Amazon Increases Brick-and-Mortar Footprint: Why It Matters
With its rapidly growing brick-and-mortar footprint, Amazon has already surpassed Costco when it comes to the number of store locations in the United States. While this may seem surprising, the tech giant still has a long way to go in order to catch up to some of its other retail competitors.
With nearly 600 physical retail locations throughout the US, the Amazon umbrella includes brands such as Amazon Go, Whole Foods Market, Amazon Books, AmazonFresh Pickup, and Amazon Pop-Up stores located in shopping malls and package pickup storefronts.
With Amazon’s push on brick-and-mortar retail, it makes the company’s acquisition of Whole Foods even more important, with Whole Foods currently representing nearly 80 percent of the Amazon-owned storefronts throughout the country. This acquisition allowed Amazon to put even more pressure on traditional retailers, many of which have shuttered a number of stores in recent years.
Retailers still dwarf Amazon’s footprint
Several physical retailers still dwarf Amazon’s footprint, including Walmart (5,295 stores), Kroger (2,769 stores), Home Depot (1,981 stores) and more. And when it comes to healthcare and pharmacy needs, CVS and Walgreens are leading the way, with nearly 18,000 US locations between the two chains. Industry experts name this an industry to watch for an Amazon expansion, so keep an eye on the eCommerce behemoth for its next move.
What do many of these brick-and-mortar giants have in common? Most have been building physical stores for decades. This makes Amazon’s trajectory even more impressive, being new to the physical retail world. In fact, Amazon only opened its first physical retail location in 2015 – the Amazon Books location in Seattle’s University Village Mall.
What does logistics have to do with it?
While Amazon is still playing catch up to its competitors in the scope of its physical presence, the company’s sheer prowess in logistics and eCommerce has inspired many other traditional retails to try to up their game in these areas. Walmart is a prime example – the discount super chain recently purchased Jet.com for more than $3 billion and acquired Bonobos for $310 million. Additionally, they are in the midst of a flurry of other strategies, whether expanding their grocery delivery services throughout the nation, buying New York-based Parcel to strengthen their capabilities for same day deliveries, or building a network of pickup towers where customers can find their online orders. The company is also partnering with tech companies, such as Google and Microsoft, to develop proprietary technology that may rival Amazon Go.
Grocery super chain Kroger has also taken notice of Amazon’s latest moves. It has invested in Ocado, an online grocer, to help boost its delivery business and also purchased Home Chef, the meal kit company, for a combined price of $450 million. And Target recently purchased Shipt (the same day grocery delivery service) for more than $500 million and has also started their own version of curbside pickup.
Amazon’s expanding footprint into the physical retail world stands in stark contrast to the large number of major retailers that are either shuttering stores to minimize losses or even going out of business altogether. With this industry trend in mind, we wouldn’t be surprised to see Amazon begin to surpass even more of its competitors in the years to come.