Amazon Faces Lawsuits and Legal Battles Over “Zombie” Stores
Amazon is currently dealing with lawsuits and legal battles with landlords as the number of “zombie” stores continues to grow. These are properties where Amazon was supposed to open its Amazon Fresh grocery stores. The situation was reported by Business Insider.
Since acquiring the Whole Foods grocery brand in 2017, Amazon has been trying to establish a larger presence in the grocery marketplace. However, the strategy has faced challenges. During a recent conference call with analysts, Amazon CEO Andrew Jassy mentioned that the company has been experimenting with different formats to find what resonates with customers.
As part of this experimentation, Amazon has canceled or paused some Fresh stores over the past year. This has resulted in legal disputes with landlords. One such lawsuit involves a lease in Long Island, New York. The landlord, Mark Sagliocca, claims that Amazon tried to back out of the lease by nitpicking about details like colors and lighting. The case is scheduled to appear in New York state supreme court on September 22.
Amazon signed a lease for the storefront with Salisbury Partners in April 2022. The developer sued Amazon earlier this year for $37 million, including unpaid rent on the property. Amazon, on the other hand, argues that it is not obligated to pay any rent for the proposed store.
The New York Post reported additional lawsuits involving Amazon Fresh stores in New Jersey, Philadelphia, and Seattle. In one case in New Jersey, the landlord is suing Amazon for $10 million after investing in preparing a location for an Amazon Fresh store.
Amazon has also attempted to get out of leases for other Fresh stores. For instance, in May, it listed six properties in the Minneapolis/St. Paul area for sublease.
Despite these challenges, Amazon remains committed to the grocery sector. The company opened its first Fresh store in 2020 and currently operates approximately 44 stores. CEO Andrew Jassy believes in the potential of the grocery market and is focused on finding a mass grocery format that can be expanded broadly.
Overall, Amazon’s journey in the grocery industry has been met with obstacles, but the company continues to adapt and explore new strategies to meet customer demands.