Amazon Continues Struggle With Physical Retail As It Shutters More Convenience Stores
Amazon has had massive success online, but successful brick-and-mortar retail appears to be eluding the digital behemoth.
The company is closing another Amazon Go location in Los Angeles this month. It is the latest blow for the high-tech convenience store concept, which has seen its footprint shrink by roughly half over the past two years, The Wall Street Journal reported.
Amazon is now focused on licensing the model’s unique “Just Walk Out” technology to other retailers, the WSJ said.
“They keep testing these concepts thinking one of them is going to connect with the consumer in a big way,” Jeff Edison, CEO of the retail investment firm Phillips Edison & Co., told the outlet. “But can you think of any examples where they’ve actually done the bricks-and-mortar retail well? I can’t.”
The technology behind Amazon Go, which allows shoppers to walk in and out of a store without standing in line to pay, is partly meant to minimize the need to employ workers. But SiteWorks Retail President Nick Egelanian said those human interactions are an important part of the brick-and-mortar shopping experience.
“I don’t think they really understand retail,” he told the WSJ. “Running warehouses and shipping stuff efficiently is not the same as greeting a customer and saying, ‘May I help you?’”
The company has also worked hard to gain a foothold in the supermarket sector in recent years.
Amazon purchased Whole Foods for $13.7B in August 2017. The grocery chain’s current stock price is just a few cents higher than it was at the time.
That purchase was followed in 2020 by the launch of Amazon Fresh, which had more than 60 locations across the U.S. as of last November.
More recently, details about a new Amazon grocery delivery service meant to compete with Walmart, Target and Kroger began circulating. The company reportedly wants to combine fulfillment networks for its Whole Foods and Amazon Fresh locations into a single service.
