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Despite retail closures, Amazon still has plenty in store

While it seems like strange timing for the e-commerce giant to be shuttering these stores, here are three reasons why Amazon's other brick-and-mortar locations may stick around for a while.
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Written by Ross Rubin on

In the early days of Amazon.com, the faceoff between the e-commerce pioneer and Barnes & Noble was reduced first to a showdown between online pure plays vs. brick-and-mortar retail, and then, after the launch of Barnesandnoble.com, online pure plays vs. "bricks and clicks." Fast-forward a few decades and Amazon had become what Bloomberg technology editor Brad Stone popularized as "the everything store" as Barnes & Noble became one of many retail category leaders to struggle mightily.

But Amazon was never dogmatically opposed to opening a physical store. In 2015, it entered physical retail with the same category that started it all for the retailer online. Rather than fill substantial floor space with physical volumes, though, the company pursued a curated collection and allowed customers to have books sent from its website vs. leaving with the paper-based product. Amazon tried another spin on the curation model with the 4-Star Store selling an eclectic selection of products that had all earned four stars on its website (which, if you've spent much time shopping on Amazon.com, you know doesn't winnow down the selection much).

On the surface, it seems like strange timing that the company will be shuttering these stores as the threat of COVID-19 continues to recede and the prospect of consumers returning to retail looks the brightest it's been in years. Among many retailers that succumbed to the lockdowns, another Big Tech retail foray, the Microsoft Store, did not survive. However, much has changed in the world of Amazon's retail since its physical retail debut. For one, the battle with Barnes & Noble for books has been replaced with one with Walmart for just about everything, but especially the $765 billion U.S. grocery market, which led to Amazon's 2017 purchase of Whole Foods

While Whole Foods' 500 stores may not offer a ubiquitous retail presence, at least compared with Walmart's 4700+, Amazon has also dipped into the convenience store space with Amazon Go. The leader in that category, 7-Eleven, has over 9,500 stores., But more than an attempt to compete aggressively with the purveyor of Slurpees, a partner in Amazon's Locker program, Go has been the testbed for Amazon's Just Walk Out cashierless tech, which the company has brought to its latest Whole Foods in Seattle and is slated to appear next at a Whole Foods store in LA, with others surely on the roadmap. (7-Eleven has also experimented with a lower-tech approach to cashierless checkouts.)

A New York Times story referred to the recent Seattle implementation as "the complete Amazonification of Whole Foods," but that's hardly the case. As I wrote after the company's Alexa developer online event last year, Amazon has contemplated how Alexa in the car might be used to auto-notify a retailer like Whole Foods to prepare a curbside drop-off and even direct staffers (or robots) to the proper parking spot at which to load the order. Perhaps, in a decade or so, your car will make the trip without you en route to taking care of a few other errands on your behalf.

As for now, with Whole Foods adopting Just Walk Out, it remains to be seen whether the smaller Amazon Go and Amazon Fresh stores will eventually go the way of Amazon's other smaller retail stores. With efforts that include Amazon Locker, its return network of UPS Stores and Kohl's, its own electrified fleet and Flex delivery network, and a future that's anticipating both robotic ground and air delivery (the last still a distant dream), It's no longer an imperative for the company to build out a significant location footprint.

However, there are at least three reasons why they may stick around for a while, First, these outposts should prove more useful in encouraging consumers to get on board with Just Walk Out technology than its first stores did; their focus on perishables is more complementary to Amazon's online business and drives more frequent transactions than books and products that were sold in the 4-star stores. Second, they could prove useful if Amazon seeks to expand its recently launched pharmacy service to customers more comfortable with the idea of picking up drugs in person. And third, they allow Amazon to wedge touchpoints into urban areas that are far too small to accommodate a Walmart.

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