Amazon is reinventing the brick-and-mortar department store. The Wall Street Journal has reported, based on “people familiar with the matter,” that Amazon plans to open several large physical retail locations in the United States.
If true, this would constitute an ironic expansion of the online-retail giant into precisely the brick-and-mortar style of retail that Amazon (NASDAQ: AMZN) is sometimes said to have replaced: or, if not “replaced,” at least “disrupted.”
The plan is to launch the stores first in Ohio and California, with a floorplan of around 30,000 feet, offering items from top consumer brands in clothing, household items, and electronics.
Thirty thousand square feet is less than one-third the size of a typical department store. But it is a good deal larger than Amazon’s physical retail spaces to date.
This perhaps related to a recent move by one of the traditional department store chains, Bloomingdales, which has spun off “Bloomie’s,” a scaled-down version of itself, in the hopes of giving shoppers a fresh, casual, convenient shopping experience.
The floor of the new Bloomie’s in Fairfax, Va. is 22,000 square feet.
Investors Aren’t Acting Worried
Presumably both companies are now willing to bet that shoppers will go to a physical location to find what they want, perhaps especially now after more than a year cooped up. But at the same time shoppers don’t want the huge old-fashioned-department- store format.
It is possible that vanity enters into the selection of a store’s size. The big department stores may have developed the large floor plans that they did, in the days before e-commerce, out of a corporate empire-building impulse. One might even squint and see all of the chaos in brick-and-mortar retailing in recent years as a humility-building exercise in right sizing.
Nordstrom, as it happens, is also looking for a happy medium between 100K-square-foot stores and no store at all. Its smaller stores operate under the names Nordstrom Rack and Nordstrom Local.
With regard to Amazon’s plans: no one as yet has independently confirmed the WSJ report. The company replied to CNBC’s request for confirmation with a statement that it will not comment on speculation.
Further, investors don’t seem all that worried on behalf of the Big Box stores that might be threatened by such a move on Amazon’s part. The stock price of Target (NYSE: TGT) was somewhat higher Friday morning than it had been at the close Thursday, before the WSJ story.
Likewise with Bed, Bath, and Beyond (NASDAQ: BBBY). It closed Thursday at $25.85. But it spent much of the morning trading Friday above $26.
The Attractions of In-Store Shopping
Feeling fabric, sitting in a chair one might purchase, trying on clothes in front of a mirror, experiencing the trip out of the house or out of one’s routine, the sight and hubbub of one’s fellow shoppers doing the same — these are experiences that people do not lightly abandon.
Yes, carrying a bag of newly purchased items in a parking lot to one’s car can be a pain in the neck. But arriving home with the new items: that is a desirable part of the experience too.
It is not too surprising, then, that Amazon and its rivals in the e-commerce world could not displace all of that, and that now Amazon would seek to get a piece of physical retail after all.
As for the optimal size of a store, it is natural that there will be different views of that. It may turn out that something between Bloomie’s 22K and Amazon’s reported 30K is optimal. Or it may turn out that there is no optimal, and there will still be some room for the really big Big Boxes.
There is no crying in retail.