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In a nutshell: Amazon is reportedly planning a bigger push into physical retail, the same industry it has disrupted over the past couple of decades. They’ll be a bit smaller than a traditional department store – around 30,000 square feet versus about 100,000 square feet – and offer products from top consumer brands alongside its own private-label goods.
Sources familiar with the matter told The Wall Street Journal that the first Amazon department stores will open in California and Ohio.
One source said Amazon approached some US apparel brands about two years ago with a strategy to offer their clothes in large-scale retail stores.
Amazon has been instrumental in systematically dismantling traditional brick-and-mortar retail with its online business, forcing many companies into bankruptcy and expediting the fall of shopping malls. Perhaps it wasn’t part of the original master plan, but after years of growing its own business and driving out competition, Amazon realized an opportunity and started its move into physical retail.
According to data from Customer Growth Partners, department stores accounted for 10 percent of retail sales just one generation ago. So far in 2021, they have contributed to less than one percent of the pie. Some of that is no doubt tied to the ongoing pandemic, but a lot of it is simply the result of shifting consumer behavior and a general uptick in online shopping.
Looking past the sheer convenience of online shopping, physical retail stores still offer plenty of perks that the Internet simply can’t match. Aside from instant gratification, retail stores allow consumers to try products before they buy, which is quite beneficial when it comes to apparel. They also attract casual shoppers that otherwise probably wouldn’t browse an online store when they’re looking to kill some time.