- Amazon is closing some fresh supermarkets and to-the-go convenience stores as it cuts costs.
- The e-retailer will also pause the expansion of Fresh stores to test the business and see whether it resonates with customers, CEO Andy Jassy said on Amazon’s earnings call.
- Amazon issued disappointing first-quarter revenue forecasts on Thursday.
Amazon Some Fresh supermarkets and Go convenience stores are planned to close, as the e-retailer rethinks its grocery strategy and looks for areas to cut costs.
Brian Olsavsky, Amazon’s finance chief, said in the company’s fourth quarter, “We’re constantly refining our store formats that will resonate with customers, build our grocery brand, and position us meaningfully over time.” allowed to grow.” Earnings Call Thursday.
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Olsavsky said that as part of a periodic evaluation of its grocery portfolio, the company “decided to exit certain stores with low growth potential.” As a result, the company took an impairment charge of $720 million in the fourth quarter, he added.
Amazon will also temporarily pause expansion of its line of fresh grocery stores until it can find a format that differentiates the company’s offering from others in the industry. CEO Andy Jassy said on the earnings call that Amazon’s stores need to resonate with customers and that the company needs to be positioned “where we like the economics.”
“We’re optimistic that we’re going to find it in 2023,” Jesse said. “We’re working hard on it. We see some encouraging signs, and when we get that equation down, we’ll expand it more broadly.”
Amazon reported better-than-expected fourth-quarter revenue on Thursday but issued a disappointing forecast for the first quarter. The company capped off its weakest year of growth in its quarter century as a public company and is cutting costs after an extended period of major expansion.
Amazon currently operates several dozen Fresh grocery stores and 28 Amazon Go convenience stores, according to Website,
Information It reported in December that a handful of built-out US Amazon Fresh stores are sitting empty, indicating a pullback in the company’s grocery strategy.
Amazon has been determined to crack the grocery sector since the launch of its fresh grocery delivery service in 2007. It made a historic splash in 2017 by acquiring upscale grocer Whole Foods Market for $13.7 billion, Amazon’s largest acquisition ever.
The mix of Amazon’s grocery offerings became increasingly complex once it launched Go cashier-less stores and a fresh supermarket chain aimed at traditional shoppers. Jesse said he’s optimistic about Amazon’s grocery business and is pleased with the progress Whole Foods has made in profitability over the past year.
“It’s a good business for us in the grocery sector,” he said.
Under Jassi, who will replace Jeff Bezos as CEO in 2021, the company has taken steps to reduce expenses at its grocery unit and elsewhere as it grapples with slowing sales and a bleak economic outlook. Amazon’s plan, announced this month, to eliminate 18,000 jobs will include cuts across most of its grocery portfolio.
Last March, Amazon announced that it would be reducing its physical store portfolio by closing all of its Amazon Books, 4-Star and Pop Up shops. The company also added a delivery fee to some orders placed through Amazon Fresh Online and a service fee for Prime members who want home delivery from Whole Foods.
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