When Amazon opened its first grocery store outside the United States in 2021, its choice of a site in west London for a cashier-free store was seen as the start of a major assault on Britain’s $290 billion food market.

That store closed in 2023, and this week the group said it planned to shut its remaining 19 Amazon Fresh stores - a failure that highlights the brutal economics of UK food retail, and how one of the most powerful retailers in the world may still be feeling its way on how to compete globally in groceries.

Amazon, which also runs Amazon Fresh stores in the United States as well as the upmarket Whole Foods Market chain, never confirmed UK store targets, but 2021 media reports suggested plans for over 260 Fresh outlets by end-2024.

Last year, it also dropped Amazon Fresh delivery in five cities but still serves over 100 UK towns and cities, including London, Birmingham and Manchester. It also ended its own grocery delivery service in Germany.

Amazon's announcement does not impact its more than 60 Amazon Fresh stores and more than a dozen Amazon Go stores in the United States or its over 539 Whole Foods Market locations across the U.S. and Canada, the company said.

PLANS TO EXPAND ONLINE DELIVERY

Amazon insists grocery remains a key part of its UK ambitions — its third biggest market overall after the U.S. and Germany.

It said on Tuesday it plans to expand UK online delivery of everyday essentials and fresh groceries through its main Amazon.co.uk site, the Amazon Fresh site, and partnerships with supermarkets Morrisons, the Co-op, Iceland, and rapid delivery firm Gopuff, where orders are placed via Amazon's site but delivered by the retailers.

Amazon plans next year to introduce perishable groceries on Amazon.co.uk with same-day delivery, a service it recently launched in the United States.

It will also convert five Amazon Fresh locations to the Whole Foods Market format, giving it 12 stores by the end of 2026.

But after over 15 years selling groceries, analysts estimate Amazon's UK market share remains below 1%, despite its stock market value being over 60 times that of industry leader Tesco.