Amazon is accelerating its physical retail footprint and supply chain integration to directly challenge Walmart’s entrenched position in the U.S. grocery and general merchandise market, with new store locations and logistics upgrades targeting high-traffic urban zones.
- 12 new Amazon Fresh stores opened in 90 days across California, New York, and Texas.
- Amazon plans 35 additional stores by mid-2026, targeting urban high-traffic zones.
- $1.4 billion invested in regional distribution hubs, including Atlanta, Chicago, and Seattle.
- Amazon Fresh transaction volume up 43% YoY in Q1 2026, outpacing Walmart’s 11% grocery growth.
- Amazon aims for 10% U.S. grocery market share by 2027, up from 5.2% in 2024.
- WMT stock dropped 2.7%, AMZN rose 1.9% following announcement
Amazon is executing a coordinated strategy to erode Walmart’s market leadership in brick-and-mortar retail, focusing on high-density metropolitan areas. The company has opened 12 new Amazon Fresh stores in the past 90 days, primarily in California, New York, and Texas, with plans to add 35 more by mid-2026. These stores leverage Amazon’s existing delivery infrastructure, enabling same-day grocery fulfillment for Prime members and integrating with the Amazon Go cashierless format. The initiative is backed by a $1.4 billion investment in regional distribution hubs, including a new 850,000-square-foot facility in Atlanta and upgrades to existing warehouses in Chicago and Seattle. These facilities are designed to reduce last-mile delivery times to under 45 minutes for 70% of Amazon Prime households within targeted regions. The move marks a shift from Amazon’s historical reliance on third-party logistics toward full supply chain control. Walmart’s U.S. retail sales reached $568 billion in 2025, with grocery accounting for 31% of that total. Amazon’s new strategy aims to capture 10% of the U.S. grocery market by 2027, up from 5.2% in 2024. In the first quarter of 2026, Amazon Fresh saw a 43% year-over-year increase in transaction volume, outpacing Walmart’s in-store grocery growth, which rose 11%. Analysts note that Amazon’s pricing power, driven by cross-subsidies from AWS and advertising revenue, allows it to undercut Walmart on select high-velocity items like milk, bread, and diapers. The strategic shift is expected to intensify competition in the consumer discretionary sector, affecting both retailers and logistics providers. Walmart’s stock (WMT) declined 2.7% in early trading following the announcement, while Amazon (AMZN) rose 1.9%. Retail investors are closely watching for signs of margin pressure and customer loyalty realignment as Amazon deepens its physical presence.