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Amazon is closing a recent Fresh and Go supply as the group cuts costs

February 6, 2023: Amazon plans to close some recent Fresh supermarkets and Go convenience stores as the e-retailer is considering its grocery strategy and looking for areas to slash costs.

“We’re continuously refining our account formats to find the ones that will give them the reason with customers, will build our grocery label and will allow us to scale over time,” Brian Olsavsky, Amazon’s finance chief, stated on the firm’s fourth-quarter earnings call.

Olsavsky stated that as part of a periodic assessment of its grocery portfolio, the firm “decided to exit certain stores with low-growth potential.” He stated that the company took a $720 million impairment charge in the fourth quarter.

Amazon will temporarily halt the expansion of its line of new grocery stores until it can search for a format that differentiates the firm’s offering from others in the industry. Andy Jass said on the earnings call that Amazon’s stores must resonate with customers, and the company needs to be “where we are liking the economics.”

“We’re optimistic that we’re going to search that in 2023,” Jassy said. “We’re working hard at it. We see some encouraging indications, and when we find that equation, we expand it more expansively.”

Amazon reported better-than-anticipated fourth-quarter revenue on Thursday but issued a sad prediction for the initial quarter. The company just closed out its lowest year of growth in its quarter-century as a public firm and is cutting costs after an extended period of outsized expansion.

According to its website, Amazon currently operates a few dozen Fresh grocery stores and 28 Amazon Go convenience stores.

The Information stated in December that the built-out U.S. Amazon Fresh stores sat vacant, signalling a pullback in the company’s grocery strategy.

Amazon has been starting to crack the grocery segment from the launch of its Fresh grocery delivery in 2007. It made a historic splash when it got the upscale grocer Whole Foods Market in 2017 for $13.7 billion, Amazon’s biggest acquisition ever.

Amazon’s grocery offerings grew increasingly complex once it launched a line of Go cashier-less stores and a Fresh supermarket chain is aiming at conventional shoppers. Jassy stated that he remains bullish about Amazon’s grocery firms and is pleased with Whole Foods’ progress in profitability in the last year.

“It’s a good business for the people in the grocery space,” he added.

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