Is Amazon Poised to Conquer the Department Store Space?

The mid-week, Aug. 19 retail stock surge after two big department store chains reported outstanding results took a brief dip after the Wall Street Journal revealed Amazon’s (NASDAQ:AMZN) leaked plans to open department store-style brick-and-mortar locations in several U.S. cities. The store openings, which may foreshadow a much wider entry of Amazon into physical retail, couldn’t keep the stock market’s bubbly mood down for long, but they do raise some questions.

If Amazon does try to position itself in retail, will it succeed, and will this end up putting other brick-and-mortar retailers out of business? A closer look at the situation suggests there’s nothing to sweat over, at least right now.

What we know so far about Amazon’s plans

After outcompeting and shuttering many of the previously thriving department store chains such as Sears with its e-commerce model, ushering in the age of the “retail apocalypse,” Amazon is now planning its own brick-and-mortar retail outlets. Sources told the Wall Street Journal that California and Ohio are targeted for some of the first stores. Apparently, the stores will be stocked with Amazon’s own private-label merchandise.

At 30,000 square feet apiece, according to the insiders, the stores will be a third the size of typical department stores. They will be much larger than Amazon’s existing Whole Foods stores, though. They are said to be organized along the same lines as department stores. However, the stores will presumably also be integrated closely with Amazon’s delivery, return, and other e-commerce services.

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