Amazon to close eight Go convenience stores in a cost-cutting move.
The decision to close eight of the Go stores is seen as part of Amazon’s broader effort to cut costs and optimize its portfolio of physical stores. The company faces slowing sales and a worsening economic outlook and has been taking steps to curtail expenses in its grocery unit and elsewhere. This includes shedding warehouse and brick-and-mortar retail space in recent months after a rapid expansion fueled by a surge of e-commerce spending during the pandemic.
Amazon executives have confirmed that the company plans to temporarily pause the expansion of the Fresh grocery chain until it can find a format that resonates with customers and “where we like the economics,” according to CEO Andy Jassy. Amazon has been determined to crack the grocery segment since the launch of its Fresh grocery delivery service in 2007. In 2017, the company made a historic splash when it acquired upscale grocer Whole Foods Market for $13.7 billion, Amazon’s biggest acquisition ever.
The first Amazon Go store opened to the public in 2018 at the company’s Seattle headquarters. The stores have cameras and sensors that allow customers to purchase products without waiting in line at the cashier. Since then, the company has opened more than 20 Go stores across the US, with launches focused mainly around urban areas to attract commuters on their lunch breaks.
While the decision to close some of its stores may raise concerns about the future of Amazon’s physical retail presence, the company has previously stated that it remains committed to the Amazon Go format. It will continue to learn which locations and features resonate most with customers as its stores evolve. The closures are part of a broader effort to optimize the company’s retail footprint and find a profitable and attractive format for customers.
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