Amazon Shuts Down 4 Fresh Stores in Southern California Following UK Closures

Amazon is strategically streamlining its grocery presence, confirming the closure of four additional Amazon Fresh supermarkets in Southern California. This move signals a continued recalibration of its grocery strategy, prioritizing investment in Whole Foods Market and bolstering its delivery infrastructure. The closures follow similar actions in the U.S., impacting locations in Washington, Virginia, New York, and a Los Angeles suburb.

“Certain locations work better than others, and after an assessment, we’ve made the decision to close these Amazon Fresh locations,” stated Amazon spokesperson Griffin Buch. “We’re working closely with affected employees to help them find new roles within Amazon wherever possible.”

The notice of closure at the La Verne, California, location came abruptly, with employees informed during an all-hands meeting about the mid-November shutdown and severance packages. Similar shutdowns are planned for stores in Mission Viejo, La Habra, and Whittier. This follows a recent announcement of the impending closure of 14 Amazon Fresh stores in the U.K., with plans to convert the remaining five into Whole Foods Market locations. The decision reflects a broader operational assessment, potentially driven by optimizing profitability and brand synergy.

Amazon regularly evaluates its store portfolio, with closures, openings, relocations, and reopenings being part of its operational strategy. Despite the Fresh closures, Amazon maintains over 60 Fresh stores in the U.S. The company’s decision to remove “Just Walk Out” cashierless technology from its stores last year, coupled with the trimming of its Go cashierless convenience store footprint, suggest a shift towards more cost-effective, customer-friendly retail models. These changes imply that Amazon is carefully assessing the long-term ROI of its tech investments in the grocery sector.

Amazon’s pursuit to establish a strong presence in the grocery market spanning nearly two decades. The company’s journey began with the launch of Amazon Fresh in 2007, an initiative focusing on fresh food delivery. This foundation paved the way for the landmark acquisition of Whole Foods Market for $13.7 billion in 2017, marking its largest acquisition to date. This pivotal move solidified Amazon’s presence in the upscale grocery segment.

The Amazon Fresh grocery chain, introduced in 2020, was conceived with mass-market consumers in mind. However, its establishment has encountered hurdles from the start. While Amazon rapidly expanded its lineup of Fresh locations by 2022, these ambitious expansion plans were curtailed by CEO Andy Jassy’s cost-cutting measures, amidst rising interest rates and escalating inflation. In 2023, Amazon announced its decision to close some Fresh stores and temporarily halt further openings, indicating a strategic reevaluation of the chain’s unique value proposition.

Despite the store closures, Amazon remains committed to innovation and investment in improving the grocery shopping experience. The company operates 500 Whole Foods Market locations and has ventured into opening compact “daily shop” Whole Foods Market stores in New York City. These smaller stores emphasize quick shopping trips for everyday essentials, reflecting a focus on capturing a different segment of the market.

Amazon has also launched a “price-conscious” grocery brand, available online and in physical stores, to cater to budget-sensitive consumers. Concurrently, the company has expanded same-day delivery of fresh food items to additional areas in the United States, demonstrating its commitment to enhancing the convenience and accessibility of its grocery offerings.

CEO Andy Jassy and other top executives have emphasized the success of its online grocery business, particularly the sales of everyday essentials such as canned goods, paper towels, and snacks. During the company’s annual shareholder meeting in May, Jassy voiced his continuing optimism regarding the grocery sector, viewing it as a “significant business” for Amazon. This optimism aligns with Amazon’s broader strategy to leverage its vast e-commerce infrastructure and Prime membership program to capture a larger share of the grocery market, both online and offline. The streamlining of the Fresh store footprint appears to be a strategic move to focus capital and resources on higher-performing assets and initiatives within its broader grocery ecosystem.