Amazon Revamps Stores to Compete With Walmart

Key Moments

Amazon Leans Into Large-Format Retail

Amazon, once the online disruptor outpacing Walmart in digital commerce, is now committing more heavily to large physical locations that resemble the kind of mega-stores long associated with its Bentonville, Arkansas-based competitor.

According to estimates from LSEG, Amazon’s fourth-quarter revenue from physical stores – which covers Whole Foods, Amazon Fresh and Amazon Go – is projected to increase 5.4% from a year earlier to $5.9 billion. Overall earnings are expected to come in at $1.97 per share.

Despite rapid expansion in its technology arm, Amazon Web Services, which accounts for 18% of Amazon’s total revenue, the company’s retail segment remains central to its business model. A recent decision to close all Amazon Fresh and Amazon Go locations and convert some of them into Whole Foods Market outlets underscores a notable pivot in its brick-and-mortar strategy.

New Chicago-Area Mega-Store Signals Strategic Shift

At the core of Amazon’s latest retail push is a new 225,000-square-foot mega-store planned outside Chicago, the company’s first of this scale. The site is designed to stock produce, household staples and a broad range of general merchandise. In addition, it will function as a distribution hub to support same-day delivery services.

“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,” said Amazon seller consultant Martin Heubel, whose clients send merchandise directly to Amazon to be sold in stores and online.

When asked for comment, Amazon directed attention to previously published blog posts about Amazon Go and Fresh closures. In those posts, the company said that its earlier approach had failed to deliver a sufficiently distinctive in-store experience to justify broad expansion.

“I think to go all-in on brick-and-mortar is probably not the long-term strategy for Amazon,” S&P Global analyst Bea Chiem said. “It’s going to take some time for them to catch up.”

Walmart’s Scale Provides Structural Edge

Walmart trailed Amazon in e-commerce for years, but its launch of the Walmart+ membership program in September 2020 marked a turning point. The program had 26.5 million members as of 2025, according to Morgan Stanley research, and Walmart’s e-commerce revenue is still expanding, with a 28% gain in its latest quarter versus the same period a year earlier.

Part of Walmart’s strength lies in its vast network of 4,600 stores, which support curbside pickup and same-day delivery. The company says that 90% of the U.S. population resides within 10 miles (16.1 km) of one of its locations. This proximity reduces last-mile delivery expenses – a cost advantage that Amazon wants to replicate, said Asit Sharma, senior investment analyst at financial services firm The Motley Fool.

Walmart posted $177.8 billion in retail sales in the third quarter, while Amazon’s combined online and physical store segment generated nearly $80 billion over the same period. Walmart did not comment.

Amazon Refocuses Its Physical Store Portfolio

Amazon has been building a brick-and-mortar footprint for years. It launched its first Amazon Go location in 2016, followed by the $13.7 billion acquisition of Whole Foods Market in 2017 and the rollout of Amazon Fresh in 2020. Under the current restructuring, only Whole Foods appears likely to remain as the core grocery brand.

“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,” Sharma said.