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Amazon putting the brakes on Amazon Fresh supermarkets

Amazon putting the brakes on Amazon Fresh supermarkets

Amazon said it was pausing the rollout of its Amazon Fresh supermarkets, and after assessing its portfolio of Amazon Fresh and Amazon Go stores, the company plans to “exit certain stores with low growth potential.” It’s not clear yet how many operating stores will close and how many planned stores will be abandoned.

There are currently 44 Amazon Fresh supermarkets in operation, including two in Pennsylvania, two in Maryland, and one each in New Jersey and New York. There have been several reports in the last year of planned Amazon Fresh stores in the Mid-Atlantic and Northeast regions, but they are now in question. Of the 28 Amazon Go stores in the U.S., 10 are in Manhattan.

The company took a $720 million impairment charge in the fourth quarter related to property, equipment, and operating leases at its physical stores.

“We continue to believe grocery is a significant opportunity,” said Amazon Senior VP and CFO Brian Olsavsky. “We’re focused on serving customers through multiple channels, whether that’s online delivery, pickup or in-store shopping.”

According to Amazon President and CEO Andrew Jassy, the company’s online grocery business “continues to grow at a rapid clip” but remains centered around shelf-stable items like paper products, canned goods, pet supplies, health and personal care items, and other consumables. The online business lacks a significant share in perishables, which are typically purchased in physical stores.

Jassy is not giving up on Amazon Fresh. “We’ve decided over the last year or so that we’re not going to expand the physical Fresh stores until we have that equation with differentiation and economic value that we like, but we’re optimistic… And when we do find that equation, we will expand it more expansively.”