Amazon said to be planning to open its own department stores

After years of squeezing brick-and-mortar retailers, Amazon will soon open its own department stores, with a focus on apparel, electronics and household goods, according to a report in the Wall Street Journal.

An Amazon spokeswoman declined to confirm the news or provide details. “We do not comment on rumours and speculation,” she said in an email.

The e-commerce giant, which last year had $US386 billion ($540 billion) in sales, has been expanding into physical retail in recent years, opening grocery stores, book shops and specialty pop-ups around the US. Analysts say its latest foray – while unexpected – provides an opportunity to reach customers in a new way.

“More stores bolster Amazon’s whole ecosystem and flywheel,” said Neil Saunders, managing director of GlobalData, a research and consulting firm that tracks the retail market. “They also allow Amazon to gather data and to understand consumer preferences better – understanding that can, in turn, be used to improve the whole proposition.”

Traditional department stores, he noted, have been declining for years because of a “failure of innovate and adapt.” Stores such as Macy’s, J.C. Penney and Kohl’s, which made up about 15 per cent of retail sales in 1985, now account for less than 3 per cent, Saunders said.

The pandemic has created new challenges for the nation’s department stores, tipping a number of storied chains, including Neiman Marcus, JC Penney and Lord & Taylor into bankruptcy. Nearly 200 department stores have permanently closed since last year, and another 800 – or about half the country’s remaining mall-based locations – are expected to shutter by the end of 2025, according to commercial real estate firm Green Street.