One of the ways Amazon is keeping itself on the Sustained Sizzle path is through physical stores; the most advanced are bookstores that also serve to showcase its various electronics. The company expects to have at least a dozen in operation by the end of this year in New York, New Jersey, Massachusetts, Illinois, California, Oregon and Washington.
Unlike in most bricks-and-mortar book stores, the volumes in Amazon’s stores do not carry prices. “Amazon’s prices are dynamic,” explains Jennifer Cast, vice president of Amazon Books, which means Amazon will charge whatever it thinks it can get at any given moment. The customers won’t know the price until they scan the book with the Amazon app or at one of the store’s digital kiosks.
Amazon also operates several physical locations that serve as pick-up points for students ordering textbooks, supplies and other merchandise online. The experimenting and tinkering with physical retail formats is just “another way to reach the customer and test what resonates with them,” says Brian T. Olsavsky, Amazon’s chief financial officer.
Dick’s has managed to prevail despite adverse trends over the last few years that have claimed competitors and earlier this year caused Wall Street to lose some confidence in the once high-flying retailer. The company has also pared down store openings for the next two years.
Chief executive Ed Stack notes that newer stores “continue to perform well” and the company is “in great shape from a profitability standpoint.” Dick’s is not planning on closing any stores; the pullback affects only new store openings.
“Our view is that we should not be opening a whole lot of stores right now because we’re going to pay a higher rent today than we would two or three years from now,” Stack says.
This position has been endorsed by many analysts and industry watchers. “Stack is right that Wall Street won’t necessarily like it, but Wall Street doesn’t seem to like negative comps either, and overbuilding stores is a sure way to get them,” says Mark Ryski, CEO of HeadCount Corp.
Source: Kntar Retail