Tencent technology news on August 20, people familiar with the matter disclosed on Thursday that Amazon plans to open several large physical retail stores similar to department stores in the United States, which will help the technology giant expand its sales range in clothing, household goods, electronic products and other fields. The plan to open large department stores will mark Amazon’s new expansion into physical retail, which the company has long sought to expand.
It is reported that the first Amazon department stores will be located in Ohio and California. The new retail space will be about 30000 square feet (about 2790 square meters), smaller than most department stores, which usually cover about 100000 square feet (about 9290 square meters) and can provide goods of top consumer brands. According to people familiar with the matter, Amazon store will dwarf many other physical retail space of the company, and its scale will be similar to the reduced format that Bloomingdale, Nordstrom and other department store chains have begun to open.
People familiar with the matter said that it is not clear what brands Amazon will provide in the store, but the company’s own brand products are expected to occupy a prominent position. Amazon currently sells many private label products, including clothing, furniture, batteries and electronic devices. People familiar with the matter said that the plan of Amazon’s large department store has not been finalized and may change.
Amazon’s plan represents the evolution of the company’s efforts to enter the field of physical retail after taking market share from large physical store operators for many years – these initiatives have helped many physical retail stores go bankrupt. Amazon’s growth in online shopping has helped accelerate the decline of mall operators and other once powerful physical store empires. According to Wells Fargo, Amazon has now surpassed Wal Mart as the largest clothing seller in the United States.
Founded in 1994, Amazon was originally an online book retailer. By opening physical bookstores, grocery stores and other physical spaces, Amazon has gradually gained a foothold in the field of physical retail. The company acquired whole food supermarket in 2017. Amazon is entering a field that has struggled for decades. Department stores used to be an exciting place to shop. Consumers can find everything from toasters to evening gowns under one roof. But they lost out to discount stores, fast fashion retailers and online retailers. According to the estimation of customer growth partners, a consulting firm, excluding cars, natural gas and restaurants, department stores accounted for 10% of total retail sales a generation ago, but so far this year, they account for less than 1%.
Last year, when novel coronavirus pneumonia was most serious, the problem of large department stores became more serious. At that time, J.C. Penney, Neiman Marcus group, Lord & Taylor and Stage Stores filed for bankruptcy. J. C. Penney and Neiman Marcus walked out of the court under the protection of their new owners. Lord & Taylor now sells only online, and stage stores has been completely liquidated. Analysts and industry executives have not yet included department stores. Chains including Macy’s and Kohl’s are expected to report strong sales on Thursday as consumers restart shopping after reducing clothing purchases last year. “People are definitely returning and shopping in department stores,” John idol, CEO of Capri holdings, Michael kors’s parent company, told analysts on a conference call last month
People familiar with the matter said that about two years ago, Amazon approached some American clothing brands and hoped to open large stores to display their products. Expanding the size of the store will enable Amazon to provide consumers with a range of products to try before they decide to buy. This is particularly beneficial in the field of clothing, which is usually a guessing game for customers to shop online because of concerns about size and fit. Compared with Amazon’s fast delivery for online purchase, it can also bring more immediate satisfaction to customers.
It is reported that Amazon executives believe that the physical store will help better interact with customers and provide a display platform for shoppers who may not have tried their devices and other products. The company has been seeking physical innovation while building a store network to collect insightful customer data and provide a new shopping experience.
According to shoppertrak, although physical stores were hit during the pandemic because people took refuge at home, pedestrian traffic has gradually recovered. Shoppertrak uses cameras to count traffic at retail stores in the United States. Sales at Amazon’s physical stores fell by about 5% last year because the pandemic led customers to shop more online. In the second quarter of this year, sales in this segment increased by 11% year-on-year.
In recent years, the company has increased its investment in building fashion business and provided consumers with more choices to buy clothes. Amazon has experienced a difficult period in entering high-end fashion. Although Oscar de la Renta began selling cocktail skirts on Amazon last year, few other luxury brands followed suit.
Over the years, Amazon has used its influence to expand new markets, disrupted some industries, and gained advantages in many other industries, including entertainment, groceries, health care, etc. Although the extent of the growth of its physical retail ambitions is unclear, the company has been steadily increasing its stores for many years. Amazon opened its first physical store in 2015, a bookstore in Seattle. It tries to differentiate these stores from competitors by offering discounts to Amazon Gold members, providing its own testing and sales equipment, and creating highly selected books according to the scoring system.
Today, Amazon operates more than 20 bookstores and more than 20 Amazon four-star stores in the United States. These stores sell everything from electronics to kitchen products. Amazon’s four-star store is usually about 4000 square feet. Two years ago, the company said it would close many flash stores in shopping malls. These flash stores display devices such as smart speakers, tablets and kindle e-readers.
Amazon’s technological innovation is particularly reflected in its grocery store series starting with the purchase of whole food supermarkets. These include its cashless Amazon go convenience stores in Chicago, New York, San Francisco and Seattle, as well as its more traditional Amazon fresh food stores in several states. It is unclear whether Amazon plans to introduce any store functions in the new retail outlets, such as no cashier technology（ Tencent Technology (compiled / Mowgli)