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

Discussion
Photo: Amazon
Mar 03, 2022

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. 

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?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Reallocating the funds from niche concepts will invigorate Amazon’s in-demand formats and free up resources for their success."
"They will win in convenience, logistics, and assortment but others will win with people and connection."
"Amazon has been subsidized for over a decade at tremendous losses during this “innovation period” at levels no traditional retailer could have survived..."

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30 Comments on "Amazon is closing all its Books, 4-Star and pop-up stores"


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Mark Ryski
BrainTrust

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
BrainTrust

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
BrainTrust

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
Guest

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
BrainTrust
8 months 27 days 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
BrainTrust

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
BrainTrust

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
BrainTrust

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
BrainTrust

“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
BrainTrust

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
BrainTrust

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
Guest

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
BrainTrust

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
BrainTrust
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… Read more »
Paula Rosenblum
BrainTrust
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… Read more »
Gene Detroyer
BrainTrust

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
BrainTrust

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
BrainTrust

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
BrainTrust

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.

George Anderson
Staff

Amazon Books and 4-Star stores had customers but they didn’t have many fans. They may have been able to survive had Amazon not made this decision, but they never would have thrived.

Brian Delp
BrainTrust
8 months 26 days 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
Guest
8 months 26 days 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
BrainTrust

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
BrainTrust

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
BrainTrust

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
BrainTrust

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.