After successfully disrupting online shopping, convenience stores, bookstores, grocery stores and more, Amazon has its eyes set on a new target: department stores.
Amazon is soon expected to open a series of department stores to sell physical products to in-person shoppers. The move will certainly disrupt the entire retail industry and further cement Amazon’s dominance, but it could be good news for customers.
Amazon has its smaller, curated 4-Star stores, as well as AmazonGo stores. The 4-Star stores feature only top-rated products. One would assume this approach at the 4-Star stores would also be explored as far as inventory in their department stores featuring only high-performing, sought-after products. One can also assume the payments technology used in AmazonGo stores (which have no actual cash registers) will also be a feature (shoppers just leave the store with the items they want), but this is just speculation for now.
Amazon hasn’t officially announced the new stores, but reports suggest that the company hopes to use department stores to expand its reach in clothing, household items and electronics. That notion tracks with Amazon’s recent push for clothing, including recently taking over Walmart as the largest seller of clothing in the U.S.
In recent years, Amazon has disrupted not only the e-commerce space but also physical retail, starting with its cashier-less Amazon Go stores, bookstores, full-scale grocery stores and Amazon Prime pop-up shops. For years, Amazon has disrupted department stores and forced them to change how they did business. Now, it’s joining them.
Early reports suggest the stores will be substantially smaller than traditional department stores (around 30,000 square feet, compared to the typical 100,000 square feet) and include items from top brands. The first stores will reportedly be in California and Ohio.
The move to brick-and-mortar stores also allows Amazon, long known for its focus on data and personalization, to collect even more data about its customers. Amazon’s department stores will add a new layer of information on each customer, including how long they spend looking at certain items, what areas they visit in the store and what items they consider before making a purchase. That increase in data will allow Amazon to create even more effective personalized campaigns for customers.
Data has long been crucial for online companies, but a growing number of physical big-box stores have recently invested in data and digital services. Amazon’s proven ability to collect customer data and use it to effectively understand and market to customers should allow it to seamlessly integrate data and digital services into its physical stores.
However, with an increase in data collection comes the chance that customers will tire of Amazon knowing everything about them. More customer data could bring greater profits for Amazon, especially as it attracts advertisers, but also increases the need to hold that data securely to maintain customer trust.
For years, people have been predicting the death of brick-and-mortar retail, but Amazon’s move to physical department stores shows that in-person shopping is still alive and well. But as with all things Amazon touches, these stores will likely not be the traditional department store experience but will instead take a more customer-centric, modern approach with things like personalization, integrated technology and experiential shopping.
Aside from highlighting its brands and products, Amazon is expanding to department stores to increase convenience for customers. Instead of being limited to what can be ordered online and delivered in one or two days, customers can now shop in person and take an item home immediately. That focus on convenience will extend to all retailers and continue the push to put customers first.
Amazon has already shown its dominance in the e-commerce space by forcing countless competitors out of business. Its move to brick-and-mortar should cause other established department stores to re-evaluate their products and customer experiences so they can stay relevant and compete with Amazon. Increased competition tends to be great for customers because it forces all stores to up their games and provide great experiences, products and prices.
Where Amazon leads, others follow. The move to physical department stores will shake up the retail industry, hopefully to the benefit of customers.