grocery store "Amazon Fresh," applying the technology in succession.
It entered the U.K. in 2021 by opening the first Fresh store in Ealing, west London. However, starting in 2023, it shut three underperforming stores and scrapped plans to expand its footprint in the U.K. The BBC said, "Amazon has a history of starting and wrapping up businesses at a rapid pace."
The reasons for exiting the Fresh business are multifaceted, but first, the very concept of "Just Walk Out" no longer attracts consumers' interest. The Guardian in the U.K. reported, "As the pandemic ended and demand for contactless shopping waned, this concept ran into headwinds."
Moreover, competition in the local grocery market is fierce. Some assess that Amazon, a latecomer in the U.K., was not strong enough to catch up with established rivals. The FT reported, "Amazon's decision to close all Fresh stores in the U.K. comes as it struggles to challenge incumbent major grocery retailers such as Tesco and Sainsbury's."
Having folded the Fresh business, Amazon plans to focus on online groceries. Amazon said it will partner with U.K. grocery chains Morrisons and Iceland, as well as the delivery platform Gopuff, to expand grocery options for U.K. Prime members and widen delivery areas.
Amazon said, "After a thorough evaluation of business operations and considering the very large growth opportunities in online delivery, we made a difficult decision." John Boumphrey, head of Amazon's U.K. unit, said, "Amazon will continue to innovate and invest in the U.K."