Amazon is preparing to increase its brick and mortar footprint in a big way. The retailer plans to open several large physical locations in the US akin to department stores, according to anonymous sources cited by The Wall Street Journal. The new stores — the first of which will come to Ohio and California — will sell clothing, household items and electronics from "top consumer brands." Obviously, shoppers can also expect to run into Amazon's own-brand products, too.
While the sites are tipped to be around the third of the size of a typical department store at 30,000 square feet, they'll still be much larger than Amazon's other physical locations. The move sees the company expanding into an area it originally disrupted as it grew into an all-in-one online shopping destination.
With their sales already plummeting, the pandemic sealed the fate of several high-profile department stores. The likes of J.C. Penney and Neiman Marcus Group have filed for bankruptcy along with other big names in the sector. Though some were thrown a lifeline when they managed to attract new owners.
Amazon, on the other hand, has seen its fortunes skyrocket during the pandemic as it profited from an increasing shift toward e-commerce. Its booming business even helping to bankroll founder Jeff Bezos' trip into space.
Amazon's move into physical retail predates the virus, however. The company started with brick and mortar bookstores back in 2015, later acquiring Whole Foods for $13.4 billion in 2017. More recently, it opened cashierless Amazon Go stores in the US and UK. Not to mention its highly-curated Amazon 4-star stores and Amazon Pop-Ups inside malls.
The larger stores are apparently viewed as a way of letting shoppers try before they buy, which is particularly useful for things like apparel. That's an area where Amazon has historically struggled. As the WSJ notes, the only high-fashion label on its online store is Oscar de la Renta. It also lost a major seller in Nike in 2019, which decided to go it alone in e-commerce — a move that has paid off for the sneaker company.
Amazon's department stores would also allow it to showcase its range of electronics, from its Fire TVs and tablets to Echo speakers to its Ring home security range, and even its Luna cloud gaming service. Notably, big box retailers have shown that emboldened shoppers are returning to stores. Both Walmart and Target recently smashed estimates in their respective second quarters as sales rose across most categories.