Amazon CEO Andy Jassy is reportedly planning to double down on the ecommerce giant’s physical grocery business despite recently announced plans to put growth on hold, according to the Financial Times. Jassy blamed the company’s grocery struggles on a lack of “normalcy” during the pandemic and noted that it was ready to “go big” on brick-and-mortar as customer behaviors stabilize.
The retailer took a $720 million impairment charge in Q4 2022 due to a decision to “exit certain stores with low growth potential,” which contributed to an overall operating income decline to $2.7 billion for the period, compared to $3.5 billion in Q4 2021. The retailer has both closed some existing Amazon Fresh locations and put new openings on hold, but at the time Jassy had stressed that the halt was temporary.
Jassy also noted that the retailer was in search of the right format, and he told Financial Times that the company has been “experimenting with selection, checkout formats, assortment, price points,” and that “we have several that I think are promising.” However, he didn’t specify which formats he believed hold the most potential.
Revenue for Amazon’s physical store business has grown just 10% since it acquired Whole Foods for $13.7 billion in 2017, and represents just 3.4% of the ecommerce giant’s total business. Fears that the deal would upend the business, which were widely felt at the time, may have been overblown. However, Amazon is still interested in disrupting grocery just as it redefined ecommerce.
“We’re just still in the early stages,” Jassy told Financial Times. “We’re hopeful that in 2023, we have a format that we want to go big on, on the physical side.
“We have a history of doing a lot of experimentation and doing it quickly,” Jassy added. “And then, when we find something that we like, doubling down on it, which is what we intend to do.”
Amazon still has had an impact on brick-and-mortar, even if its investments have yet to reach their full potential. The retail giant has started promoting a new Amazon Go store set to open in Frederickson, Wash., and its Just Walk Out technology has been used at other retailers’ convenience stores and airport shops.