Amazon Gets Physical–Can They Reinvent the Department Store?

Remember department stores? Those square footage behemoths that anchor malls across the country, homes to iconic store brands inviting you in to shop for everything from shoes and clothing to luggage and furniture.

But retail is finnicky. Companies have to predict what consumers will want to buy next spring and summer even though the fall season has yet to start. The ways in which we shop have also drastically changed, pushing the traditional department store model to the margins. Now, digital dominates; we’re shopping on apps and on Instagram, buying online and picking up in store rather than spending hours browsing the many floors of a Macy’s (M) or Nordstrom (JWN).

The department store niche has seen some big causalities over the past decade too. A favorite of the famous and fashion-forward, Barney’s shut their doors for good back in 2019, while fellow luxury name Neiman Marcus and JCPenney both filed for bankruptcy last year. Lord & Taylor, which was founded in 1826, was resurrected earlier in 2021 and now operates only online.

So when I heard the news that Amazon (AMZN) is reportedly planning to test a department store concept of their own, I was surprised but not shocked. Amazon’s bookstores have certainly been a hit—whenever I’m in Chicago’s Southport Corridor, I always stop in and end up buying two or three books—so it seems par for the course that Amazon would try and reinvent another brick-and-mortar experience (and one it played a direct and indirect hand in making a relic of the past).

The stores will be about 30,000 square feet and focus on product like clothes, housewares, and electronics; this is similar to the size of a typical Kohl’s (KSS) or TJ Maxx (TJX) store. And according to the Wall Street Journal, Amazon began approaching U.S. apparel brands about a large-scale store a couple of years ago, showing us that investing in brick-and-mortar retail has steadily been on its mind.

We can also trace Amazon’s desire to dip its toes in physical retail back to its bombshell acquisition of Whole Foods Market, and from there, opening Amazon Go convenience stores, branded grocery stores, and the above-mentioned bookstores. Department stores seem like a natural evolution of the company’s long-term retail goals.

There’s another, simpler explanation to all of this too—people like stores, and Amazon, for all its digital innovation, understands that. You can buy new jeans without having to order six different pairs and returning the ones that don’t fit; you can sit on a new couch or armchair, making sure the fabric is to your liking; you can test a new fragrance or makeup product; but most importantly, you can leave a store and immediately have everything you wanted. Instant gratification will always be better than free two-day shipping.

Amazon irrevocably changed how we behave as consumers, and moving forward, they’ll continue to set the standards for how we shop (whether we like it or not). Their new take on the department store will undoubtedly make waves, and I bet be embraced in no time.

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