Amazon has reportedly halted plans to open hundreds of its ‘Just Walk Out’ powered Amazon Fresh stores in the UK.
The US retail giant has called off the search for new locations for its convenience stores, and walked away from talks on dozens of sites, according to a source close to the project cited in The Sunday Times.
Amazon opened its first checkout-free convenience store in Ealing in March last year, its first physical retail site outside North America.
The stores allow customers scan their phones on arrival, fill their bags with products and leave without any interaction with staff or a self-checkout machine.
The rollout has now reached 19 locations – a rate of more than one opening a month – all in London apart from the latest in Sevenoaks, Kent.
Citing a source, The Sunday Times said sales at the stores had “fallen short of expectations”.
In November last year, an internal document obtained by Business Insider found Amazon was planning an estate of more than 260 Fresh stores in the UK by 2025.
An Amazon spokeswoman told The Grocer: “We currently have 19 Amazon Fresh stores open in the UK and look forward to opening additional stores in the near future.”
Despite the current tough period for Amazon – which has seen e-commerce sales decline for two quarters in a row – the company’s physical store sales are growing.
In a July earnings update sales at stores – which include Whole Foods Market, Amazon Fresh and Amazon Go – increased by 12.5% in Q2 versus the same quarter in 2021, reaching just over $4.7bn.
However, the retailer is having to work within an environment where price is increasingly more of a priority for consumers than convenience.
“People are shopping around between the retailers to find the best value products,” said Fraser McKevitt, head of retail and consumer insight at Kantar, which in its latest figures found grocery price inflation had hit 11.6%, the highest level since it first started tracking the data in 2008.
While Amazon’s online grocery offering is competitively priced versus rivals – in July provided the cheapest basket in the Grocer 33, and last month launching a price-matching scheme with Tesco’s Clubcard Prices across hundreds of products – physical store prices are more closely matched to Waitrose and supermarket convenience formats.
In a bid to boost footfall, last month Amazon Fresh stores offered all Amazon Prime members a 25% discount on their in-store shops.
“The challenge for all autonomous, checkout-less stores is to get people to try them, and try them a couple of times,” said Kien Tan, senior retail adviser at PwC UK, at the time. “Before they’ve tried it, people don’t realise it’s simple and convenient and easy. You have to get people through the door to do that.”
In July last year, Amazon hired Tesco veteran Tony Hoggett to head up its international stores arm and lead the estate expansion. The company in 2019 hired former Sainsbury’s director of commercial operations Matt Birch to scope out potential Fresh sites in the UK. The local property team now boasts former Lidl GB head of property Oliver Barrett; store acquisition experts from Aldi and Tesco; and property leads from TfL, McDonald’s, Costa Coffee and Co-op.