Amazon Will Close Pop-Up Stores and Refocus Strategy

March 7, 2019
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Amazon.com Inc. (NASDAQ: AMZN) made headlines this month when news leaked that it was planning to open dozens of supermarkets across the United States. The company has aggressively pursued physical retail markets in recent years, despite being the largest ecommerce retailer in the world.

The company sees physical retail as a key and growing area of its business, but It will begin to refocus its efforts in the coming weeks. On Wednesday, the company announced that it will close its pop-up stores in the United States. All 87 locations will be phased out by the end of April.

More Physical Retail Presence Than Most People Realize

Astute investors will be aware that in addition to its pop-up stores, they also operates cashier-less Amazon Go stores, 4-Star stores, and Amazon Book stores. The company is also the owner of Whole Foods.

The closure of pop-up stores will allow to focus on its other physical locations. The company said in a statement on Wednesday that “After much review, we came to the decision to discontinue our pop-up kiosk program and are instead expanding Amazon Books and Amazon 4-Star, where we provide a more comprehensive customer experience and broader selection.”

  • Amazon Books competes directly with bookstore Barnes & Noble, which saw its stock price drop -8.74% on Wednesday.
  • Amazon 4-Star is a physical store brand that only stocks products that are rated above 4 stars on the website. The flagship store is located in SoHo in New York City.

Amazon is Also Gearing Up to Enter the Supermarket Business

Amazon’s purchase of Whole Foods has been a successful venture, giving the company access to a growing group of consumers who want healthier, natural, and certified organic food alternatives.

The company is also planning to expand into traditional supermarket retail, with dozens of stores set to open in the next two years. According to a recent report in the Wall Street Journal, The company has already signed leases on several key locations in cities like San Francisco, Seattle, Washington D.C., and Pittsburgh.

Amazon Remains a Top Analyst Pick

Amazon’s stock dropped slightly following the news of its new retail strategy. However, the underlying strength of the company remains unchanged. The average target price of $2,122 shows optimism for continued stock growth this year.

Stock is currently up 11.12% year to date, only slightly behind the 13.12% growth in the NASDAQ Composite.

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