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Amazon to close physical bookstores, focus on groceries

(Source: Bigstock)

Amazon is planning to shut all 68 of its physical bookstores, Amazon 4-star, and Pop up stores across the US and UK, shifting its focus to the groceries businesses and new retail concepts, the company told Reuters. 

The e-commerce giant started its business as an online bookstore with the first permanent brick and mortar outlet opening in 2015 in Seattle. Since then, the company has increased its bookstore network across the US to 24. Meanwhile, the Amazon 4-star concept was introduced in 2018 with a focus on selling general merchandise rated higher than four stars by its customers. 

“Amazon’s decision to shutter many of the physical concepts it has opened over the past few years comes as a surprise – not least because a handful of outlets have only recently opened,” observed Neil Saunders, MD of GlobalData. 

“Nevertheless, the company has concluded that they are not delivering the returns – monetarily or in terms of what they are doing for the wider company – to justify keeping them open. The cost base of the stores is reasonably high because most are located in premium malls where rental costs are high.”

The company told Reuters that the closure dates of the stores will vary based on the store locations but customers will be notified by in-store signage. Meanwhile, it is working closely with affected employees to help them find new roles within Amazon. 

​​“In our view, the main problem with Amazon’s non-food stores is that while they are perfectly presentable and have better standards than many traditional retailers, they lacked a real purpose,” Saunders said. “They were designed for people to pop in and browse rather than as destinations where people would head on a mission to buy something. 

“Ultimately, this wasn’t great for driving footfall – especially in an era where people are visiting shops less. The other issue is the assortment which, in many outlets, was disjointed and unfocused.”

Amazon said it will remain focused on Whole Foods Markets and Amazon Fresh stores, and its cashier-less grocery model while working on other retail concepts. The move follows the company’s introduction of Amazon Style, its first physical apparel store in Los Angeles, last month.  

“While it is unusual for most retailers to abandon concepts in a wholesale fashion – especially outside of bankruptcy – Amazon is not a typical retailer,” Saunders added. “It tries and tests things new things, often committing reasonable levels of investment, only to move on if it doesn’t see forward potential.

“This move does not signal an end to Amazon’s store ambitions. It has plans to investigate larger format non-food shops, open a fashion concept, and continue its drive-in grocery. It will take the learnings from its previous outlets and use them to refine what comes next.”

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