Amazon is closing 68 of its physical stores, but keeping grocery concepts going

By Matt Collins Article may include affiliate links

Amazon is closing some of its ventures into the world of brick and mortar retail, reports Reuters.

The company will shutter physical stores branded under the Amazon Books, Amazon 4-Star and Amazon Pop Up names, even as it continues expansion for its grocery and convenience store formats and prepares to open a department store concept.

All told, 68 physical locations will close.

The company is not closing its Whole Foods Markets, Amazon Go or Amazon Fresh locations.

Most, if not all, of the products sold in the physical locations will remain available on Amazon’s digital platforms.

Amazon opened its first physical bookstore in 2015 and would later launch its 4-Star concept that aimed to sell only highly rated products. Pop Up shops are, despite their name, semi-permanent locations inside existing shopping centers and malls.

While its physical locations may seem counterintuitive to the company that basically defines ecommerce, Amazon saw them as a way to reach more customers in more places. It also heavily relied on its billions of datapoints about products and customers to determine what items would be most likely to sell, therefore, at least in theory, offering a better way to manage inventory and pricing.

Physical locations also provided the opportunity physically see products in person, something that online shopping can’t deliver. Amazon heavily promotes its own line of Amazon Fire, Amazon Echo, Amazon Kindle and other electronic devices in its physical locations (many stores even have Alexa powered units scattered around where customers can also where everything from bananas to the bathroom are).

Of course, physical stores also came with costs that ecomm doesn’t have — rent in often pricey locations and customer facing staff, to name a few.

Amazon will begin closing the 68 locations in the coming months, with closings announced via in store notifications and signs, it says. Affected staff will be offered transition assistance, including the possibility of transferring to another Amazon owned property or role if available.

The company’s head of physical retail, Cameron Janes, left the company in November 2021 and now works at REI and new CEO Andy Jassy likely took a hard look at all of the company’s ventures since taking over from founder Jeff Bezos in July 2021.

According to investor filings, Amazon’s physical concepts only made up about 3% of its revenue — and most of that is through Whole Foods.

Not only did Amazon likely stumble with the higher costs of running physical locations, but the pandemic almost certainly didn’t help as retail shopping plummeted in favor of digital platforms and explosion in local delivery and pick up services.

Whole Foods are full fledged grocery stores with typical footprints of their competitors and focus on offering organic and natural foods, though nationally known brands that fit within that mission are also sold in them.

Amazon Go and Amazon Go Grocery are smaller convenience style and basic grocery stores that rely on a complex series of cameras and tracking systems to “watch” what customers pick up and then let them walk out without having to check out.

Fresh stores, meanwhile, are mid-sized grocery concepts that carry only select national brands mixed in with the company’s own Happy Belly, Solimo, Basic Care, Amazon Elements and others.

The stores feature Amazon Dash carts (previously the name of devices that let customers reorder products at the tap of a button) that have built in cameras, sensors and a scale that tracks what customers add and remove from carts and let them check out and pay by simply walking through a designated area.

Dash carts are, however, designed for smaller shopping trips (perhaps a bag or two of products) and the stores still offer traditional cashiers and checklanes for larger orders or those who prefer not to use the Dash cart.

Amazon also uses Whole Foods and Fresh stores as “public warehouses” to fulfill local online customer orders for delivery or pick up.

Meanwhile, Amazon says it’s still moving forward with opening Amazon Style, a physical store that will see its first location in Glendale, California.

The medium box floor plan will feature women’s and men’s apparel, shoes and accessories.

Of course, the company is bringing its own spin to the concept.

Items on display to the public will only serve to let customers see and feel the color, texture and style of the item. They’ll be able to use a QR code and app to select a size and color, if applicable and then head to a fitting room.

As shoppers build their list, employees behind the scenes will grab the requests items from the non-public storage area in the back and deliver it to a “closet” near the fitting room assigned to the customer. When a guest is ready, they enter the room, open the closet and begin trying items on.

They can use a touchscreen inside to rate items and request different variants and sizes be delivered as needed.

For items not requiring a fitting, there’s also the option to simply head to the checkout area and it will be ready.

Checkout can be done using the company’s Amazon One contactless palm print scanners that’s use in Amazon owned properties as well as arenas and public venues.