Amazon pauses expansion of grocery stores in Britain due to sales decrease

Amazon has said it is no longer seeking new sites for its grocery store outlets in the United Kingdom, citing disappointing sales at the 19 existing check-out-free shops it operates in the country.

With the ongoing cost-of-living challenge facing consumers, Amazon has decided to pause its plans for growth for 12 to 18 months, The Sunday Times reported.

Only a few months ago, the company said it would be focusing on its Amazon Fresh grocery store operations, after closing 68 electronics and book stores in the United States and the UK, said the report.

The technology giant had planned to open hundreds more Fresh locations, which use tracking technology to identify items customers collect, and then charge their bank cards after they leave the store.

However, The Sunday Times reported that most existing Fresh stores had not achieved their sales targets, and noted that costs of building the outlets far exceeded those of traditional convenience stores. According to the report, some store openings will go ahead if leases have been signed.

A spokesperson for the company told the British newspaper that Amazon had walked away from talks on new sites for its grocery stores and ended searches for new locations.

"We look forward to opening additional Amazon Fresh stores in the near future," the source added.

Earlier this month, Amazon faced worker unrest in its distribution centers after it announced pay rises of 3 percent. The GMB trade union signed up hundreds of Amazon workers after they were told the pay rise would not be renegotiated.

Nearly 1,500 disgruntled workers staged a walkout at Amazon's huge distribution center in Essex, and there was similar industrial action at Amazon's facilities in Swindon and near Bristol.

Amazon last month reported online sales had fallen for the second quarter in a row, by 4 percent, amid a wider downturn in customer spending due to inflation.

The Daily Telegraph reported that since the COVID-19 pandemic struck, Amazon has focused more on its grocery business as more people turned to home deliveries. It noted that in the UK, the company has sought a larger chunk of the grocery market by raising prices less than supermarkets.

Industry trade magazine The Grocer reported that by last month, the average price of a basket of shopping brought from Amazon cost 3.7 percent more than last year, while, at Tesco, prices were up 4.9 percent. Its figures showed Asda's prices had increased by 15.2 percent during the past year.

In a news release last month, Russell Jones, director of Amazon Fresh, said the brand was "committed to making it as easy as possible for customers to find good value products in the face of rising living costs for customers around the country".