The news: Amazon is reportedly planning to open department-store-like retail locations, per The Wall Street Journal. The plans are not finalized yet but signal the ecommerce giant’s intentions to further disrupt retail.
The competitive set: In terms of number of stores, other mass merchants and big-box retailers have a serious advantage.
What’s interesting: The square footage of Amazon’s stores will be only a third the size of average department stores—30,000 square feet, as opposed to the traditional 100,000 square feet.
What we don’t know yet:
eMarketer retail and ecommerce analyst weighs in:
“Amazon’s Achilles heel in retail is its lack of a brick-and-mortar footprint,” said Suzy Davidkhanian, eMarketer principal analyst at Insider Intelligence. “Amazon has been experimenting with different retail formats for years, like Amazon 4-star or Amazon Go, and so it is no surprise that it is now looking to expand into the department store channel where it can offer more categories under one roof, like apparel and accessories, that drive a lot of volume and typically are more of an in-store purchase, because you want to try on before making your purchase.
"As for the smaller square footage at these stores, almost all big-box retailers are doing smaller store formats. It's easier to start small and then go big, versus the scaling back we're seeing now at chains like Target, Macy’s, and Bloomingdale’s."