Updated, March 12: This article was updated after its initial publication with information from Amazon about its grocery business, new data on competitors’ grocery sales and additional information about Amazon's supercenter plans.
Execs at major U.S. grocery chains could be forgiven for greeting Amazon’s recent decision to close its 58 Fresh grocery stores, as well as its handful of Go convenience stores, with a snarky, “Told you so.”
The decision seems to mark the end of a multi-decade experiment by the e-commerce giant to become a player in mass market physical retail segments that included bookstores, mall kiosks, and apparel.
Amazon still owns Austin, Texas-based Whole Foods, a chain of about 550 upscale food markets that ranks 28th out of 29 major U.S. grocers by revenue, according to GourmetPro, a network of food and beverage industry consultants. Although Amazon doesn’t break out Whole Foods sales (which are a small fraction of the company’s total revenue), analysts estimate it generated about $25 billion in 2024. However, today in total, as stated previously stated here: Amazon is one of the top three grocers in the U.S., with over $150 billion in gross sales—across Everyday Essentials and fresh food and grocery—and more than 150 million customers shopping groceries each year versus Walmart’s 2025 annual report, issued late last month, the world’s largest retailer said its U.S. grocery sales for fiscal 2025 (year ended January 31, 2025) reached a record $276 billion.
It would be a mistake to dismiss Amazon’s previous brick-and-mortar efforts as a failure. In fact, the company appears poised to double down, starting with plans recently approved to build a mammoth, 229,000-square-foot store in Orland Park, a suburb of Chicago.
According to Amazon, this new supercenter concept will make it convenient for customers to shop a broad selection of quality products at great value across fresh groceries, household essentials, and general merchandise —all in one trip. The back-of-house fulfillment area allows in-store shoppers to access expanded product selection and provides space to fulfill online and pickup orders from the local community.
The new concept will dwarf in size the average Walmart and Costco and will be nearly twice the average Target. According to Orland Park officials, the as-yet-unnamed new store will sell general merchandise as well as groceries and prepared foods.
Amazon, it seems, has decided to go big rather than go home.
The new strategy has some analysts scratching their heads. In a post on LinkedIn, GlobalData’s Neil Saunders wondered, “Do we need an Amazon big-box store? The honest answer is no, not really, the market is already very saturated. At this stage, the store feels more experimental than anything else. I’m curious to see what they do to drive the foot traffic.”
Colin Sebastian, a senior research analyst with Baird, told The Wall Street Journal he expects Amazon to lure shoppers by stocking products based on its mountain of data about Chicago-area Prime members’ online purchases. “Most people don’t do their weekly grocery visit on Amazon,” he told the Journal. “But most people do buy batteries or new HDMI cables or laptops.”
With such an enormous space for display and for deep inventory, an advantage unique to Amazon, shoppers who might be reluctant to buy a product online and risk being disappointed could be persuaded to place an order for pickup the same day knowing that an alternative could be instantly available on the spot. An Amazon mega-store might also appeal to those consumers who are appalled at the amount of packaging required to get the most basic products they use to their front doors.
Amazon’s physical retail efforts to date, other than Whole Foods, have—by the company’s own account—been experiments, the cost of which has been minuscule compared to its cash flow and the rich profits generated by its highly profitable web hosting division. As big as the investment in Orland Park, Illinois will be, Amazon can afford to fail again and still come out ahead in terms of what it will learn about its customers that can be leveraged in other ways.
As an example, and again according to Amazon, new concepts are continually being tested to make shopping even easier for customers. For example, they launched a new format called Whole Foods Market Daily Shop in September 2024, designed to bring high-quality ingredients to shoppers with convenience that fits their urban lifestyles and are seeing great early results, positive feedback and recently opened our fifth location.
Walmart, Costco, and their retail brethren may not be quaking in their boots today at the prospect of Amazon moving in down the street, but you can bet they are and will be paying close attention.
