Amazon is closing its Amazon Fresh and Amazon Go stores in the US, a combined network of 72 locations. As the most significant reset of its store-based grocery ambitions to date, we consider what went wrong and where it leaves Amazon’s grocery store ambitions.

Technology first, shoppers second

Amazon Fresh and Amazon Go were never straightforward supermarket propositions. They were designed as technology-led formats, intended to test new checkout models and deeper digital integration.

But Amazon Go never scaled despite different format iterations, and while there were constant efforts to improve the Amazon Fresh proposition, including new value initiatives, an enhanced look and feel, and expanded hot foods, even some of the most experienced global grocery retail executives failed to penetrate a market where fresh and service-led competition is among the best in the world.

When the technology stopped carrying the format

The removal of Just Walk Out from Amazon Fresh in the US was a pivotal moment. It exposed a more fundamental challenge: without a clear technological advantage, the format struggled to justify its existence. What remained was a mid-market grocery offer without a sharply defined role in Amazon’s wider ecosystem. The decision to close the estate suggests Amazon concluded that it did not represent a scalable or economically defensible model.

Whole Foods Market: asset, anchor, or constraint?

Whole Foods Market now sits at the centre of Amazon’s physical retail strategy. Nearly nine years into Amazon’s ownership, performance has been mixed rather than transformative. While there has been recent progress on pricing perception, private label, loyalty integration, and a new, smaller format, the retailer has not become the growth engine many anticipated. Its premium positioning, operational complexity and relatively narrow core shopper base continue to limit its ability to scale into more mainstream grocery missions.

Amazon’s decision to convert some Fresh locations into Whole Foods Market stores will accelerate its growth. Still, it raises the question of whether Whole Foods Market is more valuable inside Amazon’s ecosystem, or would it ultimately perform better under ownership singularly focused on food retail execution?

Where Amazon is still investing

This strategic reset makes far more sense when viewed alongside what is expanding rapidly: grocery delivery, particularly same-day and rapid delivery. Amazon has continued to invest in extending same-day grocery coverage across the US, pushing fresh grocery further into everyday, top-up and impulse missions.

This is where Amazon sees the strongest connection between grocery, Prime, and its logistics expertise. Although not garnering the same level of attention, in Australia, on the same day as this announcement, family-owned Harris Farm Markets said its ranges were now available on Amazon.com.au, giving shoppers in Sydney a new way to shop its products for same-day and next-day delivery. Given these concurrent developments, suppliers will need to switch their focus to winning within Amazon’s delivery-led ecosystem, optimising for speed, digital execution, fulfilment and data-driven assortment decisions.

A wake-up call for retail tech

For grocery retailers, the lesson is a sharp reminder. If Amazon, with its capital, technology depth and data advantage, has struggled to make autonomous store formats scale profitably, there is no shortcut through tech alone. The fundamentals of value, experience and clearly defined store missions remain critical to the success of physical retail. Incumbents will see Amazon’s move as a signal to further invest in these areas.

A narrower bet, not an exit

Despite shuttering Amazon Fresh and Amazon Go stores, the retailer has not abandoned physical retail. It continues to experiment with Amazon Grocery, which was launched alongside Whole Foods Market in Chicago, and a ‘store within a store’ concept in Whole Foods Market in Plymouth Meeting, Pennsylvania. It also plans to open a new format in Orland Park, Illinois, combining fresh groceries, household essentials, and general merchandise.

The recent expansion of grocery delivery services also suggests that it has fine-tuned a fulfilment model that works. For Amazon, the future of physical retail looks more likely to be mission-specific formats built on a delivery-first model. But after almost 10 years, it’s still searching rather than executing.