Amazon plans to open department stores

Amazon plans to open department stores

Amazon is making a bigger move into physical retail with plans to open stores that sell clothing, household items and electronics.

The Wall Street Journal this morning quoted people familiar with the matter who said the first stores will be about 30,000 square feet and located in Ohio and California. That’s similar in size to a Nordstrom Rack or Macy’s Backstage but smaller than the generation of free-standing Kohl’s and J.C. Penney stores of about 100,000 square feet that dot suburbia.

Amazon’s private-label goods are expected to feature prominently in the stores, the WSJ reported. It’s not clear what other brands will be sold in the stores. Plans aren’t final, the people told the WSJ.

The online behemoth, which has disrupted brick-and-mortar retailing since it was founded in 1994, has developed a few store concepts since it opened its first bookstore in Seattle in 2015 and acquired Austin-based Whole Foods Market in 2017.

More recently it has opened its own branded grocery stores in California and Chicago.

Amazon’s timing comes at a time when retail real estate is plentiful and recent shopper traffic signals that consumers are ready to return to in-store shopping. Amazon has also become the largest U.S. apparel retailer, overtaking Walmart.

Major U.S. retailers, Walmart and Target, have reported solid results this week. Even Macy’s reported better results Thursday, saying it’s resuming its dividend and stock buybacks.

The idea that Amazon would expand into physical retail in a bigger way has been rumored for some time and escalated last year when so many retail bankruptcies, including J.C. Penney, Stage Stores and Stein Mart, put more stores on the market.

Some of that speculation was about Amazon opening mini fulfillment centers in vacant mall spaces.

While Amazon is still generating good growth from its online operation, it “doesn’t view the world through the lens of what is happening today. It never has,” said Neil Saunders, managing director of GlobalData.

Amazon is looking ahead to a time when its online business is so mature that it becomes much harder to generate strong growth, he said, plus it knows that the future of retail is multichannel. “During the pandemic, the fastest growth came not from online pure plays but from multichannel players. Amazon has noted that, and it knows it must play in this space, at least more than it does today, to maintain its edge.”

Stores will also give Amazon a way to improve performance in apparel and home and get more consumers to try its brands, Saunders said. Understanding consumer preferences in stores “can be used to improve the whole proposition.”

Twitter: @MariaHalkias

Looking for more retail coverage? Click here to read all retail news and updates. Click here to subscribe to D-FW Retail and more newsletters from The Dallas Morning News.

Source link

What do you think?


Leave a Reply

Your email address will not be published. Required fields are marked *

WWE star Charlotte Flair discusses SummerSlam, Becky Lynch chants and social media trolls | Entertainment

Building a martian analog on Earth, and moral outrage on social media | Science