Amazon is plotting to open physical department stores as it steps up its assault on bricks-and-mortar rivals.
The e-commerce giant is expected to launch branches selling its own-label merchandise including fashion and gadgets, as well as branded goods from other suppliers.
The first stores to open could be located in California and Ohio, spanning 30,000 square feet – smaller than most department stores but larger than most of its existing grocery shops, according to the Wall Street Journal.
Analysts speculated that the company would eventually bring the project to the UK if it proves successful. The proposals come after a string of department chains went bust on both sides of the Atlantic owing to changing shopping habits driven in large part by Amazon itself.
The move sent a shudder through US retail stocks as Amazon seeks to cement further its leading position in the industry.
Target slumped more than 2pc, Best Buy fell 1.8pc and Walmart dipped about 1pc before making up some ground.
Amazon’s retail sales have surpassed Walmart’s for the first time according to estimates released this week by data firm Factset, making it the world’s largest retailer outside of China.
However, Amazon’s shares have tumbled nearly 14pc from their peak in early July, erasing about $253bn in value as some investors question its prospects in a post-pandemic world.
The online powerhouse first took on traditional retailers offline in 2017 by buying the US chain Whole Foods for £10.7bn, including its seven UK stores.
It has been rapidly opening its own grocery shops under the Amazon Fresh brand, and is bolstering its online food delivery business in the UK and US.
This latest move will challenge both department store incumbents and the likes of Target and Walmart that sell a raft of general merchandise ranges in the US, said Miya Knights, a retail analyst and author.
“They have been ramping up their grocery plans, real estate is super cheap. Their private label ambitions know no bounds. It would be a natural next progression,” she said.
“If they give us a compelling reason to come to their stores, that would give them a 360 view of how we shop.”
Ms Knights added that if the response in the US was positive, the format could be replicated in the UK: “The UK is the most mature market outside of America – comparable in terms of consumer profile – and has big penetration for online retail as a proportion of total retail sales.”
Department stores once dominated American retail, selling everything from fashion and toys to furniture and appliances.
But like other brick-and-mortar shops, they have lost market share to online retailers as well as lower-price rivals such as Walmart and Target.
Chains such as J.C. Penney and Macy’s have closed dozens of outlets at US shopping centres in the past few years.
Neil Saunders of GlobalData said Amazon’s move could reflect a desire to boost sales in clothing, home furnishings and other product lines and a recognition that the “future of retail is multichannel”.
He said: “The move by Amazon will be experimental at first. However, if it gets rolled out in a serious way, it is very bad news for traditional department stores.”
An Amazon spokesman said the chain did not comment on rumours and speculation.
