Are Amazon developing a retail strategy? Insiders say they are about to get physical!

20th February 2017

According to one major American shopping centre company last week, online retail giant Amazon are developing a retail strategy to open around 400 bricks-and-mortar bookstores throughout the US. The move is thought to have been prompted by the success of a pilot store, which they opened in their hometown of Seattle, last November. But why are Amazon so interested in getting physical? Whilst the retail giant has not specifically confirmed this new retail strategy, it’s seems to be a given that this will be the direction that they are headed in next – according to retail analysts – as Chief Executive of General Growth Properties, Sandeep Mathrani confirmed:

“You’ve got Amazon opening brick-and-mortar bookstores and their goal is to open, as I understand, 300 to 400 bookstores,”

He compared Amazon’s plans to those of other US brands, which started out online – like Bonobos and Warby Parker.

Are Amazon about to move into physical retail?

Going back to their roots

If the news is true, the move confirms a return to Amazon’s online retail roots. They initially started out as a bookseller 20 years ago – before branching out to offer everything from fresh groceries to original streaming TV shows – and everything in between! Amazon have revolutionised the publishing industry with Kindle, encouraging people to self-publish and creating downloadable volumes, with consumer trust generated from online ratings and reviews.

As you would expect, Amazon’s flagship bookstore in store in Seattle uses innovative selling techniques too. It stocks books based on their online customer ratings and popularity. The storefront presents a space for shoppers to try out different versions of Kindle, Fire TV and other related devices.

Although Amazon are widely credited for revolutionising book sales, they also contributed to a sharp decline in sales for other physical stores, including Waterstones and Barnes and Noble. Currently the largest American bookstore chain, with 640 stores across the US, rumours of Amazon’s intended move open a chain of physical stores caused Barnes and Noble shares to plummet by more than 5% overnight.

Despite this, perhaps their rivals should have been preparing for the news – and working on a strategy to deal with the competition. According to one source, Amazon has been hinting at their intention to move into bricks-and-mortar stores for years. Back in 2012 Chief Executive and Founder of Amazon, Jeff Bezos said that he would ‘love’ to open some physical stores as long as he could find an idea that was unique to Amazon. According to a survey published in the Telegraph recently, consumers would like to see Amazon move into physical retail more than any other online store – so the interest is certainly there!

Developing a retail strategy - are Amazon capitalising on the facts?

Picture credit: Daily Telegraph 

Amazon Go – where have the people gone?

And it’s not just books that are whetting Amazon’s appetite for physical sales. The Pop up City recently reported that Amazon have more plans afoot for innovation in other physical retail domains, including an 1,800 square foot ’Amazon Go’ supermarket which will be opening in Seattle later this year.

This prototype supermarket will have no staff at all, with fully automated processes throughout the store. Customers will begin shopping by checking in with their payment details as they enter, using their smart phone. As they walk around taking items off the shelf, an array of cameras and sensors will detect each item and add it to their bill. Once their shopping is complete the payment is taken automatically without the need to checkout.

Of course Amazon must have done some research into the ethics of this type of transaction, but it will be interesting to see what effect this has on both the labour market, potential for crime and also whether people really want to shop without any human interaction – something we have discussed a few times on the blog before.

Whilst Bezos wants to innovate and create things which are ‘uniquely Amazon’ is he doing it just because it is expected of him – innovation for innovation’s sake? Or does he really think that it’s necessary in order to give them Amazon the edge over other physical retailers? What is the consumer cost and will people really go for it? Would you like to shop in a store with no friendly faces, where they are monitoring your every move? As reported the other week on the blog, even millennials prefer to shop in store – but is this because of the human element? Or something else? We’ll be interested to see when and where Amazon are going with these ideas.