How Amazon Is Expanding Brick and Mortar Presence
E-commerce giant Amazon doesn't think brick and mortar retailing is dead, and has been slowly growing a fleet of physical stores. While the company's acquisition of Whole Foods has grabbed headlines, the company's physical footprint has reached beyond grocery sales and these efforts could dramatically shape how retail operates in the very near future.
Best Buy Store-within-a-store
In an announcement that raised more than a few eyebrows, Best Buy announced that it would be teaming up with its biggest rival to include an Amazon Store-within-a-store in 700 of its stores nationwide. These 10-foot-by 4-foot displays are an effort to expand the retailer’s dominance in the rapidly growing, smart-home technology segment.
The store-within-a-store sections are located alongside an ever-growing number of products that interact with them, like Nest thermostats, Philips Hue lighting and Insignia Smart Plugs. “Smart home, especially voice technology, can meaningfully change and improve the way we live our lives,” said Amy College, senior vice president of merchandising at Best Buy. “In collaboration with Amazon, these experiences will help people understand and use this groundbreaking technology to make their lives safer, easier and simply more fun.”
Image: Best Buy
While some snide that Best Buy stores are simply used as showrooms for Amazon to test out products before ultimately shopping for a cheaper price online, Best Buy has embraced the opportunity to offer customers an in-store experience that can’t be easily replicated online- by having a team of trained sales associates available who can provide hands-on consultations about the products being sold. Although the Amazon store-within-a-store will not be staffed by Amazon employees, the company can leverage the highly-trained Best Buy ‘Blue Shirts’ who are more than happy to show customers how Amazon products can be used to turn on lights, adjust the thermostat, find a recipe or turn on music while at home.
“Echo devices and Alexa have become a habitual part of customers’ lives, and with the Alexa voice service, setting up and using smart home products with an Echo has never been easier,” said Miriam Daniel, Director of Product, Amazon Echo Devices & Experiences. “We’re excited to work with Best Buy on this because their stores are one of the best places for customers to see, hear, and understand how these delightful Alexa experiences come together.”
With the recent bankruptcies and subsequent extinction of retailers HH Gregg and Radio Shack, Best Buy remains the only nationwide, consumer electronics-focused big-box retailer where companies like Samsung or Amazon can get their products in the hands of willing consumers. If Amazon is serious about becoming a device-driven company, so-called smart-home monitoring products must be widely adopted and become as standard in homes as microwave ovens and dishwashers are today. To that end, the Best Buy partnership is a mutually beneficial one, even if they are competitors.
Amazon Smart Home Experience
Earlier this year, Kohls announced that it would accept Amazon returns at 82 stores across Los Angeles and Chicago. Kohls would pack and ship all Amazon returns at no charge to customers, as a way to draw in more customers into these selected storefronts. Richard Schepp, Kohl’s chief administrative officer, said, “This is a great example of how Kohl’s and Amazon are leveraging each other’s strengths – the power of Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base.”
Image: Kohls
But this isn’t the only way that the two retailing giants are teaming up. This holiday season, 10 Kohls locations (also in Los Angeles and Chicago) will debut the Amazon Smart Home Experience store-within-a-store where consumers can purchase Amazon devices, accessories and smart home devices and services directly from Amazon. Unlike the Best Buy store-within-a-store spaces, the new Amazon Smart Home Experience will be staffed by Amazon sales associates. “Teaming up with Kohl’s provides an incredible opportunity to pair world-class customer and shopping experiences,” remarks Dave Zimmer, vice president, sales and marketing, Amazon Devices.
Image: Kohls
The 1,000-square-foot zone will provide a hands-on, interactive and engaging array of smart home products with a variety of Amazon devices, including Amazon Echo, Echo Dot, Amazon Fire TV, Fire tablets and more. The Amazon smart home experience at Kohl’s will allow customers to touch, feel and interact with Amazon devices before they buy. Customers can schedule an Amazon expert to come to their home, evaluate their needs and install smart home products. Customers can also take advantage of Amazon Home Services, which offers access to vetted local services professionals, to help with everything around the house from cleaning to plumbing.
These moves have only fueled speculation that Kohls may be Amazon’s next takeover target, after the recent deal to acquire leading specialty foods retailer Whole Foods has closed.
AmazonFresh
AmazonFresh is a grocery delivery service available in many large metropolitan areas. The service allows Amazon customers to purchase grocery items that are delivered to their home on the same day or next day. The service partners with local specialty stores, allowing existing brick and mortar retailers the opportunity to participate in Amazon’s ecosystem.
Image: M Field / Modern Cities
This year, the company has opened two AmazonFresh Pickup storefronts. These locations serve as a drive-in grocery store for Amazon Prime customers. Customers order products from the AmazonFresh portal and select a pickup time (which could be within 15 minutes after an order is placed). Customers then drive to the AmazonFresh Pickup storefront, and an Amazon service agent will load the contents of that order directly into their car.
Site plan of AmazonFresh Pickup store in Seattle’s Ballard neighborhood. Image: Seattle Department of Construction and Inspections
While retailers like Walmart have been offering curbside pickup services for quite some time , Amazon’s foray into this niche has the potential to unseat traditional retailers’ curbside market share according to industry analysts. Cooper Smith is an Amazon analyst with business intelligence company L2. Smith believes that Amazon has “an unprecedented installed user base of shoppers- 30 million people use Amazon’s mobile app every month. That’s how this click-and-collect [model] is going to take off.”
The AmazonFresh business has evolved from a simple home delivery service to now include brick and mortar locations. Image: M Field / Modern Cities
At 10,000 square-feet, stores will be about the same size as the average CVS or Walgreens Pharmacy. The new AmazonFresh Pickup prototypes are being tested at two locations in Seattle: one each in the SODO and Ballard (pictured) neighborhoods. Amazon plans to build 2,000 drive through grocery stores across the country.
Amazon Locker
Launched in 2011, Amazon Locker is a self-service parcel delivery service aimed at providing Amazon customers a secure space to receive items ordered through the Amazon web store. Customers receive a digital pick-up code via email or text messaging and can retrieve items from a locker kiosk by simply entering their unique pick-up code on to a touch screen- and the assigned locker door opens for package retrieval.
Image: M Field / Modern Cities
While the Amazon Locker does not currently sell products directly to consumers, the program is similar to efforts to team up with existing retailers like Kohls and Best Buy to drive foot traffic into those partner companies’ physical storefronts. Retailers receive a small rental stipend to host these locker kiosks. As brick and mortar retailers continue to explore ways to monetize unused real estate, the Amazon Locker program is one of many successful ways that commercial real estate is being reconsidered in a way that creates symbiotic relationships with complementary businesses
The company is using their Amazon Locker experience to also launch a companion program called Amazon Hub, a delivery locker for the explore ways to monetize unused real estate and create symbiotic relationships with complementary businesses- apartment lobbies.