Amazon Fresh ‘zombie’ stores reportedly causing legal troubles

Amazon is reportedly facing lawsuits and getting into legal battles with landlords as the number of “zombie” stores — or properties where it was supposed to open Amazon Fresh grocery stores — is starting to pile up, reports Business Insider. 

Amazon has been trying to establish a larger presence in the grocery marketplace, but the strategy has been a struggle since the ecommerce giant first acquired the Whole Foods grocery brand in 2017. 

During the company’s fourth-quarter conference call with analysts, Amazon CEO Andrew Jassy said that the company was doing a “fair bit of experimentation … to try to find a format that we think resonates with customers.”

As part of the testing, Amazon has canceled or paused some Fresh stores over the last year, however, and it is reportedly resulting in legal battles with landlords. One of the latest lawsuits involves a Long Island, N.Y., lease that Amazon “tried to get out of by nitpicking about things like the colors and a light,” Mark Sagliocca, whose family manages Salisbury and the property in question, told the New York Post.

Amazon signed a lease for a storefront with Salisbury Partners in April 2022 and the two are scheduled to appear in New York state supreme court on Sept. 22. The developer sued Amazon this past spring for $37 million, including unpaid rent on the property. 

Related:Amazon Fresh now offering grocery delivery for non-Prime members

According to the Post, Amazon claims that it is not obligated to pay any rent for the proposed store.

“Like any retailer, we periodically assess our portfolio of stores and make optimization decisions that can lead to closing existing locations or choosing not to pursue building a planned location,” Amazon spokesperson Jessica Martin told Insider. 

The Post also reported additional lawsuits involving Amazon Fresh stores in New Jersey, Philadelphia, and Seattle. In the New Jersey case, the landlord is suing Amazon for $10 million after it invested in readying one of its locations for an Amazon Fresh store. 

Insider also reported that Amazon tried to get out of leases for other Fresh stores. For example, in May it listed six properties for sublease in the Minneapolis/St. Paul area.

While Jassy still sees the potential in grocery, he talked about finding a mass grocery format that the company believes is worth expanding broadly. Amazon opened its first Fresh store in 2020 and currently has about 44 stores.