Amazon Faces Lawsuits and Legal Battles Over “Zombie” Stores
Amazon is currently dealing with lawsuits and legal battles as the number of “zombie” stores, where Amazon Fresh grocery stores were supposed to open, continues to grow. According to reports from Business Insider, the e-commerce giant has been facing difficulties in establishing a larger presence in the grocery marketplace since acquiring the Whole Foods grocery brand in 2017.
During Amazon’s fourth-quarter conference call with analysts, CEO Andrew Jassy mentioned that the company has been experimenting with different formats to find what resonates with customers. As part of this testing, Amazon has canceled or paused some Fresh stores over the past year, leading to legal disputes with landlords.
One of the recent lawsuits involves a lease in Long Island, New York. Mark Sagliocca, whose family manages Salisbury and the property in question, stated that Amazon tried to back out of the lease by nitpicking about things like colors and lighting, as reported by the New York Post. Amazon signed the lease with Salisbury Partners in April 2022, and both parties are scheduled to appear in New York state supreme court on September 22. The developer sued Amazon for $37 million, including unpaid rent on the property.
According to the Post, Amazon claims that it is not obligated to pay any rent for the proposed store. Amazon spokesperson Jessica Martin explained that like any retailer, they periodically assess their store portfolio and make optimization decisions that may involve closing existing locations or choosing not to pursue planned locations.
The Post also reported additional lawsuits involving Amazon Fresh stores in New Jersey, Philadelphia, and Seattle. In one case in New Jersey, a landlord is suing Amazon for $10 million after investing in preparing a location for an Amazon Fresh store.
Insider also reported that Amazon has attempted to terminate leases for other Fresh stores. For instance, in May, they listed six properties for sublease in the Minneapolis/St. Paul area.
Despite the challenges, Jassy still sees potential in the grocery sector. Amazon opened its first Fresh store in 2020 and currently operates approximately 44 stores. The company continues to search for a mass grocery format that they believe is worth expanding on a broader scale.