Amazon Books, Amazon Style, Amazon Pop-Up shops, Amazon 4-Star and now Amazon Fresh and Amazon Go – all physical retail stores and all failures (and either extinct or soon-to-be defunct).
The one exception is Whole Foods Market, which is healthy but in my opinion not run as crisply as when “Godzilla” acquired the company in 2017.
It still seems incredulous to me that one of the world’s most innovative and successful companies whose market value now stands at $2.38 trillion (with a “T”) can’t execute even at a mediocre level when it comes to brick-and-mortar selling.
And as much as CEO Andy Jassy keeps telling shareholders that grocery remains a priority, even he must wonder, “Why are we so bad at this?”
However, at the end of the day, other than corporate pride, it really might not matter to Amazon whether its physical retail operations succeed (more on that later).
The recent announcement that both Amazon Fresh (AF) and its smaller Amazon Go banners would no longer fly shouldn’t have surprised anybody. When “version one” of AF opened in late 2020 in Southern California trade observers were puzzled that after years of preparation the model was so inadequate. After several strong openings (perhaps due to curiosity), customers stayed away. As AF expanded eastward to the Chicago area and then to the Mid-Atlantic, the pattern was similar. The consistent takeaway was that there simply was no “there” there.
Even Amazon (and Jassy) knew a reset was in order and many analysts applauded the company for pausing operations. Of course, the ramifications of that move resulted in some store closures and the cancellation of plans to open about two dozen other AF stores already under lease.
About 18 months later when the “pause” ended and the company was ready for a reboot, I thought of the old Peggy Lee song “Is That All There Is?” Certainly, there were some upgrades, but Jassy and his retail team didn’t show enough improvement in the overall shopping experience. It wasn’t fluid or comfortable and the stores continued to be plagued by service levels well below most of its competitors.
So, who might benefit from Amazon’s announcement? Most of the shuttered AF stores fall in the 25,000-30,000 square foot range, the ideal size for Aldi, Lidl, Grocery Outlet or Trader Joe’s.
And if you thought Amazon was going to abandon new physical retail projects for a while, think again. Just before the Amazon Fresh and Amazon Go shutdown announcement was released, “Godzilla” said it would build a 230,000 square foot multi-purpose store in Orland Park, IL (the average Walmart Supercenter encompasses approximately 180,000 square feet). The first-of-its kind market, which will feature groceries, household goods and general merchandise and act as a fulfillment center, is slated to open next year.
If Amazon couldn’t make it operating 30,000 square foot stores with limited inventory and minimum complexity, I have to wonder how it will fare in a box nearly eight times larger with greater product diversity and many more employees?
Earlier I wrote that the success or failure of Amazon’s retail brick-and-mortar efforts might not matter. Here’s why: even though Amazon Fresh failed, it still served as a useful mobile hub to fuel the company’s core business – digital-driven delivery. The new Chicago area store will also serve that purpose.
Moreover, while its unsuccessful physical retail efforts over the past decade have cost Amazon billions, when you consider that the company’s annual 2025 sales were $716.9 billion and its net profit was $77.7, the cumulative investment in physical retail seems like chump change.
Consider further that three pieces of the Amazon gem collection – Amazon Web Services (AWS), its advertising services unit. and its “Prime” subscription memberships – individually could easily absorb its brick-and-mortar losses.
For its recently ended fiscal 2025, AWS’s profit was a whopping $45.6 billion (on $128.7 billion in sales); its advertising services division contributed $68.6 billion to the corporate top line; and the revenue reaped from its “Prime” memberships totaled about $35 billion before the first SKU was sold or shipped.
With those towering numbers and an astonishing $200 million allocated for cap-ex this year, perhaps that’s why Amazon will never give up on developing and operating its own physical stores despite these continued failures.
‘Round The Trade
In a rare example of post-merger unity, both Kroger and Albertsons are asking a U.S. District Court in California to keep certain testimony about their antitrust case sealed. While the two sides don’t seem any closer to resolving their own lawsuits against each other, the reason for this request involves another FTC-led investigation against large beverage wholesaler Southern Glazer Wine & Spirits, which is seeking remarks made during the Kroger-Albertsons trial held last in 2024.
Southern Glazer is seeking to include testimony from FTC expert witness Nicholas Hill during the Kroger-Albertsons trial to prove that the FTC took a differing opinion in its approach to charging the grocery chains than it did in its charges against the beverage distributor. Both retailers cited that the additional information Southern Glazer seeks is “commercially sensitive and highly confidential.” Business makes strange bedfellows sometimes.
More Albertsons news: from the c-suite, the retailer has hired Allison Pinkham to be its new executive VP and chief HR officer. She comes most recently from Galderma (a dermatology firm) and has also served time at Heineken USA and Boehringer Ingelheim. Pinkham replaced the recently retired Mike Theilmann, who was a holdover from the Vivek Sankaran regime.
The hits keep on coming at UK-based Ocado, the tech firm most famous for partnering with Kroger on automated fulfillment centers (sheds). In addition to Kroger closing three sheds and not going forward with a potential new shed in Charlotte, NC, Ocado will be down one more fulfillment center after Canadian retailer Sobeys said it would close its robotics-driven depot in Calgary. The reason is akin to something that we’re hearing a lot of lately: not enough e-commerce business to justify continuing a money-draining segregated warehouse.
It’s been a challenging first few weeks for new Target CEO Michael Fiddelke who took the helm at Target earlier this month. With Minneapolis being the epicenter of the political unrest in America, Fiddelke has been asked by several protest groups to denounce the presence of Immigrations and Customs Enforcement (ICE) in Minnesota’s largest city. Protesters have threatened boycotts and Target has already suffered from its decision to roll back many of its DEI initiatives last year.
The renewed boycott threat puts Fiddelke and his company in an untenable position and is frankly unfair. What Fiddelke has done, along with other Minnesota-based companies – Hormel, Land O’ Lakes, General Mills, United Health and Best Buy – is sign an open letter calling for the immediate de-escalation of the tension in the state.
On the business side, in a memo to Target’s associates, the former COO and 23-year veteran of the mass merchant outlined four priorities that he will focus on: leading with merchandising authority; elevating the guest/customer experience; accelerating technology; and strengthening team and communities.
Target also announced its first batch of new stores slated to open next month. Of the seven stores listed, two will open in the Garden State – Jersey City, and West Orange, NJ;. The Jersey City store is a small format 40,000 square footer, while the West Orange (150,000 SF) and Fuquay Varina (148,000 SF) locations are traditional Target units. The retailer plans to open more than 30 stores this year with a long-range goal of 300 new units by 2035.
Target’s chief rival, Walmart, also has a new chief executive and he’s already making personnel changes. When John Furner became the “Behemoth’s” CEO late last month he wasted no time in promoting David Guggina to president and chief executive of Walmart U.S. (the title Furner used to have). He also named Latriece Watkins as the new CEO of Sam’s Club. Most recently, Guggina had been executive VP and chief commerce officer for Walmart U.S. Watkins was formerly executive VP and chief merchandising officer for Walmart U.S. Other key promotions include Seth Dallaire to executive VP and chief growth officer for Walmart Inc. (he had the same title but for the U.S. only) and Chris Nicholas, who moves from CEO of Sam’s Club to chief exec at Walmart International, a position most recently held by Kathryn McLay who will be leaving the company.
And kudos to our buddy Anthony Hucker and his team at The Winn-Dixie Company. Yes, that’s the official new name of the retailer that used to be known as Southeastern Grocers. The new name marks the rebirth of the 101-year-old Jacksonville, FL-based retailer that is in the midst of a major transformation as an independent company that can now better control its own destiny under the leadership of Hucker and other more connected investors.
Local Notes
Last month we reported that Instacart got called out for utilizing dynamic pricing, which it claims was not deliberate and was driven by strategies originating from its retail customers. Unfortunately, as stated earlier in this column, the perception that retailers or online merchants are engineering a manipulative practice is creating a level of distrust with some government officials who feel it necessary to shoot before there’s widespread concern.
Such is the case in Maryland where Governor Wes Moore has introduced the “Protection from Predatory Pricing Act” that would prohibit grocery stores in the Old Line State from deploying dynamic pricing. The proposed bill would require grocery prices to stay fixed for a minimum of one day. Additionally, the proposed legislation would prohibit grocery merchants from utilizing surveillance data in automated systems to set individualized prices.
“This is not a fair market. This is a stacked deck. This is about profit – profit that’s extracted from people who are seeing their bills increase and who are struggling to afford basic goods,” Moore asserted. Affordability is certainly a legitimate issue, but conflating high prices with the inference that retailers are prone to cheat is counter-intuitive to how they run their businesses and a cheap shot against their reputation.
Kind of a slow month for store openings but Sprouts continues to be among the “league leaders” in ribbon cuttings. Late last month, the Phoenix-based perishables merchant opened a new store in its first unit in New York in Centereach. Another Empire State store is slated for the tony community of Hartsdale later this year, and Sprouts will also make its New England debut with a new store in Weymouth, MA.
A couple of months ago we reported on the death of the great Jamaican singer and songwriter Jimmy Cliff. Now another great Jamaican performer, Sly Dunbar (73) is gone, too. You may not be familiar with Dunbar but you probably know his music. If you follow reggae or Bob Dylan, you’ll know that Dunbar was arguably the pre-eminent drummer of Jamaican rhythm. Along with his partner, bassist Robbie Shakespeare, the duo formed one of the most successful rhythm sections in all of pop music. During his long career Dunbar worked with many popular artists including Mick Jagger, Carly Simon, Sinead O’Connor, Madonna, and Jackson Browne. He estimated that over his 55-year career he worked on about 200,000 recordings. However, it was his work on two Bob Dylan albums – “Infidels” (1983 – a great album) and “Empire Burlesque” (1985) – that brought Dunbar acclaim. His peers also recognized his talent – nominating Dunbar for 13 Grammys (he won twice).
Also recently departing the planet was Catherine O’Hara, one of the funniest comedians and comic actresses over the last half century. From the outset of her career in the early 1970s when she was part of the Second City comedy troupe, to her presence in the Canadian sketch comedy show “SCTV” to her many film roles, O’Hara rarely disappointed. She was just naturally funny in an oddball kind of way. She first became noticed as part of the “SCTV” ensemble which also featured some of the greatest comic actors of all time – John Candy, Eugene Levy, and Rick Moranis – and then moved into movies, never as the leading lady but as a quirky and funny character in some of best comedies of the past two generations. Those included “Beetlejuice” (1988); “Home Alone” (1990); and the four Christopher Guest-directed “mockumentaries” – “Waiting For Guffman” (1996), “Best in Show” (2000), “A Mighty Wind” (2003), and “For Your Consideration” (2006). Her role as Cookie Fleck, a dog show enthusiast who is constantly being “hit on” by former lovers, is my absolute favorite. She won an Emmy for her role as the delusional Moira Rose in the TV comedy hit “Schitt’s Creek” (2015-2020) to go along with a Golden Globe and Screen Actor’s Guild award for that same role. She also won a prime-time Emmy in 1982 for her writing on “SCTV.” A native of Toronto, Catherine O’Hara, was 71 when she passed.
Jeff Metzger is publisher emeritus of Food World and Food Trade News and founder of Taking Stock LLC, a grocery industry advisory and consulting firm.
