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08/19/2021

Amazon to Open Department Store Locations

Amazon is taking a big step into physical retail with plans to open several large, brick-and-mortar stores reminiscent of department stores.
Amazon building

The e-commerce giant will sell products across categories, from clothing, household items, electronics and more, The Wall Street Journal reported. The first locations are expected to open in Ohio and California, people familiar with the plans told the WSJ. The plans are not final and could change.

The new spaces will clock in around 30,000 square feet, with items from top consumer brands and Amazon’s owned brands. It’s not clear which brands will be featured in the stores, but Amazon reportedly approached some U.S. apparel brands two years ago with the idea, according to the WSJ. While that’s smaller than the typical 100,000-square-foot department store, Amazon’s footprint will still be larger than scaled-down versions of other retailers, such as Nordstrom and Bloomingdale’s.

Amazon, which is on pace to eclipse Walmart as the biggest retailer in the world by 2025, has added several physical stores to its portfolio over the last several years, from bookstores to cashierless food stores and its ownership of grocery retailer Whole Foods. However, the department store concept marks the company’s most ambitious physical retail plans to date.

The timing is auspicious, as department stores have cratered over the years, as e-commerce, discount retailers and fast-fashion have risen in popularity. Department store sales only account for less than 1% of all retail sales, compared to 10% a generation ago, the WSJ reported. A number of well-known retailers, including J.C. Penney, Neiman Marcus, Lord & Taylor and Stage Stores, all filed for bankruptcy last year when the COVID-19 pandemic heightened ongoing struggles and created unprecedented new challenges for the industry.

Department stores as a sector shouldn’t be counted out, as some brands, including Kohl’s and Macy’s, have managed to carve out new paths for themselves and emerge with strong sales. 

Amazon’s move reveals there is still high value in physical retail locations, despite a rough 2020 due to the pandemic. Executives believe physical stores can result in better engagement with customers and benefit those who want to try before they buy.

While details are minimal on the new stores, it’s clear Amazon continues to innovate with its mindset on growth.