Amazon’s department-store plans are less surprising than they appear

As a company, Amazon is entering a more mature phase. Now with a new chief executive, Andy Jassy, it is being forced to recognise that pure e-commerce has limits. It is also facing fresh competition from conventional retailers like Walmart and Target that are belatedly showing that they, too, can do the internet well.

So the new 30,000-square-foot retail spaces it is reportedly envisaging mark a departure. Amazon has neither confirmed nor denied its plans. But leaked details on the stores’ size and locations suggest substance behind the reports. The first are to open in California and Ohio. If they go well, Amazon is expected to roll out more.

In future customers will want “omnichannel” retail that combines online and physical shopping, says Mark Shmulik of Bernstein, a broker. As for Amazon’s move into department stores, he has one question: “What took them so long?” The firm’s motive is also defensive. Walmart has made omnichannel work well during the pandemic by melding its formidable physical network with its website and offering a same-day “click-and-collect” service.

Making Amazonmarts appeal to shoppers may be harder than Amazon anticipates. It reportedly wants them to sell its cheap private-label garments and gadgets, which is at odds with its aspirations for the stores to offer high-end fashion, where it has struggled online. It is unclear if the outlets will mimic existing examples of the department-store canon, as Amazon Fresh shops resemble conventional grocers, or if Amazon plans to shake things up.

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