I wrote a column in May 2023 about why the high-tech chain of Amazon Fresh grocery stores hadn’t caught on with shoppers.
At the time, I called the stores “soulless” and “sterile,” with “an off-putting, Big Brother vibe” due to the thousands of cameras hanging overhead to track what shoppers were putting in their carts, so they could “just walk out” without having to endure the checkout lane.
In the months after that, Amazon tinkered with its grocery concept, refreshing the grocery stores with new products along with faux wood paneling, warmer lighting and folksy chalkboard signs to make the giant food warehouses feel less like giant food warehouses.
The makeover, apparently, didn’t do much to turn an ugly duckling into a swan.
This week, the Seattle-based retail giant announced it would be shutting down all of its Amazon Fresh grocery stores, as well as its smaller-format but equally high-tech Amazon Go convenience stores. Many of the stores, the retailer said, will be converted into Amazon-owned Whole Foods Market locations, and the company said it would also focus more squarely on same-day grocery delivery.
Amazon’s retreat, of course, also reflects real estate costs and the brutal economics of grocery margins. But the experience piece is impossible to ignore.
The death of Amazon Fresh is an object lesson for restaurants, as well as retailers: You can’t engineer hospitality out of the transaction.
As my astute colleague Joe Guzkowski noted in a column earlier this week, many restaurant chains are finding themselves right now “at a crossroads between tradition and innovation.”
Dine-in movie theater chain Alamo Drafthouse, Joe noted, is facing some backlash for a new food ordering policy that replaces handwritten requests during films with phone-based ordering. One customer called the shift “a betrayal of Alamo’s soul.”
The situation with Amazon is much the same. (Though I can’t think of a single person who ever believed Amazon had a soul in the first place.)
With its “just walk out” grocery stores and convenience stores, Amazon pitched convenience above all else. But that also removed virtually all opportunities for human connection or brand personality or upselling.
Contrast that with, say, Trader Joe’s. No, the cashiers aren’t trained to flirt with you, the grocery chain has insisted, but they do seem genuinely interested in those frozen potstickers you’re buying. And they might recommend a tasty dark chocolate bar you’ll pick up on your next visit.
Starbucks earlier this week reported its best domestic sales results in two years, which the coffee chain’s executives said were largely the result of a new-and-improved “Green Apron” service model designed to transform coffee shops into welcoming destinations, rather than just coffee pick-up zones.
Convenience alone doesn’t build loyalty.
Another lesson from Amazon’s grocery walk-back: Physical spaces matter.
Humans want to visit places that feel human and seem to be staffed by humans. Restaurants that rely solely on ordering kiosks and a sterile vibe can come off as cold.
Let the demise of Amazon Fresh be a cautionary tale for restaurants engaged in a big tech arms race to deploy AI ordering, automated kitchens, QR code menus, cashierless dining and more.
Consumers want some of those things, yes. But they also want the experience of dining out, something they’ll remember long after the meal. In the race to automate, humanity goes a long way.