Amazon puts a pin in its pop-ups to focus on permanent stores

Discussion
Photo: Kohl's
Mar 07, 2019
George Anderson

Amazon.com is closing all 87 of its pop-up stores located in malls, Kohl’s and Whole Foods by the end of next month, according to reports by The Wall Street Journal and CNBC.

The e-tail giant, which currently has pop-ups operating in 21 states across the U.S., plans to shift its attention to rolling out more of its permanent Amazon Books and Amazon 4-Star stores that provide “a more comprehensive customer experience and broader selection,” according to statements made to the news organizations.

The announcement did not reference AmazonGo, the company’s cashier-free convenience store concept. A Bloomberg report last September, citing sources familiar with the situation, said that Amazon was considering a plan to roll out 3,000 Go locations by 2021. The plans called for 50 Go stores operating in major metro areas by the end of this year.

Amazon, as reported earlier this week by the Journal, is also planning to open “dozens” of stores in a new, lower-priced grocery concept separate from its Whole Foods business. The new stores, which will average about 35,000-square-feet, will open in cities across the U.S. with the first expected to make its debut in Los Angeles this year.

According to the Journal’s reporting, Amazon has notified employees and partners of its plans to close the pop-ups. It has offered severance to workers who stay on through the end of April.

Kohl’s has 30 Amazon shops inside its stores, the first of which was opened in 2017.

“We’ve made the decision to transition from the store-within-a-store concept to a more robust wholesale relationship with Amazon as we found it a better way to serve our customers,” said Michelle Gass, Kohl’s CEO, earlier this week on the retailer’s fourth quarter earnings call. “As a result, we will be extending our assortment of Amazon branded products into over 200 stores.”

It appears as though Kohl’s will continue to accept product returns for Amazon in a 100-store pilot that began around the same time that the two companies started their store-within-a-store experiment. Ms. Gass said that Kohl’s continues “to be encouraged and learn a great deal” through that initiative.

DISCUSSION QUESTIONS: Do you see Amazon’s decision to end its pop-up program as another indicator that it is committed to becoming a major factor in brick and mortar retailing? How do you expect rival retailers to react?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Other retailers, both e-commerce and omnichannel, should have been proactive and anticipated Amazon’s move rather than reacting."
"By announcing the end of its pop-up program, Amazon is signaling the next phase of their expansion in the physical retail landscape."
"I believe the pop-ups were a brand play, with the goal of educating the consumer about their smart devices."

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16 Comments on "Amazon puts a pin in its pop-ups to focus on permanent stores"


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Mark Ryski
BrainTrust

I suspect that Amazon’s pop-up strategy was more about learning customer preferences than about being a permanent part of their retail portfolio. By the virtue of its acquisition of Whole Foods, Amazon was committed to brick-and-mortar retailing and its expansion in their other brick-and-mortar concepts, including Amazon Go, provide the evidence of this.

Charles Dimov
Guest

Frankly, the pop-up decision seems curious. The timing specifically is odd. It would seem like a good idea if they transitioned from pop-ups to focusing on their full retail locations. That is – close the pop-ups when they have full stores opening in a particular area.

However – YES it is clear that Amazon is committed to omnichannel retailing. Otherwise they would not have further plans to open more stores.

Rivals have a short term opportunity. With less Amazon presence, there may be an opportunity. Work on bumping up the in-store experience and heavily promote your own omnichannel capabilities. Now is the time to act.

Neil Saunders
BrainTrust

The pop-up shops were partly to educate and inform shoppers about the products Amazon offered. Arguably with device penetration now much higher than it was and awareness much stronger than a few years ago, the need for these pop-ups is redundant. Add to this the new channels Amazon has to sell devices – including Whole Foods and third parties like Best Buy, and you see the reason for shutting down this early attempt at physical retail.

Does this mean Amazon is forgetting physical? No! Quite the opposite: the next step will be to open bigger stores that are more experiential and where Amazon can offer more services like classes, demonstrations, and perhaps undertake fulfillment of online orders. The closures show Amazon is evolving and growing, not regressing!

Art Suriano
BrainTrust
There is no doubt that Amazon is planning on becoming a significant brick-and-mortar player. Anyone who thought stores were doomed and the future will be consumers only shopping on the internet needs to open their eyes especially when an e-tailer the size of Amazon focuses on opening stores. However, the concern I have for Amazon is their need of trying to invade every retailer’s space in almost every retail category. No one can be successful when they are attempting to become a big player in too many categories. As a result, Amazon is spending money like a drunken sailor. I predicted last year that it would only be a matter of time before Amazon decides to open their own food chain and now that’s what they’re saying, yet how did the purchase of Whole Foods work for Amazon? Have the Whole Foods stores been successful under Amazon’s leadership or is the chain losing ground? So opening stores is fine but Amazon needs to focus on one chain at a time and to do it right… Read more »
Phil Masiello
BrainTrust

Amazon clearly used these pop-up stores to evaluate the viability of freestanding stores. They have the data they need and now are going to enter the market in a bigger way. The bigger question is whether they will continue to build their own stores or if they will purchase an existing retailer.

Amazon wants to own the home delivery of food and other goods. The map for them to achieve this is through having stores to supply the fresh products that have been the obstacle for other delivery services.

Other retailers, both e-commerce and omnichannel, should have been proactive and anticipated Amazon’s move rather than reacting. Amazon has so much data on consumers, their buying patterns, products and pack sizes that it would be very difficult for retailers to catch up.

David Weinand
BrainTrust

Pop-ups are valuable tools to learn of customer preferences and behaviors, traffic patterns, and merchandising strategies. It sounds like Amazon feels they know enough and now they are moving to the next phase of their retail strategy – permanent locations.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
5 months 15 days ago

By announcing the end of its pop-up program, Amazon is signaling the next phase of their expansion in the physical retail landscape. It dovetails with recent reporting on Amazon launch of a new grocery store business to complement Whole Foods’ upscale model and expansion of the Amazon Go stores.

This decision is certainly in line with the existing strategic trajectory of the company. As such, this does not change rival retailers’ behavior; rather, it confirms the need to bridge their in-store and online strategies through execution at every customer touch point to deliver on consumers’ evolving definition of value and convenience. From systems to organizational structure, strategic opportunities abound to create more competitive organizations with agility and insight to match the market’s pace of change.

Jeff Sward
BrainTrust

I don’t think this is the “end” of pop-ups for Amazon. I think it might be the end of the first inning. Amazon will be one of the more expansive brick-and-mortar retailers before we can blink a couple times. They have so many categories they can extend into. There is so much geography to exploit. Customers are so hungry for new, fresh retail ideas that it will be a long time before Amazon exhausts its need for pop-ups. Pop-ups are the perfect testing vehicle for new ideas, whether it’s product, tech, or service. Pop-ups are a forehead slapper for retailers. “Why wasn’t I doing more of this years ago?”

Lauren Goldberg
BrainTrust

I think Amazon is committed to a brick-and-mortar strategy, based on the continued rollout of the Amazon Go concept, the acquisition of Whole Foods and the rumors they are looking to acquire smaller regional grocers to create a new chain. I believe the pop-ups were a brand play, with the goal of educating the consumer about their smart devices. Now adoption of these devices is significantly higher than when they launched, so this method isn’t as effective. I think this gives other brick-and-mortar retailers (ie., Best Buy) a real opportunity to capture those customers who want to touch and feel these products before buying.

Paula Rosenblum
BrainTrust

What makes us think that Amazon is going to be so successful with its brick-and-mortar program, or that its pop-up stores were a great success? While it’s good sport to follow Amazon’s myriad moves, the most important thing for retailers to do is mind their knitting and attend to their customers.

Were the pop-up stores a success? I have no idea. Did Amazon “learn a lot”? I don’t see what they might have learned that would compel them to move forward with permanent stores. Pop-ups have a different dynamic than permanent stores.

It would be better to understand what over-performing retailers did that made them successful last year, and try to understand why the under-performers did not do well.

Lee Kent
BrainTrust

Not everything Amazon does is gold! Paula, as always, makes great points here and offers excellent advice to retailers. Mind your own customers. For my 2 cents.

Kevin Merritt
Guest

While there were things to learn from pop-ups and their other physical store ventures, I wonder how much of this is simply about putting the Amazon brand in front of people… where they shop – to make Amazon (online) more integral with peoples daily shopping habits. I keep waiting to see small storefront Amazon “return centers” to appear. While they own 50 percent of the U.S. online space, they remain a small portion of total purchases.

We have seen this play out before. I fully expect Amazon to make a big splash in physical stores just as Sears transitioned from catalogs to stores decades ago. It does not mean the end of the world for other retailers by any stretch.

Ricardo Belmar
BrainTrust

Pop-ups by their nature are transitory and are a primary means to collect data about customers and their preferences towards your products. Amazon is simply stating that they have completed this fact-finding mission and will now apply those learnings to permanent physical stores. It’s clear they have big ambitions with physical stores, and as I’ve said before, we should be watching what they do with the 4-Star concept more than the others as that format will continue to provide them with valuable data.

Other retailers should already be reacting to what Amazon is doing and not altering their plans just because the pop-ups are going away. This should not be seen as a weakness from Amazon – it’s just the evolution of a long-term strategy.

Steve Dennis
BrainTrust

There are a few things we know about Amazon. One, they are committed to testing and learning. Their pop-up experiments were mostly about gathering data and insight, not about a sustainable retail model. Two, they will continue to experiment with physical retail because it is key to sustaining their long-term growth. Three they are setting their sites on bigger retail plays in grocery, books and with 4-Star.

Liz Adamson
BrainTrust

Amazon will often test ideas on a number of fronts, gather the data, then make a decision where they should more fully commit. The pop-ups were part of a test as they explored different brick-and-mortar concepts. Closing them down with the announcement that they are expanding their other stores is a clear sign that they are finding a direction and are making some key decisions on the future of their brick-and-mortar business.

Brandon Rael
BrainTrust

The beauty of the retail pop-up business proposition is that they are in a word fundamentally temporary. For a company that relentlessly is on the edge of innovation, Amazon has expressed its desire to expand into physical retail. The closure of these pop-up locations is simply an end to an experiment, and there were plenty or learnings and insights that came out of it.

  • Amazon will close all of its pop-up locations in the U.S. beginning next month.
  • Amazon has 87 pop-up stores that let customers try and buy its products and services.
  • The company is also planning to open dozens of grocery stores and potentially thousands of Amazon Go stores, according to earlier reports.
wpDiscuz
Braintrust
"Other retailers, both e-commerce and omnichannel, should have been proactive and anticipated Amazon’s move rather than reacting."
"By announcing the end of its pop-up program, Amazon is signaling the next phase of their expansion in the physical retail landscape."
"I believe the pop-ups were a brand play, with the goal of educating the consumer about their smart devices."

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