The news: Amazon is shutting down two of its long-running brick-and-mortar experiments: the Amazon Go convenience store format, which showcased its Just Walk Out technology, and its mass-market Amazon Fresh grocery stores.

The writing had been on the wall for both initiatives for some time, which we pointed out several times over the past few years. Neither format showed a clear path to profitable scale without the type of major investment that Amazon appeared unwilling to make.

Amazon Go was designed for small, grab-and-go purchases like snacks and drinks, which limited revenue potential unless the concept scaled to thousands of locations. That was once the plan—Amazon reportedly aimed to open 3,000 Go stores by 2021—but the format never approached that footprint. In the meantime, the retailer’s quick-commerce service could absorb some of the immediate-need demand Go was meant to serve.

Amazon Fresh, meanwhile, was built to challenge mass-market grocers such as Kroger and Albertsons (and Walmart, to some extent). While the stores initially leaned heavily on technology like Just Walk Out and Dash Carts, the concept never fully resonated. Amazon later redesigned Fresh locations with brighter stores, broader assortments, and in-store partnerships like Krispy Kreme to feel more welcoming. But with only a few dozen locations, Fresh never reached the scale needed to compete with large grocery chains or Walmart. Amazon now believes it can more effectively sell the national brands Fresh carried via same-day delivery, rather than through physical stores.

Why is this happening? Amazon is refocusing its physical retail strategy around two clearer bets.

• It is doubling down on online grocery, expanding Amazon’s same-day delivery service for fresh groceries to allow shoppers to add perishables to their regular Amazon orders.
• It is also investing more heavily in Whole Foods, with plans to open more than 100 new stores across Whole Foods and Whole Foods Market Daily Shop formats in the coming years. Amazon says perishable grocery sales through same-day delivery have grown 40x since January 2025, and fresh groceries now account for nine of the top 10 most-ordered items in markets where the service is available. At the same time, some Amazon Fresh locations—and potentially unopened, kitted out Fresh sites—are expected to be converted into Whole Foods stores, mirroring the strategy it used in the UK, where five of 19 Fresh stores were converted.

Amazon isn’t abandoning physical retail altogether but it is rethinking the role stores play.

The company plans to open a nearly 230,000-square-foot superstore-style location in a southwest Chicago suburb, selling groceries alongside household essentials and general merchandise. It will also feature a “limited warehouse component.”

It is also testing hybrid concepts.

• A Whole Foods Market concept store in Plymouth Meeting, Pennsylvania, includes a 10,000-square-foot automated micro-fulfillment center, allowing customers to pick up Amazon and Amazon Fresh orders in-store.
• It is experimenting with a two-level store that places a mass-market Amazon Grocery on the ground floor and a Whole Foods on the second to enable shoppers to buy national brands and premium assortments under one roof.

Implications for Amazon: While our forecast expects Amazon to account for roughly $2 out of every $5 spent online in the US this year (39.6%), its ecommerce dominance has yet to translate at scale to the offline world. The goal of the Pennsylvania hybrid is to see whether Amazon can capture more wallet share by letting Whole Foods shoppers collect staples the chain doesn’t typically carry. Physical store sales—driven primarily by Whole Foods Market—generated $5.58 billion in Q3, representing just 3.7% of Amazon’s $147.16 billion in total revenues. That gap reflects Amazon’s difficulty finding the right formula for physical retail. Ecommerce is built around efficiency, while brick-and-mortar retail hinges on experience—and outside of Whole Foods, Amazon has struggled to deliver a compelling one.

That dynamic helps explain why Amazon is walking away from formats that couldn’t scale and focusing instead on stores that either strengthen its logistics advantage or extend Whole Foods’ role as a premium anchor. The shift suggests Amazon increasingly views stores as infrastructure and fulfillment nodes, rather than destinations in their own right. Still, whether that infrastructure-first approach can ever produce a scaled, differentiated physical retail business—rather than a collection of logistics-enabled outposts—remains an open question.