What: The online retailer wants a larger retail presence to sell clothing and household items, and facilitate exchanges.

Why it is important: It’s not clear that Amazon has the skills to master this kind of retail store. The e-tailer is excellent at selling commodities and its logistics efficiency gives it an advantage. But selling fashion and true discretionary products that involve creativity is different.

Amazon plans to open several large physical retail locations in the U.S. that will operate akin to department stores, a step to help the company extend its reach in sales of clothing, household items, electronics and other areas. The first department stores are expected to be located in Ohio and California. The new retail spaces will be around 30,000 square feet, smaller than most department stores, which typically occupy about 100,000 square feet.

It is unclear what brands Amazon will offer in the stores, although the company’s private-label goods are expected to feature prominently. The company has invested more in building out its fashion business and giving shoppers increased alternatives regarding the purchase of apparel. Amazon has had a tougher time breaking into high-end fashion.

Besides, Amazon is not known for its merchandising skills. It has not demonstrated that it has the ability to help a consumer pick the right dress for an event, as an example. It does not have content that gives consumers inspiration to enable discovery the way you might find on Net-A-Porter.com. The experience of walking into a store and finding something at a high price that you don’t need but fall in love with is not part of the Amazon experience. On another hand, the new stores might be able to provide Amazon’s loyal Prime customers with an elevated in-store experience it cannot offer online.

Amazon is pushing into an area that has struggled for decades. Department stores were once big, exciting places to shop, where consumers could find everything from toaster ovens to evening gowns under one roof. But they have lost out to discounters, fast-fashion retailers and online players. A generation ago, department stores comprised 10% of retail sales, excluding automobiles, gas and restaurants, according to estimates by the consulting firm Customer Growth Partners. So far this year, they account for less than 1%. Analysts and industry executives aren’t counting department stores out just yet. Chains including Macy’s Inc. and Kohl’s Corp. are expected to report strong sales.

Amazon’s physical-store sales declined roughly 5% last year as customers shopped more online because of the pandemic. Year-over-year sales for the segment grew 11% during the second quarter this year.

Amazon Plans to Open Large Retail Locations Akin to Department Stores 

Amazon to test department stores in offline expansion 

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