Amazon Fresh supermarkets to resume opening, including 2 on LI

Amazon will again open Amazon Fresh supermarkets, including two on Long Island, after pausing the grocery chain’s expansion early last year to examine "the economic value" of the concept.

Following a revamp of Amazon Fresh, which allows shoppers to pay digitally without going through traditional checkout lanes, 10 of the chain’s 51 U.S. stores have opened since June in California, Illinois, Maryland, New Jersey, Pennsylvania and Virginia.

Two of the three openings that have been on hold on Long Island are moving forward.

Amazon spokesman Griffin Buch confirmed stores will be opening in Plainview and East Setauket, but declined to say when the stores will open. "We’ll continue to open new Whole Foods Market stores, and will do so selectively with Amazon Fresh as we see results we like," he said.

Activity is taking place now at both locations, which for at least the last year and a half have been decked out in Amazon Fresh’s signature look outside — gray and light green paint and clusters of large windows on their storefronts.

On Tuesday, workers were inside the unopened stores in East Setauket, at 4054 Nesconset Hwy. in Suffolk Plaza, and in Plainview, at 50 Manetto Hill in Manetto Hill Plaza.

The windows of both the nameless storefronts were mostly obscured from the inside.

Both stores are hiring employees, according to Amazon’s website, and signs saying "new hire orientation" were posted on the windows of the Plainview store.

Seattle-based Amazon applied to the New York State Liquor Authority for liquor licenses for the two stores in March, and both have pending applications. But they have been issued temporary retail permits that allowed them to start sales effective Sept. 9, said Patrick Garrett, a spokesman for the liquor authority.

The Town of Brookhaven issued a new building permit for alterations to the East Setauket store April 8, spokesman Jack Krieger said.

In January, an application for a new building permit was submitted to the Town of Oyster Bay because Amazon wanted to do additional interior alterations to the Amazon Fresh space in Plainview, and the permit was issued in June, spokesman Brian Nevin said.

The 42,908-square-foot Amazon Fresh in East Setauket occupies most of the space that a Waldbaum’s supermarket vacated in 2015. The 33,342-square-foot Amazon Fresh in Plainview is in the majority of the space that a Fairway Market vacated in 2020.

Aside from the East Setauket and Plainview locations, there is an empty Amazon Fresh store in Farmingville, at 3017 North Ocean Ave.

In March 2022, Brookhaven approved the plans of the property owner, Islandia-based North Block Ventures LLC, to build the 35,053-square-foot store in Farmingville on vacant land. Completed in spring 2023, the gray and light green building sits empty now.

Amazon and North Block Ventures declined to comment on that store.

The only operating Amazon Fresh on Long Island — and in New York State — opened in Oceanside in July 2022.

Lawsuits and revamps

The first Amazon Fresh store opened in Woodland Hills, California, in 2020.

By early 2023, there were 44 Amazon Fresh stores in eight states and Washington, D.C.

But Amazon was disappointed with the grocery chain's performance.

Amazon CEO Andy Jassy told analysts during an earnings call in February 2023 that the company was pausing the opening of new Amazon Fresh stores while it experimented to try to find a format that resonated with customers.

Retail landlords in Philadelphia; Jersey City; Sunrise, Florida; and several other cities filed lawsuits against Amazon alleging that the e-commerce company breached contracts by delaying Amazon Fresh openings or pulling out of leases completely.

One lawsuit was filed by a Long Island real estate company, Salisbury Partners LLC in Lake Success, which sued Amazon in March 2023 alleging a breach of contract over a lease signed in April 2022 to open an Amazon Fresh in East Meadow.

Salisbury is seeking a judgment of more than $37 million against Amazon. 

Amazon, which is countersuing for $250,000 plus interest, claims that it had the right to terminate the lease because it never approved the initial landlord’s plans, according to a court filing. The case is ongoing.

In August 2023, Amazon rolled out changes to the Amazon Fresh format, starting with revamps of stores in Schaumburg and Oak Lawn, Illinois.

 The changes include an expanded grocery selection and lower prices on more items, Amazon said. 

Also, the company announced in April that Amazon Fresh would no longer use Just Walk Out technology, which tracked what consumers put in their shopping carts without the need to scan items’ bar codes and allowed shoppers to pay digitally without going through checkout lanes.

Now, Amazon Fresh stores use Dash Carts, which are "smart" shopping carts with screens that show running cost totals. Customers scan the bar codes of products using cameras on the carts, and then exit the stores through Dash Cart lanes that charge them using the payment method linked to their accounts.

The stores also have traditional checkout and self-checkout lanes.

 The Amazon Fresh changes included pullbacks in some areas. In April, three smaller Amazon Fresh stores closed in Seattle; Washington, D.C.; and Arlington, Virginia. 

Regarding the revamped Amazon Fresh format, Jassy told analysts in April, "We like the early results a lot. They’re really meaningfully better in almost every dimension. It’s still early, and there’s some things to work through, but we like what we’re seeing there."

Amazon has been trying to get a larger portion of the U.S. grocery market for years in a number of ways, including buying the Whole Foods Market chain for $13.7 billion in 2017.

Walmart has long been the largest grocery retailer in the country, where it had 21.4% of the market share in the second quarter of this year, while Amazon ranked 17th, with 1.30%, according to Numerator, a Chicago-based market research firm.

Amazon’s 2023 revenue was $575 billion, but its physical stores, the vast majority of which are Whole Foods, only accounted for 3.5% of that, said Dan Romanoff, a senior equity research analyst at Morningstar Research Services, a financial services firm in Chicago.

Because Whole Foods focuses on organic and natural foods; has only 536 stores, including 517 in the U.S.; and targets higher-earning shoppers, it has a limited appeal, he said.

Amazon is hoping that Amazon Fresh can draw a wider audience, Romanoff said.

Groceries have a lower profit margin than Amazon’s high-earning cloud and advertising businesses, and Amazon hasn’t perfected the recipe yet for Amazon Fresh, so the expansion pace for the grocery chain has been slow, said Brent Thill, a tech analyst at Jefferies, an investment bank based in Manhattan.

There is also some concern from Amazon investors, he said.

"I think for investors, they’re fearing that they’re going to push too fast and too far in a category they might not be able to make a big dent in," he said.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.