In June 2017, when Amazon.com Inc. announced its monumental acquisition of Whole Foods Market for nearly $14 billion, a telling moment unfolded at the natural grocer's Austin headquarters. Employees gathered to meet their new corporate overlords, and Whole Foods CEO John Mackey introduced Jeff Wilke, Amazon's CEO of Worldwide Consumer.
Wilke attempted to connect with the food-focused audience by describing his breakfast: "As I was sitting this morning, eating breakfast, watching the sun rise over this beautiful city—by the way, quinoa, blueberry, and some other vegetables…" Mackey quickly interrupted to correct him: "Those aren't vegetables. That's okay. We're learning."
The Grocery Learning Curve That Never Fully Materialized
This exchange perfectly encapsulated why Amazon needed Whole Foods in the first place: despite its dominance in e-commerce and technology, the Seattle-based behemoth knew remarkably little about the intricate world of food retail. Now, more than eight years later, as Amazon plans to shutter its 57 Amazon Fresh and 15 Amazon Go stores, serious questions emerge about whether the company has genuinely absorbed the lessons it needed from Whole Foods.
The closure isn't just about food knowledge—it's about Amazon's struggle to master physical retail operations that successfully sell everything from everyday avocados to specialty items like Za'atar. In its official announcement, Amazon conceded that it hadn't "yet created a truly distinctive customer experience with the right economic model needed for large-scale expansion" with its branded grocery stores.
Where Amazon's Physical Retail Strategy Went Wrong
Industry experts point to fundamental misunderstandings about brick-and-mortar grocery operations. Errol Schweizer, former head of grocery at Whole Foods who left in 2016, observes: "They're admitting that they don't get retail. I don't think they understand the human aspect of it."
Schweizer previously described Amazon Fresh stores on his Substack "The Checkout" as soulless, neutered, and radically unimpressive—what he imagined a store would look like if designed and managed by artificial intelligence rather than human retail experts.
The core problem appears to be Amazon's approach: the company spent more time imposing its cost-cutting, efficiency-focused ethos on Whole Foods than learning from the grocer's decades of expertise. According to reports, Amazon has:
- Cut staffing levels significantly
- Centralized operations that were famously regionalized under Whole Foods
- Tested selling mainstream products like Coca-Cola while trying to maintain Whole Foods' health-focused image
These changes have led employees to describe an "Amazonification of Whole Foods" that hasn't delivered the industry-shaking results Wall Street anticipated. While Amazon claims Whole Foods' sales have grown more than 40% since acquisition, this translates to a modest average of just 4% annually.
Why Grocery Still Matters to Amazon's Future
Despite these physical retail struggles, Amazon isn't abandoning its grocery ambitions. The company recognizes that food remains critical to its long-term success, not merely because of the market's enormous size but because of consumer behavior patterns.
The very characteristics that make grocery delivery challenging—food perishability—make it strategically valuable to Amazon. Unlike toilet paper or laundry detergent that consumers can stockpile, perishable items like cheese, meat, and milk require regular replenishment. The average family visits supermarkets at least weekly, creating a frequency of engagement that Amazon desperately wants to capture.
This grocery frequency is essential for ingraining Amazon deeper into consumer routines and behaviors. The company appears to be finding more success in delivery than physical stores, having rolled out options for customers to add perishables to same-day delivery orders—a service that reportedly grew 40-fold in one year. Amazon is also testing fresh food delivery in 30 minutes or less, playing to its technological and logistical strengths.
The Contradictory Path Forward
Amazon's grocery strategy now presents intriguing contradictions. While closing Fresh and Go stores, the company has announced plans to open a supercenter and more than 100 new Whole Foods locations over the next few years. A big-box store represents a significantly more complex physical retail endeavor than the formats Amazon is abandoning.
This raises the crucial question: Has Amazon truly learned its brick-and-mortar lesson? The winding down of Fresh and Go suggests recognition that its technology-heavy, Amazon-branded approach to physical grocery hasn't resonated with mainstream shoppers as intended.
The most promising path forward might be the simplest: letting Whole Foods be Whole Foods. Rather than imposing Amazon's culture and systems, the tech giant might finally learn something by embracing the expertise that made Whole Foods successful in the first place. As Amazon continues its quest for grocery dominance, the Fresh and Go closures serve as a humbling reminder that even the most powerful technology companies must respect the unique complexities of food retail.
