Amazon makes major U-turn by shutting all book stores and physical shops in UK
E-commerce giant Amazon has said it is planning to shut all of its book stores as well as its other brick-and-mortar shops and pop-up stores in the UK and US.
The shock announcement to close down all 68 book stores, as well as shops that offer toys and home goods in Britain and the US, comes as the company said it wants to focus fully on the rapidly growing groceries market.
In addition to the supermarket sector, Amazon also said it wants to zoom in on fashion.
Amazon Books was one of its first physical stores and seen as a major retail experiment when it first opened in 2015.
Hundreds of supermarkets
The news to shut dozens of physical stores comes only months after Morning Wire reported that Amazon has developed detailed plans to storm the UK supermarket sector as the e-commerce is planning to open hundreds of cashierless grocery stores across the country in the next three years.
More than 260 Amazon-owned and run supermarkets are to be launched before the end of 2024, namely 60 in 2022, another 100 per year in 2023 and 100 more the year after.
All Amazon supermarkets will be cashierless, the online retail giant wrote in internal documents, according to a Business Insider report.
Amazon reportedly wants to “catch up to” Tesco and Sainsbury’s, with a growth rate similar to both supermarkets, as well as Co-op.
The internal Amazon documents read: “In 2022, we assume a broader rollout of 2 store launches per week by the end of [the] year, targeting 60 total openings.”
“In 2023 and 2024, we are planning 100 store launches per year, in line with more aggressive opening programmes achieved by convenience stores in the UK in the last five years, Tesco’s, Sainsbury’s and Co-op have all exceeded 100 openings per year.”
Amazon is reportedly also looking to open a number of supermarkets in Germany, Spain and Italy next year.
However, so far the project has faced some serious challenges, the company seemed to have acknowledged internally.
The team has reportedly struggled to meet its goals, leading to frustration internally. Only six of the 26 stores that are scheduled to open before the end of this year are currently in operation.
When approach by Morning Wire, an Amazon spokeswoman said “we do not comment on rumours or speculation.”
Retail ambitions
It is no secret Amazon has ambitions to enter the UK grocery store market, as well as other markets around the world.
In July, the company poached Tony Hoggett, formerly one of Tesco’s top executives, to run its physical stores.
Starting in January 2022, Hoggett will take on the role of senior vice president of physical stores and report to Dave Clark, chief executive of Amazon’s worldwide consumer business. He will be based in Seattle.
Hoggett joined Tesco in 1990 and has served in a number of top roles in the UK and Asia. He became group chief operating officer in 2018 before being appointed to the newly-created role of chief strategy and innovation officer in April this year.
‘Calculated move’
Discussing the reports with Ross Hindle, retail sector analyst at Third Bridge, he called Amazon’s decision recently “a typically aggressive and calculated move.”
It also raises further questions around the future of the Group’s partnership with Morrisons, Hindle pointed out.
“Amazon has bricks and mortar in its sights in order to ramp up its presence within the UK grocery market. Despite already having an online grocery presence, the pace of sales growth hasn’t been as fast-paced as some might have expected.
“Growing a brick-and-mortar retail presence is Amazon’s way of bringing more people into their online ecosystem and ultimately driving overall sales.”
Ross Hindle, retail sector analyst at Third Bridge
“The data shows that when Amazon gains a customer through their grocery channel or an existing customer opts for grocery, those customers bring in, by far, the highest life-time-value for the business,” Hindle concluded.