Amazon is opening Fresh supermarkets after yearlong stall — but many locations remain vacant
Workers stock shelves at an Amazon Fresh grocery store in Seattle, Washington, US, on Thursday, May 2, 2024.
David Ryder | Bloomberg | Getty Images
On a humid afternoon in August, a few hundred shoppers lined up outside an Amazon Fresh supermarket in a Philadelphia suburb, eagerly awaiting the store’s grand opening. A person in a banana costume hyped up the crowd, while Amazon staffers handed out free samples of cold brew coffee.
The event was a long time coming. Since 2022, the Fresh store in Bensalem, Pennsylvania, looked ready to open. But month after month, it sat vacant, with Amazon’s familiar smile logo plastered on a sign overlooking an empty parking lot.
“I kept thinking it would open, but it didn’t,” Joe Knowles, Bensalem Township’s council president, told CNBC. “All of a sudden, bang, it was ready to go.”
The Bensalem store is one of a handful of new Fresh locations that Amazon has launched in recent months, the first new store openings since the company halted expansion of the franchise more than a year ago. Since June, Amazon has opened seven other stores in California, Illinois, Maryland, New Jersey and Virginia, with more locations expected this year and into next. The company said it’s also launching five redesigned stores in Illinois and California this week.
It’s the latest development in Amazon’s on-again, off-again effort to become a powerhouse in a market the company has been pursuing for 17 years, culminating with its $13.7 billion acquisition of Whole Foods in 2017, the company’s biggest deal ever. Amazon’s scattershot approach has at times been about expanding its “everything store” mission and at others has been focused on making high-end produce more affordable. In some cases, the markets have provided a testing ground for in-store technologies.
Through it all, Amazon in 2023 claimed just 1.4% of the U.S. grocery market, compared compared with Walmart at 23.6% and Kroger’s 10% share, according to Numerator data.
Fresh supermarkets are a piece of the portfolio, which also includes Go convenience stores and same-day delivery for Prime members. The company also launched an unlimited grocery delivery subscription in the U.S. earlier this year. On Tuesday, Amazon introduced a new grocery private label called Amazon Saver, which includes items like pancake syrup, deli meat and canned goods mostly priced under $5.
The Fresh chain made its debut during the early months of the Covid pandemic. Amazon opened the first such store in September 2020, in the Woodland Hills neighborhood of Los Angeles, with an eye toward offering cheaper prices than Whole Foods. The company added package drop-off counters, along with cashierless checkout lanes and voice-activated displays, allowing shoppers to ask Alexa for recipe ideas or help finding items.
Amazon would reach 46 Fresh locations worldwide by early 2022. But the expansion plans ran head first into CEO Andy Jassy’s efforts to rein in costs as rapidly changing macro conditions forced dramatic downsizing. Amazon instituted mass layoffs starting in 2022, and shuttered some of its newer, more unproven bets.
In February 2023, Jassy announced on a quarterly earnings call that Amazon planned to close some Fresh supermarkets and Go convenience stores. He also hit pause on further growth of its Fresh footprint until the company could identify a store format that resonated with shoppers and “where we like the economics,” Jassy said.
Krispy Kreme donuts
With headcount cuts largely in the rearview mirror, Amazon is back into investing mode and pouring resources into Fresh, opening new stores after refining the experience and testing out a redesigned format late last year in select California and Illinois locations. Jassy and Amazon Fresh leaders have acknowledged that in order to grow its already “very large” grocery business, the company needs a bigger brick-and-mortar footprint.
In 2022, just 11% of sales in the $1.6 trillion U.S. grocery market took place online. That’s far below the level of e-commerce penetration in other categories, such as consumer electronics, where 41% of purchases were made online, according to Jefferies data. Companies “need to have a physical presence to be big in grocery,” analysts from the bank wrote in a note in October.
As part of the Fresh store redesign, Amazon created a more colorful layout and added Krispy Kreme donut and coffee stalls. In April, the company said it would remove the cashierless checkout technology, called Just Walk Out, from its U.S. Fresh stores and Whole Foods markets in favor of computerized Dash Carts, which track and tally up items as customers shop.
Amazon told CNBC it’s seen increased purchasing and higher customer satisfaction scores at the redesigned locations. The company said it expects to selectively open new Fresh locations over time based on feedback from shoppers.
“We like the early results a lot,” Jassy said on the company’s first-quarter earnings call in April, referring to the revamped Fresh stores. “They’re really meaningfully better in almost every dimension. It’s still early, and there’s some things to work through, but we like what we’re seeing there.”
A woman uses a dash cart during her grocery-shopping at a Whole Foods store as Amazon launches smart shopping carts at Whole Foods stores in San Mateo, California, United States on February 25, 2024. The smart shopping cart makes grocery shopping quicker by allowing customers to scan products right into their cart as they shop and then skip the checkout line.
Tayfun Coskun | Anadolu | Getty Images
Still, at least 22 Fresh supermarkets across the country remain vacant or unopened even though construction is complete, according to interviews with city officials and local news reports.
Delayed openings or cancellations have triggered at least five lawsuits. Landlords in Pennsylvania, New Jersey, New York, Florida and Washington alleged the company breached its contract by terminating its lease, with some parties seeking tens of millions of dollars worth of damages. Amazon last year reached a settlement with property owners in Florida and Washington, according to court documents. Attorneys representing the property owners didn’t respond to requests for comment.
Amazon declined to comment on the status of the Fresh stores that remain unopened.
One store in limbo is in Rancho Mirage, California, a desert town about 30 minutes southeast of Palm Springs. Previously the location of a Stein Mart department store, the market is in a shopping center that also includes a Hobby Lobby, an Italian restaurant and a blood bank. Shoppers in the area can find a Whole Foods, Walmart, Trader Joe’s and Aldi all within a short drive.
Amazon began remodeling the store in 2021 and signage went up the following year. But “opening soon” signs are still plastered on the doors. The company has told Rancho Mirage officials and AlbaneseCormier, the owner of the shopping complex, that it expects the store to open in 2025, said Ted Weill, a city council member.
AlbaneseCormier didn’t respond to a request for comment.
Weill said there aren’t many companies that can afford to just let a building sit idle for years.
“Amazon has so much money that whether they’ve invested $10 million, $20 million, $30 million in the project and decide not to go forward, so be it,” Weill said. “That won’t be the criteria that holds them back from pulling out.”
More than 500 miles north of Rancho Mirage, in the Sacramento suburb of Roseville, Amazon recently opened the doors of a Fresh supermarket. The store was fully constructed by last summer.
Brent Thill, an analyst at Jefferies, took the two-hour drive to Roseville from the Bay Area with his 16-year-old son a week after the Fresh store opened last month. Thill said the supermarket had an “amazing” selection, though he described the overall vibe as “sterile.”
“You walk into the Amazon Fresh store in Roseville and it feels like you’re in a stainless steel wine cellar,” Thill said. “And the store doesn’t have any decorations, it’s just a giant building.”
Thill has a buy rating on Amazon stock, but he says in grocery the company is spending a lot of money to compete in “one of the lowest-margin businesses on the planet.” But he called it “one of the highest budget items in the pocketbook,” which is where it clearly fits into Amazon’s broader retail strategy.
“And if there’s synergies around Amazon returns, if they can make it more unique, then who knows which way it goes,” Thill said.
The Nasdaq MarketSite in New York, June 9, 2023.
Michael Nagle | Bloomberg | Getty Images
Silicon Valley executives and financiers publicly opened their wallets in support of President Donald Trump’s 2024 presidential run. The early returns in 2025 aren’t great, to say the least.
Following Trump’s sweeping tariff plan announced Wednesday, the Nasdaq suffered steep consecutive daily drops to finish 10% lower for the week, the index’s worst performance since the beginning of the Covid pandemic in 2020.
The tech industry’s leading CEO’s rushed to contribute to Trump’s inauguration in January and paraded to Washington, D.C., for the event. Since then, it’s been a slog.
The market can always turn around, but economists and investors aren’t optimistic, and concerns are building of a potential recession. The seven most valuable U.S. tech companies lost a combined $1.8 trillion in market cap in two days.
Apple slid 14% for the week, its biggest drop in more than five years. Tesla, led by top Trump adviser Elon Musk, plunged 9.2% and is now down more than 40% for the year. Musk contributed close to $300 million to help propel Trump back to the White House.
Nvidia, Meta and Amazon all suffered double-digit drops for the week. For Amazon, a ninth straight weekly decline marks its longest such losing streak since 2008.
With Wall Street selling out of risky assets on concern that widespread tariff hikes will punish the U.S. and global economy, the fallout has drifted down to the IPO market. Online lender Klarna and ticketing marketplace StubHub delayed their IPOs due to market turbulence, just weeks after filing with the Securities and Exchange Commission, and fintech company Chime is also reportedly delaying its listing.
CoreWeave, a provider of artificial intelligence infrastructure, last week became the first venture-backed company to raise more than $1 billion in a U.S. IPO since 2021. But the company slashed its offering, and trading has been very volatile in its opening days on the market. The stock plunged 12% on Friday, leaving it 17% above its offer price but below the bottom of its initial range.
“You couldn’t create a worse market and macro environment to go public,” said Phil Haslett, co-founder of EquityZen, a platform for investing in private companies. “Way too much turbulence. All flights are grounded until further notice.”
CoreWeave investor Mark Klein of SuRo Capital previously told CNBC that the company could be the first in an “IPO parade.” Now he’s backtracking.
“It appears that the IPO parade has been temporarily halted,” Klein told CNBC by email on Friday. “The current tariff situation has prompted these companies to pause and assess its impact.”
‘Cave rapidly’
During last year’s presidential campaign, prominent venture capitalists like Marc Andreessen backed Trump, expecting that his administration would usher in a boom and eliminate some of the hurdles to startup growth set up by the Biden administration. Andreessen and his partner, Ben Horowitz, said in July that their financial support of the Trump campaign was due to what they called a better “little tech agenda.”
A spokesperson for Andreessen Horowitz declined to comment.
Some techies who supported Trump in the campaign have taken to social media to defend their positions.
Venture capitalist Keith Rabois, a managing director at Khosla Ventures, posted on X on Thursday that “Trump Derangement Syndrome has morphed into Tariff Derangement Syndrome.” He said tariffs aren’t inflationary, are effective at reducing fentanyl imports, and he expects that “most other countries will cave and cave rapidly.”
That was before China’s Finance Ministry said on Friday that it will impose a 34% tariff on all goods imported from the U.S. starting on April 10.
At Sequoia Capital, which is the biggest investor in Klarna, outspoken Trump supporter Shaun Maguire, wrote on X, “The first long-term thinking President of my lifetime,” and said in a separate post that, “The price of stocks says almost nothing about the long term health of an economy.”
However, Allianz Chief Economic Advisor Mohamed El-Erian warned on Friday that Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession.
“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.
Former Microsoft CEOs Bill Gates, left, and Steve Ballmer, center, pose for photos with CEO Satya Nadella during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.
Stephen Brashear | Getty Images
Meanwhile, executives at tech’s megacap companies were largely silent this week, and their public relations representatives declined to provide comments about their thinking.
Microsoft CEO Satya Nadella was in the awkward position on Friday of celebrating his company’s 50th anniversary at corporate headquarters in Redmond, Washington. Alongside Microsoft’s prior two CEOs, Bill Gates and Steve Ballmer, Nadella sat down with CNBC’s Andrew Ross Sorkin for a televised interview that was planned well before Trump’s tariff announcement.
When asked about the tariffs at the top of the interview, Nadella effectively dodged the question and avoided expressing his views about whether the new policies will hamper Microsoft’s business.
Ballmer, who was succeeded by Nadella in 2014, acknowledged to Sorkin that “disruption is very hard on people” and that, “as a Microsoft shareholder, this kind of thing is not good.” Ballmer and Gates are two of the 12 wealthiest people in the world thanks to their Microsoft fortunes.
C-suites may not be able to stay quiet for long, especially if the recent turmoil spills into next week.
Lise Buyer, who previously helped guide Google through its IPO and now works as an adviser to companies going public, said there’s no appetite for risk in the market under these conditions. But there is risk that staffers get jittery, and they’ll surely look to their leaders for some reassurance.
“Until markets settle out and we have the opportunity to access valuation levels, public company CEOs should work to calm potentially distressed employees,” Buyer said in an email. “And private company managements should refine plans to get by on dollars already in the treasury.”
— CNBC’s Hayden Field, Jordan Novet, Leslie Picker, Annie Palmer and Samantha Subin contributed to this report.
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