Amazon announced Wednesday it will close some physical outlets including all of its bookstores, plus 4-star shops and pop up locations in the name of rebranding its physical image.
The global e-commerce retail giant said this decision will affect 66 stores in the United States and two in the United Kingdom, but declined to mention how many Amazon employees will be affected – whether their contracts will be terminated or reassigned elsewhere.
Amazon has however said those affected can opt between receiving severance pay or they can accept help from the company in finding a job in another part of the company.
“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”, an Amazon spokesperson said, AP reports.
A general view of the exterior of the UK’s first branch of Amazon Fresh, on March 04, 2021, in the Ealing area of London, England. (Leon Neal/Getty Images)
The company which is headquartered in Seattle has said it plans to focus on expanding its Amazon Fresh, Whole Foods Market – which Amazon purchased in 2017 – its more traditional convenience concept called Amazon Go and its upcoming Amazon Style stores that offer more fashion-oriented products.
Experts have suggested Amazon’s decision is fuelled by the decline of the high street, where fewer people are visiting stores in person and opting to purchase items online.
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Amazon’s physical stores’ net revenue has slowly begun to decrease – partly due to the coronavirus pandemic but also due to people being reluctant to swap from their current in-person spending habits – in 2018 Amazon’s Whole Foods brought in $17.2 billion in sales which dropped to $17.1 billion in 2021.
In the last quarter, Amazon’s physical stores only contributed to three percent of Amazon’s $137 billion in sales across the entire company.
A man waits to pick up books at Solid State Books, one of six independent bookstores in New York, Los Angeles and Washington taking part in a campaign by the American Booksellers Association (ABA) against Amazon, in Washington, DC, on October 14, 2020. (NICHOLAS KAMM/AFP via Getty Images)
Michael Pachter, an analyst at Wedbush Securities, commented on Amazon’s decision to close the stores saying, “Retail is hard, and they’re [Amazon] discovering that”.
Neil Saunders, the managing director of GlobalData Retail, has also weighed in and suggested to AP that Amazon’s in-person stores lacked a real purpose.
“They were designed for people to pop in and browse rather than as destinations where people would head on a mission to buy something”, Saunders said.
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