The CEO of a large mall operator is backing off his statement about Amazon’s plans to open 400 physical bookstores.
Toward the end of his company’s earnings call on Tuesday, General Growth Properties CEO Sandeep Mathrani said that Amazon was planning to open as many as 400 brick-and-mortar bookstores. The Wall Street Journal first reported on his comments.
But today, General Growth Properties issued a statement about what Mathrani said:
Chief Executive Officer Sandeep Mathrani has indicated that a statement he made concerning Amazon during GGP’s earnings conference call held on February 2, 2016, was not intended to represent Amazon’s plans.
An Amazon spokesperson told GeekWire on Tuesday that “we don’t comment on rumors and speculation.”
Here is the transcript from Mathrani’s comments on the earnings call, via Seeking Alpha:
Linda Tsai: Hi. Thanks for taking my question. In light of your comments on holiday traffic, do you think you will comment on traffic going forward? I think in the past you didn’t like to discuss it because it came from external flash unreliable sources but now you are measuring it in your malls.
Sandeep Mathrani: I think as we continue to measure them we’re happy to give the data because the irony is that the loan traffic is actually up and one of the biggest pain points during the holiday season was lack of parking.
So we’re obviously seeing people come to the mall. We’re seeing then stay longer at the mall. They’re shopping a lot of fewer stores when they come into the mall, but they’re definitely roaming the malls and shopping
So if you’ve got the product the retailer — the consumer is redoing the research on their mobile device and coming into the mall to shop which is why still to date from a soft goods perspective, almost 95% of all soft goods are bought in the bricks and mortar store.
And I think the other fact is that people are really built into the equation is that the return rate on the soft goods is incredibly high. I think its 38% of eCommerce purchases of soft goods that are bought online or returned in the bricks and mortar store.
So to really get a true and proper understanding until the retailer stock to show you exactly what the return rate is and how it’s being impacted is really hard to evaluate in this Omni channel world why one growth is bigger than the other because you have to take the return rates into account, which really no one does.
And just case in point, you go to Amazon opening bricks and mortar bookstores and their goal is to open as I understand 300 to 400 bookstores, and it should sit back and say that the last mile is all important, which is why Bonobos is opening bricks and mortar store and Warby Parker is opening bricks and mortar stores and Birchbox is cutting their overhead to open bricks and mortar stores.
It’s a very interesting evolution because the cost of the last mile is that important. And again the mall business if you appreciate which is more focused on fashion is very different than a staple business where you’re buying commodity and so you know in the mall business, the impact of eCommerce is a lot less, it’s actually your friend not your enemy.
Amazon only has one bookstore today, a 7,400 square-foot shop in Seattle’s University Village that opened this past November. The bookstore utilizes data and information from its massive online store — best-sellers, customer reviews, etc. — to refine the selection of the physical books it sells inside a brick-and-mortar building that smells of printed paper and also features the company’s newest hardware products.
At the time, the company told GeekWire it did not have immediate plans for expansion.
“We hope that if this goes well, if customers love it, we’d love to do it in other places,” Amazon Books VP Jennifer Cast said.
Recode reported on Wednesday that Amazon does indeed have plans to open more bookstores, citing a job posting for an Amazon Books assistant store manager in Southern California. Whether it’s 400 bookstores is another matter.
Recode also reported that Amazon wants to open other retail locations beyond just bookstores, noting that Amazon executive Steve Kessel, who was responsible for developing the company’s first e-reader, is leading a stealthy retail store initiative.