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Tuesday, September 27, 2022
HomeTechnologyAmazon to close bookstores and shops to focus on grocery sector

Amazon to close bookstores and shops to focus on grocery sector

Amazon.com Inc. is closing its physical bookstores, “Amazon 4-Star” locations and mall pop-up kiosks as the world’s largest online retailer narrows its brick-and-mortar push to the grocery sector.

The company plans to “focus more on our Amazon Fresh, Whole Foods Market, Amazon Go and Amazon Style stores and our Just Walk Out technology,” Amazon said Wednesday in an emailed statement. “We remain committed to building great, long-term physical retail experiences and technologies, and we’re working closely with our affected employees to help them find new roles within Amazon.”

Amazon began pushing into physical retail in 2015 when it opened a bookstore in Seattle and pledged to use technology to redefine the shopping experience. But the first location resembled a small-scale Barnes & Noble without coffee. Three years later, the company opened Amazon 4-Star stores to highlight products that were popular on the web store. The assortment resembled the random products sold for decades by retailers such as Brookstone, and 4-Star stores failed to stand out.

Amazon has 24 bookstores, 33 4-Stars and nine mall pop-up kiosks. The company planned to open another 16 4-Stars locations, indicating the decision to shutter the operation was abrupt.

This announcement also comes on the heels of Amazon announcing in January it plans to open a physical apparel store in Los Angeles later this year.

The Seattle-based company made its biggest move into physical retail in 2017 with the $13 billion acquisition of Whole Foods Market, which has about 450 locations. Since then, the company has also launched its own Amazon Fresh supermarkets and now has 24 locations in California, Illinois and the mid-Atlantic region.

Amazon has a long way to go to become a major grocery retailer. Amazon only accounts for 1.4% of U.S. food sales and Whole Foods, 1.2%, compared to 22% for Walmart and 12% to Kroger, according to market research firm Numerator. 

Given that U.S. consumers buy about $1 trillion in groceries, there is a huge opportunity for Amazon to grow its revenue by becoming a bigger player among supermarket chains. 

Amazon generated $4.69 billion in revenue from its physical stores, mostly from Whole Foods, in the quarter ending Dec. 31, or about 3% of sales. In 2020, Amazon’s stores generated $16.23 billion in revenue in 2020, down 5.6% from $17.19 billion in 2019, as coronavirus-driven store closures limited sales. Those sales represented 4.2% of Amazon’s revenue in 2020, compared to 6.1% a year earlier.

Reuters reported the closures earlier.

Amazon is No. 1 in the 2021 Digital Commerce 360 Top 1000.


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