Amazon is making its boldest push yet to convert its e‑commerce dominance into physical retail power—even as it retreats from earlier brick‑and‑mortar experiments.

The company plans to open a 230,000‑square‑foot mega‑store outside Chicago in 2027, a footprint that eclipses a typical Walmart supercenter and signals Amazon’s most aggressive move into grocery and general merchandise.

Yet at the same time, Amazon is shutting down its Fresh grocery and Amazon Go convenience store concepts, realigning its grocery strategy around online delivery and Whole Foods as it tries to gain ground in a nearly $1 trillion grocery market where it is still dwarfed by Walmart.

Currently, Amazon holds only about a 3% share in the grocery market, even after its $13.7 billion Whole Foods acquisition—1.6% for Amazon and 1.6% for Whole Foods, according to Numerator. By contrast, Walmart commands a 21% share, with 4,600 U.S. stores, including 3,500 superstores and 600 Sam’s Clubs.

However, Amazon generated over $150 billion in grocery and everyday-essentials sales last year, so presumably that would be a larger share of the segment’s sales. Yet, regardless of how it’s measured, Amazon is still playing catch-up to the retail giant.

Chicago Mega-Store Coming In 2027

While details of the store remain sketchy, Amazon told the Wall Street Journal that the store will be designed for customers to buy “fresh groceries, household essentials and general merchandise—all in one trip.” It also revealed more Amazon big-box stores are in the works.

Approximately half of the new store will be designed for customers to browse the aisles, and the back half will be used to fulfil same-day grocery orders as well as orders generated from the front of the store.

A new store-within-a-store concept at the Whole Foods store in Plymouth Meeting, PA provides a hint of what might be coming. The back of the store includes a 10,000-square-foot automated micro-fulfillment center, which carries over 12,000 items, including name-brand groceries and popular everyday essentials from Amazon, allowing customers to order additional products with QR codes. It also offers multiple online delivery and pickup options.

Getting brick-and-mortar retail right is becoming a critical necessity for Amazon where roughly 80% of all retail happens. And since an estimated 75% of all American adults already Prime members, it is hitting a ceiling online—a boundary that will be increasingly difficult to break through. It needs to find a successful physical retail concept to keep the pump primed, since consumers will always want to shop in stores.

“At this stage, the store is more experimental than anything else,” GlobalData’s retail managing director Neil Saunders shared with me, as he noted, “Amazon’s track record of physical store concepts isn’t great because they tend to focus too much on technology and not enough on customers and differentiation—and given there are so many physical stores to choose from, those things are critical.”

Next Moves On The Grocery Front

Just a day after it announced its Chicago mega-store plans, Amazon called it quits on its Fresh grocery and Amazon Go convenience store concepts as it realigns its grocery strategy around online delivery and Whole Foods.

Amazon will shutter the full fleet of 57 Amazon Fresh stores and the remaining 15 Amazon Go locations after acknowledging that these concepts failed to deliver a “truly distinctive customer experience.” Instead, Amazon is prioritizing investments in growth areas, such as online grocery delivery and Whole Foods, where it has differentiated business models and tailwinds from past successes. Some of the closed brick-and-mortar locations will be converted to Whole Foods stores.

Where groceries are concerned, Amazon has found itself in unfamiliar territory: playing catch-up to category leader Walmart. Amazon aims to narrow the gap by leaning into its ability to drive online sales and quick delivery, while also building up its natural and organic Whole Foods Market business. Amazon acquired Whole Foods in 2017—its first major move into brick-and-mortar grocery.

Proven Grocery Concepts

Both online grocery and Whole Foods businesses have proven scalable. Whole Foods sales have grown over 40% since the acquisition. With 550 locations now, Amazon sees room to add 100+ more Whole Foods stores in the next few years, including small-scale Whole Foods Market Daily Shops. Whole Foods is also testing store-within-a-store integration with Amazon.

On the online front, Amazon says it served over 150 million grocery customers last year, generating $150 billion in gross grocery and everyday-essentials sales. It also introduced same-day delivery in over 5,000 U.S. cities and towns last year, enabling online sales and rapid delivery of perishable groceries along with other items. It will expand same-day delivery to more communities in 2026.

Amazon Go Technology Is Scalable, But Not The Stores

Amazon Go convenience stores launched in 2018 with the intention of reinventing the convenience store concept, making it even more convenient with “Just Walk Out” technology. By activating the Amazon app, customers could walk in, pick up their items and leave the store immediately, with all purchases charged automatically—no checkout required.

While the Go concept never gained enough traction to warrant continued retail expansion, Amazon has successfully licensed the Just Walk Out technology to over 360 third-party locations, including a sports arena, where getting patrons in and out of the concession stand quickly is paramount.

Amazon Fresh Stores Never Took Hold

Amazon Fresh was first introduced as an online grocery delivery service in 2007, then Amazon Fresh supermarkets followed in 2020 as a more budget-friendly alternative to Whole Foods. But unlike Whole Foods, which had a well-defined identity and positioning in the marketplace, Amazon Fresh supermarkets couldn’t distinguish themselves from mainstream grocery stores. While the Amazon name carries enormous weight online, it never translated into a compelling advantage in physical grocery retail.

“Amazon is prudent to step back from rolling out an expensive fleet of suboptimal stores and to divert its investments to areas where it can have more impact and generate a better return—of which there are plenty,” said GlobalData’s Neil Saunders.

“It is to these areas that Amazon will direct its immediate focus. Initiatives like integrating perishable groceries into the mainstream e-commerce operation, expanding fast delivery options and growing online assortments are all proven ways to increase grocery sales. Whole Foods also has significant potential, mainly because it has a clear point of differentiation in the market—one that Amazon is now intent on sharpening to include more food innovation.”

Amazon Still Reigns Supreme Online

While Amazon is playing catch-up in the grocery aisle, it holds a dominant 40% share of e-commerce sales among the nation’s top 2,000 online retailers, while Walmart trails at 11%, per Digital Commerce 360.

Through the first three quarters of the current fiscal year, Amazon.com generated $299.3 billion in North America segment sales compared with Walmart U.S. at $353.8 billion.

Ultimately, the new online grocery, Whole Foods and Chicago mega-store’s success will depend on whether it can entice existing Walmart, Costco and other local grocery store customers to transfer their loyalty to Amazon.