What Does Amazon’s Shifting Retail Footprint Mean for the Sector?

As the first quarter comes to a close, market demand for retail properties is experiencing a rapid rebound and investors and analysts are looking ahead to see where the sector is headed as it rides out the disruptions of COVID-19. One major shift in 2022 so far is Amazon’s recent decision to close all 68 of its bricks-and-mortar retail locations, including Amazon Books, 4-Star and Pop-Up stores. The company says the move allows it to focus on its Amazon Fresh, Whole Foods Market and Amazon Go businesses. But it has prompted questions about how the e-commerce giant’s strategy is shifting and what the closures might say about the trajectory of bricks-and-mortar retail.

“The stores were almost exclusively located in malls and acted as more of a showroom than a traditional store,” said Kevin Cody, strategic consultant with real estate data firm CoStar Advisory Services. "They did not expand Amazon’s distribution network in a meaningful way and produced a small share of the company’s revenue.”The company’s 4-Star and Pop-Up locations sold electronics, top-selling items from web sales and Amazon-branded products, including Fire tablets and Amazon Echo lines. Though the closures clearly represent a re-evaluation of strategy, the company’s decision is also a sign that the retail sector can expect to see more moves towards disruption and new concepts in the future, according to Daniel Taub, national director of the retail and net lease divisions with commercial real estate brokerage Marcus & Millichap.