Amazon's Big-Box Gambit: Assessing the Scalability of a Grocery Market Share Bet

The investment case for Amazon's big-box bet hinges on a clear market shift. For years, the battle for American retail dollars was a two-horse race. Now, the momentum is decisively pulling away from the incumbent. In the second quarter of 2025, Amazon's share of U.S. retail spending jumped 7.6%, more than doubling in just six years. Meanwhile, Walmart's share has remained flat at 7 to 8%. This isn't a minor blip; it signals a structural reordering where Amazon is not just competing but actively capturing market share at an accelerating pace.

Amazon's 9.5% year-over-year sales growth in the U.S. further outpaces Walmart's 4.6%, fueling a self-reinforcing cycle of reinvestment in logistics and personalization. The proposed 229,000-square-foot store in Orland Park, Illinois, is the latest physical manifestation of this ambition. Designed as a supercenter, it aims to blend groceries, general merchandise, and a limited warehouse for fulfillment. At that size, it is larger than a typical Walmart Supercenter, directly challenging the format that built Walmart's empire.

This move follows a strategic integration of Amazon's grocery assets. In 2025, the company took key steps to more closely integrate Whole Foods Market with the rest of its food retailing operations, including consolidating leadership under the Whole Foods CEO. This centralization is paired with a massive expansion of its delivery footprint, as Amazon expanded its same-day perishable foods delivery service to more than 1,000 cities. The big-box store is the next logical step: a physical anchor that combines the scale of a supercenter with the fulfillment efficiency of an Amazon warehouse, aiming to capture the high-frequency grocery shopper and deepen customer loyalty within the Prime ecosystem.

Scalability & Capital Allocation: The Model's Viability

The Orland Park project's scale is a direct bet on scalability. A 220,000-square-foot facility on 35 acres with seven loading docks is a massive, upfront capital commitment. While exact costs are undisclosed, the footprint dwarfs a typical Walmart Supercenter and signals Amazon's intent to build a high-volume, high-velocity hub. The real question for a growth investor is whether this model can generate returns that justify the investment, especially given Amazon's broader capital allocation priorities.

The company's financial structure provides a crucial buffer. Amazon's retail business now accounts for just 40.5% of total revenue, with services like AWS, advertising, and third-party seller fees driving the majority of growth and higher margins. This isn't a pure retail play; it's a strategic investment funded by a diversified, high-margin infrastructure empire. The advertising business alone, which grew 22% year-over-year, now contributes nearly 10% of total revenue and serves as a key profit center that can subsidize retail initiatives. This financial cushion allows Amazon to absorb the capital costs and potential margin pressures of a new store format without jeopardizing its core growth engines.

The scalability argument is supported by strong category growth. Amazon Grocery demonstrated its potential in the Philadelphia region, showing the largest sales gain among Greater Philadelphia grocery retailers with a 17.5% increase in 2025. That performance, driven by new Amazon Fresh stores, suggests the model can capture market share quickly in a key test market. The big-box store is the next step: a physical anchor that could dramatically increase the frequency of shopper visits and deepen integration with Prime, potentially accelerating the path to profitability for the grocery segment.

Yet, the capital intensity remains a material consideration. The project will require 200 construction workers and will eventually employ 500 people, representing a significant operational commitment. The sheer size also raises practical and political friction, as seen in Orland Park where traffic concerns are a major point of debate. For the model to be truly scalable, Amazon must prove it can replicate this format efficiently across multiple markets without getting bogged down by local opposition or disproportionate infrastructure costs. The viability hinges on whether the revenue upside from capturing high-frequency grocery traffic can consistently outpace the capital and operational demands of these large, complex facilities.

Catalysts, Risks, and What to Watch

The immediate catalyst for Amazon's big-box thesis is a green light from local authorities. The project is currently under review by the Orland Park Village Board, with construction potentially starting later this year if approved. This is the first concrete step from concept to ground-breaking, and its approval will signal that Amazon's new retail format can navigate local political and logistical hurdles. The next major milestone will be the store's opening, which will allow investors to directly observe its sales velocity and customer traffic in a real-world setting.

The primary risk to the growth narrative is profitability at scale. The sheer size of the facility-larger than a typical Walmart Supercenter-implies massive fixed costs for rent, utilities, and staffing. Amazon must prove that the high-volume, high-frequency grocery traffic it aims to capture can generate sufficient revenue to cover these costs and deliver a return that justifies the capital outlay. This risk is amplified by intense competition from established big-box retailers that have perfected the supercenter model for decades. The store's ability to differentiate itself on price, selection, or convenience will be critical.

For a growth investor, the key metrics to watch in the store's first year are clear. First, monitor its sales performance against the 17.5% sales gain Amazon Grocery achieved in the Philadelphia region. Can it replicate or exceed that growth rate in a new market? Second, track its market share capture within the local grocery landscape. The goal is to become a dominant local player, not just another store. Finally, watch for any impact on Amazon's broader retail margin profile. If the big-box model requires deep discounts or high operating costs, it could pressure the company's overall retail profitability, even as it gains share.

Traffic concerns, as highlighted in Orland Park, represent a tangible operational and reputational risk. The facility's seven loading docks and planned truck traffic could strain local infrastructure, leading to community opposition that delays construction or increases costs. Amazon's success will depend on its ability to manage these local friction points efficiently, ensuring the store's launch is smooth and its operations are sustainable. The outcome of this test case will determine whether the big-box format is a scalable growth engine or a costly experiment.