When Amazon reports results on Thursday, analysts expect its fourth-quarter physical store revenue—which includes sales from Whole Foods, Amazon Fresh and Amazon Go—to rise 5.4% from a year earlier to $5.9 billion, according to LSEG estimates. Overall earnings are forecast at $1.97 per share.
Despite rapid expansion at Amazon Web Services, which now accounts for about 18% of total revenue, retail remains central to the company’s identity and growth ambitions. That reality was underscored last month when Amazon announced it would shutter all Amazon Fresh and Amazon Go locations, converting them into Whole Foods Market stores. The decision signaled an acknowledgment that earlier experiments in physical retail failed to deliver a scalable or clearly differentiated shopping experience.
Amazon’s latest and most ambitious wager is a 225,000-square-foot mega-store planned outside Chicago—its first of that size. Designed to compete directly with Walmart and Costco, the store will sell fresh produce, household essentials and general merchandise, while also functioning as a distribution hub for same-day delivery.
“Amazon knows that it needs to win in grocery,” said Martin Heubel, an Amazon seller consultant whose clients supply products sold both online and in stores. “Shoppers who regularly buy groceries and fast-moving consumer goods tend to have the highest customer lifetime value.”
The company has said its prior approach to physical retail did not create a compelling enough in-store experience to support widespread expansion. Amazon declined to comment further on its revised strategy.
Some analysts remain cautious about how far the pivot can go. “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 time for them to catch up.”
Walmart’s Enduring Advantage
Walmart, long criticized for lagging Amazon online, has narrowed the gap in recent years. The launch of its Walmart+ membership program in September 2020 proved a turning point. The service had an estimated 26.5 million members as of 2025, according to Morgan Stanley research, and e-commerce sales rose 28% in Walmart’s most recent quarter compared with a year earlier.
A key advantage lies in Walmart’s vast physical footprint. Its roughly 4,600 U.S. stores support pickup and same-day delivery, with the company estimating that 90% of Americans live within 10 miles of a Walmart location. That proximity sharply reduces last-mile delivery costs—a benefit Amazon has long sought to replicate.
“Walmart saves significantly on last-mile logistics because customers are already so close to the store,” said Asit Sharma, senior investment analyst at The Motley Fool. “That’s exactly the world Amazon wants to play in.”
The scale gap remains wide. Walmart reported $177.8 billion in retail sales in the third quarter, while Amazon’s combined online and physical store sales totaled nearly $80 billion over the same period. Walmart declined to comment.
Amazon’s pursuit of physical retail is not new. It opened its first Amazon Go store in 2016, acquired Whole Foods Market for $13.7 billion in 2017, and launched Amazon Fresh in 2020. Of those initiatives, only Whole Foods now appears positioned to anchor the company’s brick-and-mortar future.
“Amazon would love to operate in a world where customers come into a store and effectively solve the last-mile problem themselves,” Sharma said.
Whether the new mega-store format can help Amazon close the gap with Walmart remains an open question. But the shift underscores a broader reality: even the world’s most powerful e-commerce company is finding that scale, proximity and physical presence still matter in retail.