Amazon plans to open stores in at least 10 markets
February 4, 2016 12:23 PM
Amazon plans to open stores in at least 10 major markets to sell books and electronic readers in sites near indoor shopping malls, a retail real estate executive with knowledge of the plans tells Internet Retailer today.
The source could not say where the stores would be or when they would open, but his description of the 3,000-square-foot stores is similar to but smaller than Amazon’s bookstore in Seattle. That store sells a few thousand books that are chosen partly based on customer reviews at Amazon.com, No. 1 in the Internet Retailer 2015 Top 500 Guide. The Seattle store measures 7,400 square feet and carries 5,000-6,000 SKUs, including Amazon’s Kindle e-reader, Fire tablets and Echo speaker.
An Amazon spokeswoman says today the only store publicly announced is the one in Seattle and that Amazon doesn’t comment on “rumors and speculation.”
The source tells Internet Retailer that mall operator General Growth Properties Inc. is working with Amazon to open stores in 10 cities, although he couldn’t say which markets are involved. General Growth CEO Sandeep Mathrani on Tuesday told analysts during an earnings call that Amazon plans to open 300-400 bookstores. But he backtracked Wednesday, saying his comments weren’t meant to represent Amazon’s plans.
Store locations have not been named, but most major shopping malls have just one bookstore and an agreement not to allow a competitor inside, the real estate source says. This means Amazon stores likely would open near big shopping malls in “power centers”—nearby strip malls that usually feature such stores as Target, Wal-Mart, Petco, Marshall’s and Sports Authority, the source says.
“It’s very common for mall landlords to give a bookstore an exclusive lease, so Amazon’s bookstore cannot get into the mall,” the source says. “But Amazon can go into the big, fancy, powerful strip center that’s typically located across the street.” And in malls with no bookstores, Amazon could negotiate lower rent and overhead costs because the retailer would drive traffic to the mall and benefit the landlord, the source says.
Amazon likely will open only one store per market with General Growth Properties, but could lease locations from many other landlords, the source says. The source is skeptical that Amazon will open the 300 to 400 stores that General Growth CEO Mathrani mentioned earlier this week, and says an expansion of that scope would take a long time.
“Walgreens, at its peak of expansion, with a huge staff of real estate directors, was able to do about 400 new deals a year, but they had been building up to that figure for 25 years,” the source says.