Amazon Closes 14 UK Fresh Stores, Abandons Brick-and-Mortar Grocery Push

Amazon Closes 14 UK Fresh Stores, Shifts Focus to Online Grocery Deliveries In a significant move, Amazon has announced the closure of 14 Amazon Fresh stores in the UK, marking a major contraction in its brick-and-mortar grocery operations in the country. The e-commerce giant will convert the remaining five locations to the Whole Foods Market brand, while focusing on online grocery deliveries within the region. The decision is expected to have a significant financial impact, with estimates suggesting that Amazon will incur approximately £100 million ($130 million) in costs associated with store closures and conversions. This move follows a similar contraction in 2023, where Amazon shuttered both some Fresh supermarkets and Go convenience stores. Amazon's pivot towards online grocery deliveries comes as the company seeks to optimize its operations and improve profitability in the highly competitive UK market. The decision is also seen as a response to concerns around cost, accuracy, and privacy associated with its Just Walk Out technology, which was introduced in the US in 2018 and in the UK in 2021. Market Context The UK grocery market has been undergoing significant changes in recent years, with online sales growing rapidly. According to a report by Kantar Worldpanel, online grocery sales accounted for approximately 15% of total grocery spend in the UK in 2022, up from around 10% in 2018. Amazon's decision to focus on online grocery deliveries is likely to be seen as a strategic move to capitalize on this trend. The company has been investing heavily in its logistics and delivery infrastructure, including the introduction of Same-Day Delivery orders for UK customers, which was just launched in the US last month. Stakeholder Perspectives Industry experts have welcomed Amazon's decision to focus on online grocery deliveries, citing improved efficiency and cost savings. "This move is a pragmatic response to the changing market landscape," said Neil Saunders, Managing Director of GlobalData Retail. "By focusing on online deliveries, Amazon can reduce costs associated with maintaining physical stores and improve its bottom line." However, some stakeholders have expressed concerns around job losses and the impact on local communities. "We are disappointed by Amazon's decision to close these stores," said a spokesperson for the UK's GMB union. "These closures will result in significant job losses and undermine the economic vitality of local areas." Future Outlook Amazon has announced plans to add perishables to its Same-Day Delivery orders for UK customers by 2026, which is expected to further enhance its online grocery offerings. The company's focus on online deliveries is likely to be seen as a key differentiator in the highly competitive UK market. As Amazon continues to navigate the complexities of the UK grocery market, it remains to be seen how this move will impact the company's long-term strategy and profitability. However, one thing is clear: Amazon's decision to pivot towards online grocery deliveries marks a significant shift in its approach to the UK market. Key Statistics 14 Amazon Fresh stores closed in the UK £100 million ($130 million) estimated costs associated with store closures and conversions 5 remaining Amazon Fresh locations to be converted to Whole Foods Market brand Online grocery sales accounted for approximately 15% of total grocery spend in the UK in 2022 (Kantar Worldpanel) Same-Day Delivery orders launched for UK customers, with plans to add perishables by 2026 *Financial data compiled from Engadget reporting.*