Amazon, the company that revolutionized retail by convincing consumers they never needed to leave home to shop, is making its biggest bet yet that the future actually requires massive physical stores. The e-commerce giant is planning a 229,000-square-foot big-box retail location in the Chicago area, according to reports—a store format that would rival the footprint of a typical Walmart Supercenter.
The planned store, which would sell both groceries and general merchandise, represents a significant escalation of Amazon's physical retail strategy and a direct incursion into territory long dominated by Walmart and Target. It also marks a notable pivot from Amazon's previous grocery ambitions, which have produced mixed results across multiple formats.
Why Now? Why This Big?
Amazon's move into big-box retail might seem counterintuitive for a company that built its empire by making stores obsolete. But the reality of modern retail is more nuanced. Despite e-commerce's explosive growth, approximately 85% of all retail sales in the United States still occur in physical stores. Even Amazon's dominance of online shopping hasn't changed this fundamental fact.
Moreover, Amazon has discovered something that traditional retailers have known for decades: certain categories—particularly groceries—are exceptionally difficult to make profitable through delivery alone. The cost of picking, packing, and shipping perishables often exceeds the margins available, making physical stores economically necessary.
"Amazon's 30-minute delivery is better than you could possibly do by going to a store. But sometimes customers want to browse, touch products, and make spontaneous purchases. A big-box format lets Amazon capture both behaviors."
— Lee Peterson, Retail Industry Analyst
Amazon's Physical Retail Evolution
The Chicago store represents the latest chapter in Amazon's complex relationship with brick-and-mortar retail. The company's journey has included:
- Amazon Books: Small-format bookstores, most now closed
- Amazon 4-Star: Curated product stores, also discontinued
- Amazon Go: Cashierless convenience stores with limited expansion
- Amazon Fresh: Grocery stores with mixed performance
- Whole Foods: Premium grocery chain acquired for $13.7 billion in 2017
The new big-box format appears designed to address the limitations of these previous efforts. Amazon Fresh stores, while technologically impressive with their Just Walk Out cashierless technology, have struggled to achieve the scale and selection necessary to compete with established grocers. Whole Foods serves a premium niche but remains a relatively small player in the overall grocery market.
A Challenge to Walmart and Target
At 229,000 square feet, the planned Amazon store would be comparable in size to a Walmart Supercenter, which typically range from 180,000 to 260,000 square feet. This is no coincidence. Amazon appears to have concluded that competing effectively in grocery and general merchandise requires the same economies of scale that made Walmart dominant.
The timing is also significant. Walmart just announced a leadership transition, with John Furner set to take over as CEO on February 1. Target has struggled with its "want-based" merchandise mix, reporting declining same-store sales in late 2025. Amazon may see an opportunity to exploit this moment of industry transition.
Potential Competitive Advantages:
- Prime integration: Special pricing and benefits for Prime members
- Delivery infrastructure: Same-day delivery capabilities unmatched by competitors
- Data and personalization: AI-driven inventory and marketing
- Cashierless technology: Just Walk Out checkout eliminates friction
- Advertising revenue: In-store retail media opportunities
What It Means for the Industry
If Amazon successfully executes a big-box retail strategy, the implications for the industry would be profound. Traditional retailers have long consoled themselves with the belief that their physical store advantages—immediate gratification, product inspection, personal service—would provide a durable moat against Amazon's digital assault.
A successful Amazon big-box format would eliminate that consolation. The company would offer the best of both worlds: vast selection, competitive prices, and the data-driven personalization of e-commerce, combined with the instant gratification and tactile experience of physical shopping.
The Chicago Test Market
Chicago represents a strategic choice for this expansion. The metropolitan area offers a diverse consumer base, well-established competitors for benchmarking, and a logistics infrastructure that Amazon has already heavily invested in. If the format succeeds in Chicago, rapid national expansion would likely follow.
For investors, Amazon's big-box move signals continued ambition in the physical retail space—and continued pressure on traditional retailers who have long viewed their store networks as competitive advantages. The company's willingness to invest at this scale suggests confidence that the format can achieve profitability that previous physical retail experiments have not.
The era of assuming Amazon would stay in its digital lane appears to be ending. The question now is whether Walmart, Target, and other traditional retailers can evolve fast enough to meet an Amazon that combines digital mastery with big-box scale.
