Amazon Fresh is no longer with us. All 72 locations (57 Amazon Fresh and 15 Amazon Go). Gone.
This is a somewhat shocking outcome. How does the retail behemoth Amazon miss this badly? They own Whole Foods. They clearly have a strong grasp on grocery operations. Whole Foods is one of the best grocery stores in the United States.
What happened?
Word on the street is that the Amazon Fresh group and the Whole Foods group were totally siloed off from each other. Huh? Why would you not want the group that has all of the grocery operational experience sharing information with the startup group? That doesn’t make sense.
Amazon is one of the best run companies in the world so I’m sure they had their reasons.
We’ve read this book twice in recent memory here in Southern California.
Few will remember Haggen. In early 2015, Bellingham, Washington-based Haggen expanded from 18 (very well run and beloved stores) stores to over 160, including 83 locations in Southern California purchased as part of the Albertsons/Safeway merger.
Haggen’s 2015 expansion into Southern California was a rapid, failed attempt after acquiring 83 Albertsons, Vons, and Pavilions stores. Within months, high prices and intense competition forced the company into bankruptcy, leading to the closure of all California locations and the sale of stores to chains like Gelson's and Smart & Final.
Shelves were nearly empty within weeks of the Southern California stores opening. It was an unmitigated disaster.
We all remember the Fresh & Easy experiment. Tesco, one of the largest retailers in Europe, came to the US with a grand plan to modernize and streamline the grocery business.
They expanded fast. Really fast. The only problem? They didn’t understand the US customer and didn’t appear to understand site selection any better.
They were a pioneer in self check out. The only problem: you can’t launch that model in trade areas with an average population of 65 years or older. Their stores should have been opened in college towns, beach cities, and dense urban areas (areas with younger populations), not in retirement communities in the Inland Empire, Phoenix, and Las Vegas.
So here we are again. This time is different though. It’s Amazon. The biggest retailer in the world with massive grocery expertise. It is shocking. The writing was on the wall for a while though. There were a handful of deals that were completed which Amazon simply just didn’t open. That’s never a good sign.
The grocery business is hard. Very hard. It is fiercely competitive and has the added “benefit” of operating on razor thin margins.
Landlords should not be happy. Sure, they will get their rent because Amazon, but nobody is going to buy a dark supermarket. Nobody wants to buy the shops next to a dark anchor either.
There are several sites that are A+ real estate and those owners will be fine. A handful of very lucky landlords will get Whole Foods conversions. These will be the best locations. Real estate matters.
Looking on DealGround, we found an Amazon Fresh in Fontana, CA (for example) which was marketed at descending prices from October 2022 to December 2024 and finally sold in April 2025 for $17,800,000 (5.41% CAP). The rent on that site is $962,400 / year. That works out to $2.00 PSF / month on 40,100 square feet.
For those that aren’t familiar with Fontana, that rent is on the far upper end of the market. The two shop buildings in the center will suffer if the anchor remains dark for an extended period of time unless this landlord gets a winning lottery ticket with a Whole Foods conversion.
What happens with these sites is anyone’s guess but it is going to take some time for the market to absorb 57 grocery box sites at top of market rents. There will be buyouts, subleases, assignments, and everything in between but, for most of these owners, there will not be another Amazon coming to save the day.
