Amazon is making another move into physical retail, this time with plans to open department store-like locations in Ohio and California that would sell items such as clothing and electronics, according to a report from The Wall Street Journal.
It’s the latest brick-and-mortar experiment from Amazon, which has steadily grown its physical retail footprint with Amazon Go, Amazon Books, Amazon Fresh, Amazon 4-star, and Whole Foods stores.
The department stores will likely feature Amazon’s private-label products and other top brands, WSJ noted.
The reported department store rollout is a “circle of life” moment, as University of Washington professor and author Margaret O’Mara noted on Twitter, given that Amazon’s growth in e-commerce contributed to the demise of many longstanding physical big-box store operators such as Sears and J.C. Penney.
The circle of life https://t.co/t7jeGAnOjS
— Margaret O'Mara (@margaretomara) August 19, 2021
Guru Hariharan, a former Amazon manager who is now CEO of CommerceIQ, said the downfall of traditional brick-and-mortar retailers was due to their inability to manage three metrics successfully: price, selection and availability.
“The losers could not figure out how to be price competitive with Amazon, they did not have technology to drive the right assortments, and they did not have the mechanisms in place to ensure that the right products were in stock,” he said in an email to GeekWire.
Hariharan added that while Amazon dominates e-commerce, it is still a small player in physical retail.
“It is important to remember that e-commerce is still only 20% of the whole retail market,” he said. “Physical retail is a 4X bigger opportunity and with a new CEO coming in, they will want to drive new experiments to try to accelerate their growth into the future.”
The Wall Street Journal reported last year that Amazon was in talks with mall operator giant Simon Property Group to convert Sears and J.C. Penney stores into package distribution centers.
Amazon’s physical stores revenue was up 10% in the second quarter to $4.2 billion, less than 4% of its overall revenue.
