Amazon to open large physical stores in the US to step up the retail battle

The online retailer is reportedly expected to start with Ohio and California

Amazon Fresh cashierless convenience store in London. Amazon Fresh now has 15 stores in the US and five in the UK. Bloomberg

E-commerce giant Amazon plans to open large physical retail stores in the US that will compete with department stores, as brick-and-mortar shops are coming back into the fore with more people now vaccinated.

The company, based in Seattle, is initially expected to open stores in Ohio and California, spanning nearly 30,000 square feet (2,787 sq metres), the The Wall Street Journal reported on Thursday, citing sources. It would be smaller than most big department stores that usually cover an area of about 9,290 sq metres.

“The Amazon stores will dwarf many of the company’s other physical retail spaces and will have a footprint similar to scaled-down formats that Bloomingdale’s, Nordstrom and other department-store chains have begun opening,” the WSJ said.

The news sent shares of some key retailers down on Thursday. Target’s stock dropped 2.1 per cent, while Best Buy fell 1.8 per cent.

Amazon did not respond immediately to The National's request for comments.

It is not clear which brands Amazon will sell in its stores, but it is likely to sell items across categories including electronics goods, household objects, sports equipment and clothing, according to the report.

“[The] company’s private-label goods are expected to feature prominently … Amazon sells scores of products including clothes, furniture, batteries and electronic devices through many of its own labels,” the WSJ said.

Currently, Amazon has physical stores selling books and groceries and the company runs pop-up stores across the US. Pop-ups bring the goods from the millions of products available on Amazon.com to shopping malls.

In February last year, Amazon opened its first, full-size, cashier-less grocery store – Amazon Go Grocery – in the Capitol Hill neighbourhood of Seattle.

In March, this year, it opened a convenience store in west London, its first physical outlet outside North America. As of July 2020, Amazon's physical retail store count reached 89 stores, or 589 stores including supermarket chain Whole Foods.

Driven by the growth in online shopping after the coronavirus pandemic, Amazon’s second-quarter net profit surged almost 50 per cent on an annual basis, rising to $7.8 billion, almost $2.6bn more than the same period last year.

From April to June, sales at the company’s online stores grew 16 per cent to $53.2bn, while physical store sales surged by 11 per cent yearly to $4.2bn.