Amazon Reportedly Planning to Open Department Stores

Amazon.com is planning to open large retail locations that resemble department stores, The Wall Street Journal reported. The newspaper, citing people familiar with the plans, reported that some of the first Amazon department stores are expected to be in California and Ohio. The locations will take up roughly 30,000 square feet, around the size of a Kohl’s or T.J. Maxx store, but only about the third of a size of a traditional department store. The move would mark Amazon’s latest experiment with physical retail stores. The department stores are expected to help Amazon sell more apparel and technology products, according to the Journal.

Total Retail's Take: Here's a sampling of industry reaction to this news:

“While Amazon cited selling more and facilitating exchanges as the reason for opening up physical big-box stores, there's going to be immense — perhaps more — value to them in helping to manage and reduce costs for returns.

"The pandemic facilitated the explosion of online returns. With so many people buying online, customers are returning items that they may not have if they had bought in-store — e.g., if the fit is different than what was expected or the color is off. The opening of more physical locations will allow consumers to see or try on goods as well as to return or make exchanges in-store, which will inevitably cut down on the number of returns coming into warehouses. This could also help alleviate supply chain backups.

"Looking to the holiday season and how consumers will be purchasing, the ability for retailers to offer returns and exchanges in ways that are convenient for the customer is how they’re going to end up winning — everyone wants to buy online, it’s just whether they look at returns the same way.” — David Malka, Chief Sales Officer, goTRG

“Amazon’s ability to scale beyond just cashier-less tech to a full-size department store will send ripples throughout the retail industry, giving a snapshot of what the future could look like. For both large brands and small local stores, Amazon has shown that consumers are becoming increasingly familiar with a tech-enabled and contactless shopping experience, especially during the COVID-19 pandemic. In the next few years, I expect to see other retailers ramp up their abilities to offer contactless shopping experiences in connection with both delivery services and curbside pickup." — Joe Scioscia, Vice President of Sales, VAI

“Amazon’s department store plans are a testament to the e-commerce giant’s agility and sets the stage for the future of retail and e-commerce. Consumers want convenience. Amazon’s department stores make it easy and convenient to make shopping with Amazon part of consumers’ everyday routines — online or in-store. Now, rather than consumers having to wait 24 hours to 48 hours for delivery of their favorite clothing, home goods and electronics, they can pick it up in-store for instant gratification. This concept of agility and a diversified selling strategy is so important for retailers to keep in mind as they look for ways to stay competitive in the growing market. For individual sellers on marketplaces, Amazon will be highly selective about the brands and products that hit the shelves in its department stores. So, while it will be difficult to earn Amazon’s blessing to grace department store shelves, it presents a tremendous opportunity for brands to diversify their own selling strategies.” — Kunal Chopra, CEO, Kaspien