NEW YORK, Feb 4 - Amazon, which once disrupted traditional retail through e-commerce, is intensifying an effort to build a large-scale brick-and-mortar presence that resembles the national grocery and general merchandise stores run by rival Walmart.
Analysts polled by LSEG anticipate that Amazon’s physical store revenue for the fourth quarter - a total that includes sales from Whole Foods, Amazon Fresh and Amazon Go - rose 5.4% year-over-year to $5.9 billion. Overall earnings for the quarter are projected at $1.97 per share when the company reports on Thursday, according to those same estimates.
Even as Amazon continues to generate rapid growth from its technology division, Amazon Web Services - which represents 18% of the firm’s revenue - the company’s retail operations remain a material component of its business model. The balance between digital and physical retail has shifted lately, underscored by a corporate decision last month to close all Amazon Fresh and Amazon Go locations and convert those sites into Whole Foods Market stores.
Amazon’s most ambitious new move is a proposed 225,000-square-foot mega-store located outside Chicago - the company’s first store of that scale. The retailer says the site will stock produce, household essentials and broad general merchandise, while also functioning as a distribution center to support same-day delivery in the surrounding area.
Martin Heubel, a consultant who works with sellers that supply merchandise directly to Amazon for in-store and online sales, emphasized why the company is pushing into grocery. "Amazon knows that it needs to win in grocery because shoppers that tend to buy grocery and fast-moving consumer goods items tend to have the highest customer lifetime value," he said.
Internally, Amazon concluded that its earlier approach to physical stores did not yield a distinctive enough shopping experience to justify a broad rollout. The company did not comment on the record for this story.
Outside observers caution that a full pivot to bricks-and-mortar would represent a sizable undertaking. "I think to go all-in on brick-and-mortar is probably not the long-term strategy for Amazon," said Bea Chiem, an analyst at S&P Global. "It’s going to take some time for them to catch up."
Walmart’s advantage in physical scale
Walmart’s extensive store network remains a competitive differentiator. The retailer expanded its membership-based services in September 2020 with Walmart+, a program that Morgan Stanley research says had 26.5 million members as of 2025. Walmart’s e-commerce business continues to grow as well; it reported a 28% increase in e-commerce sales in its most recent quarter compared with the same period a year earlier.
Part of Walmart’s strength derives from its physical footprint of roughly 4,600 stores, which facilitate order pick-up and same-day delivery services. The company states that about 90% of the U.S. population lives within 10 miles of one of its locations, a proximity that reduces last-mile delivery costs - a logistical advantage Amazon aims to replicate, according to Asit Sharma, a senior investment analyst at The Motley Fool.
In terms of retail sales scale, Walmart reported $177.8 billion in retail sales in the third quarter, compared with nearly $80 billion for Amazon’s combined online and physical store sales in the same period. Walmart did not provide a comment for this piece.
History and reorganization
Amazon’s experiments with physical stores date back to the opening of its first Amazon Go convenience store in 2016, its $13.7 billion acquisition of Whole Foods Market in 2017, and the launch of Amazon Fresh in 2020. As part of the current reorganization, only Whole Foods appears positioned to continue under the new store strategy.
Asit Sharma noted a practical benefit of in-person shopping for Amazon: "Amazon would love to also play in a world where customers come into a store and take care of that last-mile problem by themselves."
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This coverage reflects Amazon’s current strategic posture: a pivot to scale up physical grocery operations while maintaining a fast-growing cloud business. The coming earnings release and Amazon’s execution of its redesigned store network will be watched closely by investors, retailers and logistics stakeholders.