Amazon is shutting some Fresh and Go stores as the company cuts costs

Amazon plans to shut some Fresh supermarkets and Go comfort shops, because the e-retailer rethinks its grocery technique and appears for areas to chop prices.

“We’re continuously refining our store formats to find the ones that will resonate with customers, will build our grocery brand, and will allow us to scale meaningfully over time,” Brian Olsavsky, Amazon’s finance chief, stated on the corporate’s fourth-quarter earnings name on Thursday.

associated investing news

Olsavsky stated that as a part of a periodic evaluation of its grocery portfolio, the corporate “decided to exit certain stores with low-growth potential.” He stated the corporate took a $720 million impairment cost within the fourth quarter consequently.

Amazon may also quickly halt enlargement of its line of Fresh grocery shops till it may possibly discover a format that differentiates the corporate’s providing from others within the trade. CEO Andy Jassy stated on the earnings name that Amazon’s shops have to resonate with prospects and the corporate must be able “where we like the economics.”

“We’re optimistic that we’re going to find that in 2023,” Jassy stated. “We’re working hard at it. We see some encouraging signs, and when we do find that equation, we will expand it more expansively.”

Amazon reported better-than-expected fourth-quarter income on Thursday however issued a disappointing forecast for the primary quarter. The firm simply closed out its weakest 12 months of development in its quarter century as a public firm and is chopping prices after an prolonged interval of outsized enlargement.

Amazon presently operates a number of dozen Fresh grocery shops and 28 Amazon Go comfort shops, based on its web site.

The Information reported in December {that a} handful of built-out U.S. Amazon Fresh shops sat vacant, signaling a pullback within the firm’s grocery technique.

Amazon has been decided to crack the grocery phase because the launch of its Fresh grocery supply service in 2007. It made a historic splash when it acquired upscale grocer Whole Foods Market in 2017 for $13.7 billion, Amazon’s largest acquisition ever.

Amazon’s mixture of grocery choices grew more and more advanced as soon as it launched a line of Go cashierless shops and a Fresh grocery store chain geared toward typical consumers. Jassy stated he stays bullish about Amazon’s grocery business and is happy with the progress Whole Foods has been making on profitability within the final 12 months.

“It’s a good business for us in the grocery space,” he added.

Under Jassy, who succeeded Jeff Bezos as CEO in 2021, the corporate has taken steps to cull bills in its grocery unit and elsewhere because it grapples with slowing gross sales and a dismal financial outlook. Amazon’s plans, introduced this month, to remove 18,000 jobs, will embody cuts throughout a lot of its grocery portfolio.

Last March, Amazon introduced it could slim down its bodily shops portfolio by shutting all its Amazon Books, 4-star and Pop Up retailers. The firm has additionally added supply charges to some orders positioned via Amazon Fresh on-line and a service price for Prime members who need house supply from Whole Foods.

WATCH: Amazon beats on income, AWS income down barely