Amazon opens 7 Fresh stores, but 22 locations are still unoccupied after a yearlong hiatus.
TakeAway Points:
- Amazon has resumed its growth of Fresh supermarkets, opening 7 new locations since June.
- Amazon’s share of the U.S. food market is just 1.4%, significantly smaller than Walmart’s 23.6% and Kroger’s 10%, despite attempts.
- At least 22 closed Fresh businesses are the subject of ongoing legal disputes, with landlords suing for damages.
Amazon Fresh Stores
On a humid August afternoon, a few hundred shoppers lined up outside an Amazon Fresh supermarket in Bensalem, Pennsylvania, eagerly awaiting the store’s grand opening. This event marked the first new store opening since Amazon halted the expansion of its Fresh franchise over a year ago. Since June, Amazon has opened seven other Fresh stores in California, Illinois, Maryland, New Jersey, and Virginia, with more locations expected this year and into next. Additionally, Amazon is launching five redesigned stores in Illinois and California this week.
The Bensalem store had been ready to open since 2022 but remained vacant until recently. Joe Knowles, Bensalem Township’s council president, remarked, “I kept thinking it would open, but it didn’t. All of a sudden, bang, it was ready to go.” This store is part of Amazon’s broader strategy to become a significant player in the grocery market, a sector it has been pursuing for 17 years, culminating in its $13.7 billion acquisition of Whole Foods in 2017.
Strategy and Market Share
Despite its efforts, Amazon claimed just 1.4% of the U.S. grocery market in 2023, compared to Walmart’s 23.6% and Kroger’s 10%, according to Numerator data. The Fresh chain, which debuted in September 2020, aims to offer cheaper prices than Whole Foods and includes features like package drop-off counters, cashierless checkout lanes, and voice-activated displays.
Amazon’s expansion plans were paused in early 2022 due to CEO Andy Jassy’s cost-cutting measures amid rapidly changing macroeconomic conditions. In February 2023, Jassy announced that Amazon would close some Fresh supermarkets and Go convenience stores and halt further growth until a suitable store format was identified. “We like the early results a lot,” Jassy said on the company’s first-quarter earnings call in April, referring to the revamped Fresh stores. “They’re really meaningfully better in almost every dimension. It’s still early, and there’s some things to work through, but we like what we’re seeing there.”
Legal and operational obstacles
Despite the recent openings, at least 22 Fresh supermarkets across the country remain vacant or unopened, even though construction is complete. This has led to at least five lawsuits from landlords in Pennsylvania, New Jersey, New York, Florida, and Washington, alleging breach of contract and seeking tens of millions of dollars in damages. Amazon reached settlements with property owners in Florida and Washington last year but declined to comment on the status of the unopened stores.
One such store in limbo is in Rancho Mirage, California. Ted Weill, a city council member, noted that Amazon has informed local officials that the store is expected to open in 2025.
“Amazon has so much money that whether they’ve invested $10 million, $20 million, or $30 million in the project and decided not to go forward, so be it; that won’t be the criteria that holds them back from pulling out.” Weill said.
