Amazon To Close All Remaining Stores In San Francisco

Tech giant Amazon announced further disinvestment from the San Francisco Bay Area on Monday with the closure of all physical Amazon stores, becoming the latest Amazon related entities to close since late last year.

Starting in October of last year, the tech sector across the Bay Area announced mass layoffs in the tens of thousands. Among others, these have included Twitter, Peloton, Facebook parent company Meta, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and numerous others. In January, Salesforce cut 10% of it’s staff, or around 7,000 jobs, in only their latest round after several other cuts last year. Seattle-based Amazon slashed 18,000 jobs, with many coming in Silicon Valley cities such as Sunnyvale. Google cut 12,000 employees. And last month in February, thousands more had lost their jobs due to layoffs at former Silicon Valley stars like PayPal, NetApp, Yahoo, and Twilio.

Through all this, Amazon has shed much of it’s presence in the area. Last year, Amazon bookstores in San Jose and Walnut Creek have closed, as well as other Amazon stores in Berkeley, Corte Madera, and Burlingame. Meanwhile, Amazon Go stores, originally planned as being completely cashless, were struck hard by a city-wide ban on cashless only stores, passing a law that said that all stores must accept cash as cashless stores disincluded low-income people who may not have cashless options or a smartphone. With costs going up at the stores as a result, as well as the general economic downturn due to the COVID-19, Amazon Go stores entered 2023 barely hanging on.

And it got worse for Amazon in the Bay area this year too. In addition to the 263 Sunnyvale employees being laid off, a Milpitas development was abandoned and a warehouse in San Francisco was put up for lease. That all led to Monday’s announcement from Amazon that all Amazon Go stores in San Francisco would be closed, along with a few in New York and Seattle.

“Like any physical retailer, we periodically assess our portfolio of stores and make optimization decisions along the way. In this case, we’ve decided to close a small number of Amazon Go stores in Seattle, New York City, and San Francisco,” said Amazon on Monday in a statement. “We remain committed to the Amazon Go format, operate more than 20 Amazon Go stores across the U.S., and will continue to learn which locations and features resonate most with customers as we keep evolving our Amazon Go stores.”

Experts noted on Monday that the closures all had to likely do with high-rent areas, as well as other smaller burdens unique to areas such as San Francisco.

“All these closures happened in the city,” explained Michael Cervantes, a property leaser in the Los Angeles area, to the Globe on Monday. “And what does San Francisco have? A tech boom that is no more, high crime, high rents, and a failing downtown. Curiously, this isn’t a California-wide thing either. Amazon keeps opening stores in the LA area, and outside of California, you have Seattle suburbs gaining stores. The San Francisco closures are in part due to San Francisco’s general failings right now, but it is also economical. The new Go stores prove to be more popular in the generally cheaper suburbs, especially if said suburbs have higher income people. Plus Amazon really hated it when San Francisco forced them to have a cash payment option, even though the whole point was to get away from that.”

“But yeah, they just keep losing businesses like this. The city is still expensive, people aren’t going there so much anymore, and the city railed on them too hard. A lot of these Bay Area businesses are trying their luck out of state or around LA or San Diego right now. It’s gotten that bad. And Amazon Go is the latest casualty.”

More tech closures and layoffs are likely in the coming weeks as many companies continue to reconfigure themselves following the end of COVID-19 restrictions and dealing with a new at-home office based working situation.