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Amazon is closing all its Books, 4-Star and pop-up stores

Amazon.com appears committed to operating physical stores, but appears to be optimizing its format strategy. The retail and technology giant is shuttering all of 68 of its Amazon Books, 4-Star and pop-up shops.

Physical stores only made up three percent of Amazon’s revenues in the fourth quarter with almost all of that coming from its Whole Foods business. Reuters, which was the first to report news of the store closings, says that Amazon was never able to generate the types of results with its book, 4-Star and pop-up shops that would warrant further expansion of the concepts. 

Michael Pachter, an analyst at Wedbush Securities, told the news service that ditching the physical store concepts makes sense as Amazon’s strengths lie elsewhere. “Retail is hard, and they’re discovering that,” he said.

It’s common for legacy retailers that close stores to take a hit online as well, but that doesn’t appear to be a concern for Amazon based on the relatively small scale of the individual concepts and its dominance in the digital sales space.

Amazon expects that shuttering its niche concepts will benefit its other physical retail businesses.

Betsy Harden, an Amazon spokesperson, told The New York Times, that the company will “focus more on our Amazon Fresh, Whole Foods Market, Amazon Go and Amazon Style stores and our Just Walk Out technology.”

“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,” said Ms. Harden.

The company currently operates more than 500 Whole Foods and is expanding its Amazon Fresh concept, as well. 

There are about two dozen of the Amazon Go concept stores operating and the company is shifting its focus to opening larger stores in suburban locations. Two larger Go stores are currently planned for Mill Creek, WA, and the Los Angeles area. 

The company will also debut Amazon Fashion,  a clothing store concept, later this year. The 30,000-square-foot store will feature men’s and women’s apparel, shoes and accessories. It will open in Glendale, CA, at The Americana at Brand, a large dining, shopping and residential complex that boasts A list retailer tenants including Apple, lululemon, Nike, Nordstrom, Sephora and Tiffany. 

BrainTrust

"Reallocating the funds from niche concepts will invigorate Amazon’s in-demand formats and free up resources for their success."

Lisa Goller

B2B Content Strategist


"They will win in convenience, logistics, and assortment but others will win with people and connection."

Brian Cluster

Director of Industry Strategy - CPG & Retail, Stibo Systems


"Amazon has been subsidized for over a decade at tremendous losses during this “innovation period” at levels no traditional retailer could have survived..."

Brent Biddulph

Industry Marketing Lead, Retail & CPG


Discussion Questions

DISCUSSION QUESTIONS: What do you think of Amazon’s decision to shutter its Books and 4-Star stores? Will closing niche concepts increase the likelihood that Amazon will be more successful in its other physical retail ventures?

Poll

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Mark Ryski
Noble Member
2 years ago

This is just part of the experimentation process. They create new concepts, launch them, tweak them, and if they don’t produce interesting results, they close them. These concepts were weak and the market voted with their dollars. I expect that Amazon has learned a lot from these experiences and the learning will get applied as they iterate. I fully expect to see new physical store concepts from Amazon in the future.

Neil Saunders
Famed Member
2 years ago

Amazon’s stores were OK. But that doesn’t really cut it. In truth, they lacked a real purpose. They were designed for people to pop in and browse rather than as a destination. Ultimately, this wasn’t great for driving footfall. The other issue is the assortment which was disjointed and unfocused. Interestingly, Amazon never really connected its stores and online. Options to order online and pick up from stores, or check stock levels before heading out, were non-existent. That said, this does not signal an end to Amazon’s store ambitions. It will focus on food and apparel – both categories where stores are essential for success.

David Naumann
Active Member
Reply to  Neil Saunders
2 years ago

Good points Neil! The store concepts that weren’t successful didn’t have a big draw to attract customers or drive repeat business. Amazon is constantly testing new concepts and evaluating which ones are winners and these were not winners.

Diana S
Reply to  Neil Saunders
2 years ago

Completely agree, Neil! Their experiment, fail fast, and learn mindset seems to be the key element of their exploration in physical retail. I think the launch of their Whole Foods “Just Walk Out” store in DC is a clearer indication of where their mind is at and I think, ultimately, it’s selling that technology in other retail outlets which will become a critical component of their strategy.

Dion Kenney
2 years ago

There is so much opportunity for innovation in the retail industry, and there are few companies that have a more successful track record than Amazon. But the only way to have more “home runs” is more “at bats.” While superficially this might look like Amazon is acknowledging difficulty in the brick-and-mortar realm, I think this is just part of the innovation process. Their ability and willingness to experiment and find what works is part of their DNA, and I expect more impressive projects and results in the near future.

Bob Amster
Trusted Member
2 years ago

Amazon knows the numbers better than we do. Therefore we could assume that, in comparison to other operations, the return was not going to meet the requirements for expanding those businesses.

Ananda Chakravarty
Active Member
Reply to  Bob Amster
2 years ago

Nicely put. The ROI here could never amount to much significance in Amazon’s income statement, even with canvassing such stores worldwide. Where would they go for large enough markets to carve out $100s of billions? Watch out healthcare and auto….

Steve Dennis
Member
2 years ago

Yes, but not because they represent a meaningful distraction or competition for resources. Amazon 4-star was wholly unremarkable and Amazon Books never got any meaningful traction. Sharpening the innovation habit and supporting a culture of experimentation means that failure is, in fact, an option. The Fire Phone could be seen as a failure, but Amazon gleaned many important learnings that led to Alexa and other more valuable initiatives. I hope Amazon has learned what made these niche concepts boring and uninspiring and applies them as they focus on concepts with far great value potential.

Gary Sankary
Noble Member
2 years ago

“Retail is hard, and they’re discovering that.”

Retail is hard, especially brick-and-mortar. Amazon deserves some credit for experimenting, this happens to be an experiment that either didn’t meet their expectations or that they feel they’ve learned all they can from. I suspect more the latter. Right now they’re focused on grocery for physical retail. I expect that the resources and learnings from their book business will be applied there.

Dave Bruno
Active Member
2 years ago

Another example of Amazon’s less-than-stellar results with brick-and-mortar retail. I may be an outlier on this opinion, and I am not sure how strongly I hold this opinion, but I would not be shocked to see a Whole Foods exit next for Amazon, because “retail is hard.”

Lisa Goller
Trusted Member
2 years ago

Amazon knows its numbers. As a data master, Amazon identifies exactly where to double down (grocery, c-stores, apparel) vs. shut down (Books, 4-Star, pop-ups). While these formats seem random, they reflect Amazon’s DNA as a methodical retailer that continuously tests, observes and optimizes its operations.

Yes, reallocating the funds from niche concepts will invigorate Amazon’s in-demand formats and free up resources for their success.

Matt Lyles
2 years ago

Amazon has successfully grown by testing and learning. This is simply one more of their experiments to learn from. And they should easily be able to apply these learnings to their other retail ventures and create more engaging retail experiences.

Jeff Weidauer
Jeff Weidauer
Member
2 years ago

Whether these stores remain open or closed isn’t really the point. It’s Amazon’s decision to state its new direction and where it will focus (grocery and apparel) that is the real news. Amazon is known for its test and learn practice, and this new announcement is a direct result of what the company has learned operating brick-and-mortar.

Jeff Sward
Noble Member
2 years ago

Turns out that Amazon completely reinvented the way we shop for and buy books. Apparently they will do just fine with with an ecommerce-only book business. And was 4-Star ever really going to be a thing, or was it just a data mining exercise? Amazon is a retail behemoth, and they are only going to get bigger as they explore the best possible avenues to expand into the physical retail business. They’ve accomplished the easy part by siphoning off vast amounts of sales from physical stores into the e-commerce world. They’ve given us a whole new way to shop and buy in the last two decades. But they’ve also learned that e-commerce has its limits and that there are huge opportunities in physical retail. And now they are learning just how difficult physical retail really is. I give Amazon huge credit for being a very patient student of retail and all the opportunities it presents, both in product and process. They’ve got the resources to continue to be a patient student. Which also makes them a great teacher. We are all going to school on Amazon’s continuous testing of the market. I almost said “successes and failures,” but a failed experiment isn’t really a failure. It’s just another step on the learning curve to success.

Paula Rosenblum
Noble Member
2 years ago

Amazon does something, and the industry acts like those old Smith-Barney commercials — everyone stops and listens. With the company’s money, it can do all kinds of experiments and the rest of us think they mean something.

There’s a reason why online bookselling works. There’s also a reason why people are cleaving back to the independent bookseller. So Amazon opening stores to sell those products was kind of silly.

Now the industry is going to chase “Just Walk Out” and Amazon fashion. Guys — this is not a thing.

I’m sure if the “down arrow” was still here, I’d get lots of them, but I stand by it. These are all head-fakes. Feints. Sure, Amazon will sell lots of basics. But fashion? I don’t think so. And grocery? I see nothing positive about its stewardship of Whole Foods Markets.

Am I surprised? It was a quick statement of defeat. The company failed fast.

Why open Amazon Fresh when you could morph WFM into anything you want?

I guess all I can say is, I’m not surprised and the credit Amazon gets is everyone seems to follow its every move. Even more than they follow Walmart.

I’m not surprised, and the other concepts will do no better.

Gene Detroyer
Noble Member
2 years ago

Far too many companies try new concepts and stick with them way to long. It may sound great on a business proposal, but not until one measures the reality can you really judge if the concept works.

Amazon experiments, learns and makes decisions. Some people will look at these decisions as an Amazon failure, when in fact it is quite the opposite. This is the way Amazon has operated successfully.

As Dion Kenney points out perfectly — the only way to have more “home runs” is more “at bats.”

Shep Hyken
Active Member
2 years ago

Amazon’s Books and 4-Star stores are concepts. The Whole Foods chain was an acquisition. Whole Foods made sense for many reasons, especially as distribution points for grocery delivery. The Books and 4-Star stores were experiments. While I feel they went “big” on these concepts, they still only opened 68 stores (not hundreds or thousands). They can afford to go a bit bigger with experimental concepts than others, simply because they are big enough and have the dollars, but they won’t go all in, unless they know the concepts are valid. The Go stores may continue to grow. And I look forward to see the results of Amazon Fashion.

Dick Seesel
Trusted Member
2 years ago

Yesterday’s New York Times profiled a new Whole Foods store in the Washington DC market, using the “Just Walk Out” technology. Obviously the Amazon Go concept provided some important lessons for Amazon’s most important brick-and-mortar business.

On the other hand, the concepts being shuttered are battling Amazon’s own vast assortments in small-format stores, and it just doesn’t work. While independent booksellers’ sales have been strong over the past two years, how does Amazon Books compete with the offerings on Kindle? And what did the “Amazon 4-Star” concept even mean?

Andrew Blatherwick
Member
2 years ago

Amazon is realizing that not everything it touches turns to gold and that retailing is a tough business to get right. They have the luxury of a huge financial security safety net to be able to play at these concepts, no doubt learning all the time, but still walk away if they do not work. It is not easy to open stores and make them successful. Even if you are Amazon or any other major brand, you still must be a smart operator and understand physical retailing. Will closing these stores help the other physical stores prosper? Why would it unless they have learned lessons that will help in the other formats? We can expect Amazon to keep trying new formats in different categories, with some working and many not working, but it must be reassuring and encouraging for the major physical retailers to know that Amazon cannot move into physical retail and win every time.

delp.brian
Member
2 years ago

Amazon has become so much more than a book retailer, so I think this is the right move to shift away from that and focus on the larger opportunities with Whole Foods. The majors it is competing with mainly, Walmart and Target, are grocery first retailers. They need to continue to build their association as a mass merchant and further separate themselves from niche convenience.

Brian Kelly
Brian Kelly
2 years ago

Where are the opportunities? Convenience, apparel and grocery. Learnings will migrate.
The best chances for success, in order of likelihood, are:

  1. Convenience. “4-Star” ought to apply, the sector is open for success, “Dollar” stores seem wobbly.
  2. Grocery. Whole Foods extension.
  3. Apparel. Good luck! That’s the La Brea Tar Pits of retail. It seems too crowded at this time, but in confusion there is profit.

At least they aren’t looking at furniture. Of course, there are other Amazon businesses that will benefit; the store operational technology and shopper behavior data.

Brent Biddulph
Member
2 years ago

Let’s be honest here. Amazon has forever changed retail leveraging data and technology at “next level” capabilities that are truly inspiring.

That said, Amazon has been subsidized for over a decade at tremendous losses during this “innovation period” at levels no traditional retailer could have survived — and many have perished as a result. For example, they have been tinkering in grocery (products and delivery) for more than two decades now, mostly at great loses, and even the addition of Whole Foods brick and mortar has been a bumpy ride to say the least.

As traditional retailers have stepped up their game in digital capabilities that now rival Amazon by leveraging their brick and mortar scale — it is no surprise that these now failed brick and mortar Amazon “experiments” are finally cast aside.

Brian Cluster
Member
2 years ago

Amazon has succeeded in the technological aspects of retail, the buying side. However, I would suggest that they have not been able to demonstrate their ability to create community-based retail and the slower, browsing side of retail. They will win in convenience, logistics, and assortment but others will win with people and connection.

In my personal experience in the San Diego Amazon bookstore, I liked that they had some of the Amazon products that I could touch and feel and some of the innovations on the best assortment for the area’s interest. However, I could go in and out without being greeted or asked if I need anything. While, if I am in Warwicks in La Jolla, CA. or Andersons in Naperville, IL. they ask questions and have an actual interest in books and excel in the high touch customer experience.

Ananda Chakravarty
Active Member
2 years ago

Amazon is closing down a few billboards in the mall. Yes, more resources elsewhere, but more important, it shows the consistency of Amazon in working with data, experimentation and innovation. It also shows the importance placed on moving forward rather than lingering.

There should be little to no material impact to Amazon’s other initiatives — physical or digital. These stores were designed as islands and what was proven is that the tie-back to their other businesses is weak. They don’t fit into the ecosystem and hence, have to go.

Liz Crawford
Member
2 years ago

Amazon is smart. They diversified their physical retail offerings and implemented a fail-fast approach, to minimize their financial hit. Now they have proven winners to roll-out. Best-in-class approach.

Brad Halverson
Active Member
2 years ago

What I love about Amazon’s business approach is embracing innovation, patiently testing and making decisions to adjust or get out. Its culture of being in the mode of Day One and refinement will continue to propel the company.

Grocery stores are a different game than occasional retailing. Americans do food shopping many times each week. I wouldn’t be surprised if Amazon takes the best of what they’ve learned from physical retail to carve out square footage and sections of Books and 4-Star products in their grocery stores. Much more efficient and profitable.

Craig Sundstrom
Craig Sundstrom
Noble Member
2 years ago

I don’t see these as “(store) closings” as much as “experiment ended.” The bookstores will probably excite a bit of nostalgia — not that they’re actually where Amazon began as much as a suggestion of how it began — but not otherwise mattering much.

Kai Clarke
Kai Clarke
Active Member
2 years ago

Smart, smart, smart! Amazon is like any other business. After trying a concept, it needs to decide if it’s profitable. If it is not, Amazon should close it and move on. Just like any other business would do. Don’t get stuck on trying to make a poor business decision work when it clearly does not.

Michael Berne
2 years ago

I, like a few others on this site, am going to get a little contrarian on this. Amazon’s ability to learn and refine is no doubt part of its genius, yet I am constantly astounded by how even their failures are seen as successes, how they always manage to “fall upwards” in people’s minds. So far, Amazon’s efforts with brick-and-mortar have been uninspiring, their physical stores lacking much in the way of theater or magic. Why haven’t they “learned” more from having acquired one of the best in this regard — Whole Foods — more than four years ago? Whole Foods itself has stagnated at best under Amazon’s ownership. I have learned never to bet against Amazon, but given its lackluster track record thus far with the in-store experience, I am also not holding out high hopes for their Amazon Style concept…

Here’s another way of looking at it: Amazon started rolling out bookstores in the middle of a decade which saw a doubling of independent bookshops across the country. Meanwhile, Barnes & Noble is experiencing something of a revival under James Daunt. Could it be that maybe, just maybe, in the irony of ironies, Amazon ultimately could not compete with all of these rivals it had supposedly once vanquished?

I would be hard-pressed to bet against Amazon on anything, especially given how much capital it has to play with, but until I see them “hit one out of a park” on brick-and-mortar, I am not about to buy into the inevitability that they will figure it out, either…