Amazon pulls back on UK grocery store expansion ambitions

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Amazon has paused the rollout of its checkout-free grocery store format in the UK following disappointing sales.

Amazon Fresh

The online giant will still open a handful of new stores this year

Amazon is understood to have pulled out of talks on dozens of new sites set for further roll-out of its Fresh store format and to have called off the search for new locations.

The online giant will still open a handful of new stores this year at premises where it had already committed to a lease, but previous plans for expansion beyond this have been put on ice.

Amazon opened its first Fresh store, which uses machine-vision tech to enable shoppers to buy groceries without needing to pay at a till, in Ealing, west London last March. The expansion to a further 18 sites in the months since has been helmed by former Sainsbury’s and Central England Co-op executive Matt Birch.

But one source close to the project told The Times that sales had fallen short of expectations, further exacerbated by fit-out costs for stores, which are multiple times higher than those of a standard convenience store.

Shoppers, who need to have an Amazon app on their phone and scan a QR code at the entrance to gain access to the store, may also be deterred from shopping at Fresh stores due to price hikes introduced to the online giant’s Prime scheme. Data from industry regulator Ofcom found that UK subscribers to Amazon Prime dropped by 590,000 in the second quarter of 2022 alone, and Amazon is set to increase the price of the annual Prime subscription from £79 to £95 in September.

This is not the first time that Amazon has u-turned on a store format. In March the online goliath shuttered its 68 bookshops worldwide as well as its 4-star store format, just months after launching the concept in Bluewater.

A source close to Amazon told The Times that shoppers were enjoying the Fresh store format and that the retailer would revisit expansion plans in 12 to 15 months.

In July, Amazon announced plans to price-match Tesco on hundreds of everyday groceries in its latest bid to gain market share in the UK grocery sector.