Amazon to double down on physical retail

Amazon is set to double down on its struggling physical retail business despite recent reports suggesting that it was planning on scaling back its operations.

In an interview with the Financial Times, Amazon chief executive officer Andy Jassy said that it is ready to “go big” on bricks-and-mortar stores, attributing their stumbling performance to the Covid-19 pandemic.

Earlier this month on an earnings call, Jassy said that Amazon has paused the expansion of its checkout-free Fresh supermarkets, with a number of locations shutting down causing a $720 million charge in the last quarter.

All of this comes five years after the company acquired Whole Foods for $13.7 billion in what remains its largest acquisition to date. Amazon has yet to make a major impact on the grocery sector, with its physical store unit only growing 10 per cent since the Whole Foods deal and making up only 3.4 per cent of Amazon’s business.

Clarifying the company’s position on physical retail in 2023, Jassy said: “Remember, a lot of these opened right in the heart of the pandemic. So we haven’t had a lot of normalcy. We’re experimenting with selection, checkout formats, assortment, price points. I’m encouraged, we have several that I think are promising.”

He added that the physical retail business is “still in the early stages” and 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. And then, when we find something that we like, doubling down on it, which is what we intend to do,” he said.

Expanding the grocery business was identified by founder Jeff Bezos as one of the ‘important Amazon initiatives’ with which he would remain involved when he stepped down as chief executive in February 2021.

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