Amazon’s physical retail business is suffering a major blow as the company today confirmed to Reuters it will close 68 brick-and-mortar retail stores across the U.S. and U.K. This includes its Amazon Books bookstores, its pop-up shops in various markets and its 4-star stores, where customers could shop popular and highly rated products across Amazon.com.
The retailer, which began its life as an online bookseller, launched its first physical bookstore in Seattle back in 2015, then steadily expanded its brick-and-mortar footprint to include more locations across the U.S. and abroad, including in U.S. states like Arizona, California, Colorado, D.C., Illinois, Maryland, Massachusetts, New Jersey, New York, Oregan, Tennessee, Texas and, of course, its home state of Washington.
The stores didn’t just provide a place for customers to interact with Amazon merchandise in real life, including its hardware devices, they also served as a convenient spot to pick up merchandise bought online or make returns. In later years, Amazon’s retail footprint expanded to include Whole Foods, with the 2017 $13.7 billion acquisition of the grocer, plus its own Amazon Fresh grocery stores. And Amazon has been testing its Just Walk Out cashierless shopping technology at a growing number of Amazon Go convenience stores, which weren’t a part of this planned shutdown.
The company told Reuters it will alert shoppers to the upcoming closures through in-store signage, as the actual closing dates may vary by location. It also said it was working to find new roles for employees impacted, when possible, or offer them severance.
The decision to exit so much of its brick-and-mortar business follows a couple of years that have made in-person retail more challenging for everyone, as the COVID pandemic sent more consumers online as foot traffic to local stores declined. But this decision also comes at a time when Amazon retail workers had begun to organize — though in this case, at an Amazon Fresh grocery. The union push saw the retail workers demanding better wages, more flexible attendance policies, longer breaks and other benefits, Insider today reported.
Shutting down dozens of physical stores immediately after such demands seems to send a chilling message to all Amazon retail workers that the company doesn’t value its physical retail business. Amazon, however, said it will continue to work on its cashierless grocery stores and other new concepts, like the recently opened physical clothing store in LA called Amazon Style.
Though a small part of its broader retail business, Amazon’s brick-and-mortar stores made the company billions. In Q4 2021, the company reported its physical retail business generated $4.68 billion, up from $4.02 billion in the year-ago quarter. It also touted other retail developments in the quarter, in addition to Amazon Style, including the opening of the first Starbucks Pickup with Amazon Go store in New York, and plans for two more such stores in 2022.
From movies to shipping, AWS is driving Amazon’s revenue diversification
Comment