The news that Amazon (AMZN:NASDAQ) would be joining the ranks of the departments stores it has been beating up for years came as somewhat of a surprise to many retailers. The industry-slaying ecommerce giant has seen its market cap rise to $1.7 trillion this year. While ecommerce’s overall performance continues to eat market share, traditional retailers respond by closing underperforming stores. UBS analysts predicted that by 2025, the U.S. would have 100,000 fewer stores. Now Amazon wants to open physical stores to sell clothing and household items and facilitate exchanges.
As Adam W. Ifshin, board member at the International Council of Shopping Centers (ICSC), stated earlier this year,
“There’s only one company in e-commerce that matters and it’s Amazon. And what are they doing? They are trying to become Walmart.”
What does Amazon’s foray into brick-and-mortar mean for the industry? Can Amazon provide enough differentiation in a saturated market to “win” or even compete at the department store business?