Amazon Halts All New Amazon Fresh Just Walk Out Stores

[ClownLoach]

Respective links might be paywalled,but Rancho Mirage appears to have been mothballed while a location planned for Chicago's Six Corners neighborhood has apparently been scrapped entirely.

I must note that interior work for the proposed Citrus Heights location is far from complete(though still ongoing to some extent)and thus no exterior signs are present.Elk Grove remains in a mothballed state,don't know how far along Country Club or Roseville are yet.

I noticed a half built building in West Covina lost its exterior tarps and it's obviously a mothballed Amazon Fresh. It's across from Eastland Center where there's already a Walmart on top of a Target and plenty of other competition nearby. This one is unusual in that they have not even finished the building, it's half built but there's enough gray cladding with the green trim over an entrance to discern who it is. There is a large construction vehicle, some kind of lift, that is parked to form a barricade against the entrance but otherwise it's still a construction yard. Appears no work has been done in months and equipment has been removed from the site. The other mothballed stores were at least fully built but not occupied; this is a real mess and damage from the elements will likely take their toll on the facility if it isn't finished soon. The site looked smaller than the usual, might be another attempted small format like the Murrieta one (a former Rite Aid, comes off as being even more inadequate for everyday shopping due to scaled down perimeters and poor assortment)

[storewanderer]

Roseville looks ready to open. It even has cart returns out front.

I don't expect it to ever open.

[mjhale]

Why is Amazon still building Fresh stores if they are so tentative on opening the stores? Amazon is in the process of constructing a new Fresh store in Fair Lakes Shopping Center in Fairfax, VA. The are taking over spaces occupied by World Market and a closed Off Saks Fifth Avenue. World Market moved to an adjacent shopping strip at the other end of Fair Lakes. Incidentally, World Market apparently has now been kicked out of that new location by a new landlord who wants the space for another tenant. Amazon has been working on the build out for most of this year. There are open Fresh locations in Fairfax City and Springfield. If this Amazon Fresh location actually opens, there will be five (!) tenants who sell groceries in Fair Lakes - Fresh, Aldi, Target, BJs and a Walmart Supercenter. Granted Fresh would be the only "standard" grocery store, it still seems like a lot of competition for a concept Amazon seems to no longer support.

[ClownLoach]

Why is Amazon still building Fresh stores if they are so tentative on opening the stores? Amazon is in the process of constructing a new Fresh store in Fair Lakes Shopping Center in Fairfax, VA. The are taking over spaces occupied by World Market and a closed Off Saks Fifth Avenue. World Market moved to an adjacent shopping strip at the other end of Fair Lakes. Incidentally, World Market apparently has now been kicked out of that new location by a new landlord who wants the space for another tenant. Amazon has been working on the build out for most of this year. There are open Fresh locations in Fairfax City and Springfield. If this Amazon Fresh location actually opens, there will be five (!) tenants who sell groceries in Fair Lakes - Fresh, Aldi, Target, BJs and a Walmart Supercenter. Granted Fresh would be the only "standard" grocery store, it still seems like a lot of competition for a concept Amazon seems to no longer support.

It's most likely that the landlord is the one running the construction, not Amazon. Their lease probably has requirements for Landlord to build and Amazon to pay on delivery. Seeing that Amazon is already getting into legal issues with other landlords where they're walking away from unopened Fresh stores on lease technicalities - if I was a landlord I would make sure they couldn't pin anything on me so that I can hold them to their lease agreement and make them pay.

Two other thoughts: it could be flipped to a Whole Foods.

The other thought is that Amazon needs to develop a revamped prototype for Fresh, and fast. They will probably want to design something that can be remodeled into the prototypical Fresh store within a reasonable cost and time frame. Amazon has already been quoted as saying they're going back to the "dash cart" indicating that they are sending the awful Just Walk Out back to the drawing board. When I look at the initial success and sudden drop off with these Fresh stores - it seems like everything was derailed once all new stores were opening with the faulty Just Walk Out tech. Not only does it probably double or even triple the build out cost over a non JWA location (according to an expert network engineer I walked the store with), but it becomes such a big distraction to the store team somehow that they lose sight of the basics and start merchandising senseless displays with overstock so you have endcaps of tuna fish, tea and graham crackers (I'm dead serious). They were able to manage the business until that program was added. Maybe Fairfax will be where the Amazon Fresh v3.0 prototype is launched? It makes too much sense at this point in time - if Amazon wasn't going to give this program one more shakeup they would have already closed.

[storewanderer]

I agree- this format may have a chance if Just Walk Out is eliminated. I suspect the non Just Walk Out Stores are showing better numbers than the Just Walk Out Stores. And wait until they do inventory at those Just Walk Out Stores... and the amount of shrink...

They need to work on everything... merchandising, lighting, mix, in-stock, pricing, etc., but the Dash Cart is not bad.

I'd put in a few self checkouts too, in addition to Dash Carts.

[ClownLoach]

I agree- this format may have a chance if Just Walk Out is eliminated. I suspect the non Just Walk Out Stores are showing better numbers than the Just Walk Out Stores. And wait until they do inventory at those Just Walk Out Stores... and the amount of shrink...

They need to work on everything... merchandising, lighting, mix, in-stock, pricing, etc., but the Dash Cart is not bad.

I'd put in a few self checkouts too, in addition to Dash Carts.

I'm completely convinced the dash cart stores are outperforming the Just Walk Out locations. Unfortunately I don't see Amazon just turning off the cameras and installing regular registers in those just yet. I think they will try to hash out a new and improved prototype and assortment with everything described above - tweaks to lighting, fixtures, assortment, pricing and so on. To cut costs it won't have the insanely expensive JWA tech. I also think that the description of that Fairfax VA area makes it a perfect place to test, since it doesn't have any true conventional as a competitor.

Amazon has already "impounded" nearly a billion dollars to spend on writing off the entire chain, paying to sever every lease, and liquidating it. As such they've already taken the hit for it in earnings, so in theory there isn't much of a cost associated with opening one more store since they already planned for the cost of closing if it fails. Makes sense because we've seen mentions where they're declaring leases invalid and walking away for free on technicalities.

I think we will see the regular chain limp along as living zombies for a while if they open a new and revised prototype. Then they will spend some time testing and adjusting the new prototype, plus maybe remodel a couple of existing stores into it (maybe one regular and one JWA). If the new prototype works out they can update the rest of the chain, if it fails then no real harm done because they've already "saved" enough on lease severance to "pay" for this new prototype.

All of this is assuming the reports we have seen above about Fairfax are legitimate.

[mjhale]

It's most likely that the landlord is the one running the construction, not Amazon. Their lease probably has requirements for Landlord to build and Amazon to pay on delivery. Seeing that Amazon is already getting into legal issues with other landlords where they're walking away from unopened Fresh stores on lease technicalities - if I was a landlord I would make sure they couldn't pin anything on me so that I can hold them to their lease agreement and make them pay.

Two other thoughts: it could be flipped to a Whole Foods.

The other thought is that Amazon needs to develop a revamped prototype for Fresh, and fast. They will probably want to design something that can be remodeled into the prototypical Fresh store within a reasonable cost and time frame. Amazon has already been quoted as saying they're going back to the "dash cart" indicating that they are sending the awful Just Walk Out back to the drawing board. When I look at the initial success and sudden drop off with these Fresh stores - it seems like everything was derailed once all new stores were opening with the faulty Just Walk Out tech. Not only does it probably double or even triple the build out cost over a non JWA location (according to an expert network engineer I walked the store with), but it becomes such a big distraction to the store team somehow that they lose sight of the basics and start merchandising senseless displays with overstock so you have endcaps of tuna fish, tea and graham crackers (I'm dead serious). They were able to manage the business until that program was added. Maybe Fairfax will be where the Amazon Fresh v3.0 prototype is launched? It makes too much sense at this point in time - if Amazon wasn't going to give this program one more shakeup they would have already closed.

I always thought that the new tenant would take care of all construction work. Does the landlord handle the project as an incentive for the new tenant to actually open? We build, you move in, no logistics for you kind of thing?

As for the coming Fair Lakes Amazon Fresh, I'm going to go with your thought that it could a launch of a reworked Amazon Fresh concept. There is already a large Whole Foods within a mile that seems to still be popular despite all of the changes that have been made to Whole Foods over the past couple of years. I used to shop at this Whole Foods off and on mainly for seafood and meat. As discussed in other threads, their pricing has gone way up and the product quality is now no better than Safeway or Giant for seafood. I'm done with their meat too as I got violently ill after purchasing house made sausage and some pre-marinaded chicken products from them. I am lactose intolerant so I'm not sure if there were undeclared milk products or if the stuff I bought was just bad. Anyhow, not going to risk that again. It would be nice to have a grocery store option in Fair Lakes again that isn't a combo store like Walmart. There was a Food Lion/Bloom some years back that closed when the Ahold/Delhaize merger happened. Food Lion was good to stop in to get a few quick things when you don't have the stomach for Walmart.

[buckguy]

Amazon seemed to have a scattershot and probably opportunistic approach to locating these stores. The one in Chevy Chase, MD was almost within sight of an existing Whole Foods. That Amazon store was a failed Giant---a relatively new store that had replaced a previous one, but didn't do well. Amazon opened another one about 3 miles away that was built as part of a new development that replaced retail included a long-running, successful independent super. There's a up to date, popular Safeway a couple miles away, and a small Safeway a couple miles in the other direction but otherwise not a lot of competition. That location made more sense and it's still open.

[storewanderer]

Amazon seemed to have a scattershot and probably opportunistic approach to locating these stores. The one in Chevy Chase, MD was almost within sight of an existing Whole Foods. That Amazon store was a failed Giant---a relatively new store that had replaced a previous one, but didn't do well. Amazon opened another one about 3 miles away that was built as part of a new development that replaced retail included a long-running, successful independent super. There's a up to date, popular Safeway a couple miles away, and a small Safeway a couple miles in the other direction but otherwise not a lot of competition. That location made more sense and it's still open.

Have you been to either of these Amazon Fresh units and tried to shop through them, if so what did you think of them? Also how does traffic look?

[ClownLoach]

It's most likely that the landlord is the one running the construction, not Amazon. Their lease probably has requirements for Landlord to build and Amazon to pay on delivery. Seeing that Amazon is already getting into legal issues with other landlords where they're walking away from unopened Fresh stores on lease technicalities - if I was a landlord I would make sure they couldn't pin anything on me so that I can hold them to their lease agreement and make them pay.

Two other thoughts: it could be flipped to a Whole Foods.

The other thought is that Amazon needs to develop a revamped prototype for Fresh, and fast. They will probably want to design something that can be remodeled into the prototypical Fresh store within a reasonable cost and time frame. Amazon has already been quoted as saying they're going back to the "dash cart" indicating that they are sending the awful Just Walk Out back to the drawing board. When I look at the initial success and sudden drop off with these Fresh stores - it seems like everything was derailed once all new stores were opening with the faulty Just Walk Out tech. Not only does it probably double or even triple the build out cost over a non JWA location (according to an expert network engineer I walked the store with), but it becomes such a big distraction to the store team somehow that they lose sight of the basics and start merchandising senseless displays with overstock so you have endcaps of tuna fish, tea and graham crackers (I'm dead serious). They were able to manage the business until that program was added. Maybe Fairfax will be where the Amazon Fresh v3.0 prototype is launched? It makes too much sense at this point in time - if Amazon wasn't going to give this program one more shakeup they would have already closed.

I always thought that the new tenant would take care of all construction work. Does the landlord handle the project as an incentive for the new tenant to actually open? We build, you move in, no logistics for you kind of thing?

As for the coming Fair Lakes Amazon Fresh, I'm going to go with your thought that it could a launch of a reworked Amazon Fresh concept. There is already a large Whole Foods within a mile that seems to still be popular despite all of the changes that have been made to Whole Foods over the past couple of years. I used to shop at this Whole Foods off and on mainly for seafood and meat. As discussed in other threads, their pricing has gone way up and the product quality is now no better than Safeway or Giant for seafood. I'm done with their meat too as I got violently ill after purchasing house made sausage and some pre-marinaded chicken products from them. I am lactose intolerant so I'm not sure if there were undeclared milk products or if the stuff I bought was just bad. Anyhow, not going to risk that again. It would be nice to have a grocery store option in Fair Lakes again that isn't a combo store like Walmart. There was a Food Lion/Bloom some years back that closed when the Ahold/Delhaize merger happened. Food Lion was good to stop in to get a few quick things when you don't have the stomach for Walmart.

The landlord builds the empty box. They might go so far as to do some of the interior walls and plumbing/electrical/HVAC basics. But the tenant typically has their contractors do the interior decor, fixtures, finishes, and so on. No landlord would be paying for this IT camera junk which is easily still double the cost of the entire store (again walked with a engineer who designs this and he was shocked at how much cable and network switching was there - estimated materials alone in the millions and obviously didn't see what's behind the scenes in the server farm that has to be running these).