5 Ways Amazon is Investing Into Brick & Mortar Including Department Stores
By Natalie Jones / 09.01.21 / 3 min read
Over the past five years, Amazon has dominated retail by opening stores with the goal of bringing its online success to in-person shopping experiences. The company has made a recent move that follows several tactics that have will impact the retail landscape for years to come. Here are five ways that Amazon is growing in the brick and mortar sector:
According to reports, Amazon’s latest expansion in retail will be in the form of department stores in multiple locations. These 30,000 SF stores are anticipated to land in California and Ohio first. The physical locations are recognized for the expected positive impact on clothing and technology sales for Amazon. This is part of the reason why the stores are bound to impact retailers including Target, Bed Bath & Beyond, Best Buy, and Walmart as already seen with a 1.0-1.5% decrease in share among these competitors.
Traditional department stores such as J.C. Penney and Lord & Taylor have struggled in recent time with many filing for bankruptcy or turning to other ways to bring in new customers. As the world’s largest retail seller outside of China, Amazon is tapping into a struggling area of the industry with momentum from its online growth and results from the following efforts:
The retail giant brought its online bookstore, Amazon Books, to the brick-and-mortar setting in select locations. However, some think that these stores aren’t structured in an ideal way for in-person shoppers, supporting the argument that how people shop online versus in a store doesn’t line up. This highlights the importance of brick and mortar data that Amazon will soon have more of with the reported department stores.
In 2017, Amazon bought Whole Foods for $13.4 billion. It helped Amazon land a spot in the $750 billion grocery market, but benefits went beyond that. Investing in Whole Foods was a big step in the direction of blending Amazon’s physical and online experiences. This grew Amazon’s physical footprint in the country to cover most states and allowed the company to leverage Whole Foods’ existing web of brand partnerships, product distributors, individualized buyers, and a trained workforce. With Whole Foods, Amazon filled a need for in-person shopping data to fuel their strategy.
Amazon also launched cashier-free convenience stores known as Amazon Go, catering to business districts during breakfast and lunch hours. These locations have popped up across the country and are designed so that shoppers scan a QR code at a turnstile upon entry and simply walk out with their items when finished. The opening of the 10,400 SF Amazon Go Grocery Store in Seattle last year is Amazon’s first full-size grocery store that doesn’t require any human interaction for shoppers. Competitors including 7-Eleven and Walmart have paid attention to this cashierless technology and attempted to implement a similar system in their stores.
The 4-star stores that Amazon launched three years ago offer products that fall into one of three categories: have a four-star rating or above in the online store, are marked as a top seller, or are new and trending on the website. Each store features customer review cards, digital price tags that frequently adjust to prices on Amazon’s website, and a section of items that a popular in the online store’s wish lists.
From here on out, retailers in the industry will face pressure due to Amazon’s increasing presence in brick and mortar. Forbes explains that the company’s moves show a push for making the shopping experience convenient for consumers which can spark competition to stay relevant. Amazon stands in a position to set precedents for the industry and hopefully enhance the consumer shopping experience.
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