NEWS

Amazon physical toy sales admit defeat

Published on: 7th March 2022

Amazon has decided to close its physical outlets which sell books, toys and other goods as its grocery chain expands.

The retailer has announced plans to close all 68 of its brick-and-mortar bookstores, pop-ups and shops carrying toys and home goods in the United States and United Kingdom, ending some of its longest-running retail experiments.

A report by Reuters says that the move marks a turning point for Amazon, which said it will now focus more on its grocery markets and a department store concept going forward.

The retailer has tried out various retail concepts, including convenience stores without cashiers, supermarkets and a format called “4-star” which offered toys, household items and other goods with high customer feedback.

The Amazon stores were an attempt to reach shoppers in more places and use the company’s online data to range the most popular products in store, allowing customers to see Amazon reviews and ratings alongside the products.

The first Amazon physical non-food storein the UK opened in Bluewater, featuring a host of consumer products which included toys and featured a dual pricing strategy  – one price for customers with an Amazon account and another higher price for those without one.

The 3,500 square feet store carried around 2,000 of the online retailer’s most popular and best-rated products, with the selection changing regularly, linked to what was selling well digitally.

Such innovations have not proved successful enough to persuade enough shoppers to switch from online shopping. Amazon’s physical stores revenue was only 3% of Amazon’s sales last quarter, and the majority of this was at  the company’s Whole Foods subsidiary.

Amazon’s new chief executive, Andy Jassy, has been reviewing the retailer’s entire business model since taking over in July. Michael Pachter, an analyst at Wedbush Securities, believes that the experiment simply hasn’t worked, commenting: “Retail is hard, and they’re discovering that.”

The company’s vice president of physical retail, Cameron Janes, departed Amazon in November, after 14 years with the company.

Amazon will start to close its 4-star, pop-up and bookstore locations and notify customers via signage. The company said workers will receive severance or receive help finding jobs at any company stores nearby, such as at new Amazon Fresh grocery locations that have been announced. It declined to specify how many jobs would be cut.

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