Stores

Amazon to close 68 retail storefronts—why the move makes sense

“Focusing on running so many different initiatives is eventually death by 1,000 cuts,” said Holden Bale, group VP and head of commerce at Huge, said.
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Francis Scialabba

· less than 3 min read

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Sometimes, the bricks don’t click. This week, Amazon said it would close 68 brick-and-mortar stores across the US and UK, including all of its 4-Star shops and Amazon Books locations.

John Mercer, head of global research at Coresight, thinks the move makes sense. In fact, he told Retail Brew he believes these concepts were on the back foot from the start. “Those categories are really categories that Amazon had led on when it was online-only,” he said. “Those categories are…[ones] with very high e-commerce penetration rates.”

Suzy Davidkhanian, principal analyst at Insider Intelligence, too didn’t expect 4-Star to be very successful—given its random nature, she said—but was more surprised Amazon Books didn’t pan out.

  • “They must have done their math and they’re like, ‘Okay, we tried it. We learned a ton. And now we’re gonna use that information to help with our next in-store concept,’” she told us.

But just because Amazon is closing these stores doesn’t mean they were a miss, noted Holden Bale, group VP and head of commerce at Huge. “It means they did not work as well as the other formats…Focusing on running so many different initiatives is eventually death by 1,000 cuts,” he said.

Looking ahead…No wonder that Amazon is instead focusing its IRL presence on grocery (like Amazon Fresh) and fashion (Amazon Style is on the way). “If they could claim grocery and even a couple more percent of apparel sales, it’s tens of billions of dollars,” Bale said.

  • “I’m not surprised they’re doubling down on categories like grocery where there’s still so much happening physically in a store,” Davidkhanian added.—KM
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