Amazon Plans Hundreds of Brick-and-Mortar Bookstores, Mall CEO Says--2nd update

By Greg Bensinger 

After dipping its toes into brick-and-mortar retailing last year with its first physical bookstore, online giant Amazon.com Inc. is poised to dive into the deep end.

The Seattle company plans to open as many as 400 bookstores, Sandeep Mathrani, chief executive of mall operator General Growth Properties Inc., said on an earnings call on Tuesday.

"You've got Amazon opening brick-and-mortar bookstores and their goal is to open, as I understand, 300 to 400," said Mr. Mathrani in response to a question about mall traffic.

That plan compares to the 640 stores Barnes & Noble Inc. operates and the 255 locations Books-A-Million Inc. said it had as of last summer. Both companies spent years building their retail presence. In addition to its one bookstore, Amazon also has a presence in Westfield Corp. malls, where it has set up permanent kiosks selling devices, cases and branded apparel.

It wasn't clear where Mr. Mathrani got Amazon's store figure, but he could have spoken with Amazon's real-estate executives about their plans. A spokesmen for Amazon and GGP declined to comment.

If Amazon were to open hundreds of stores, it would take years to pick locations, reach leasing deals, and hire staff. Physical stores would give Amazon customers a place to leaf through books before buying them.

Barnes & Noble shares slid 2.3% to $7.90 and Amazon fell a fraction to $551, both in after-hours trading.

Amazon opened a physical bookstore in Seattle in November, its first foray into brick-and-mortar retail. The store, in an outdoor mall, sells books and Amazon's Kindle and Fire devices. Amazon says it stocks the location using data it collects from its website. The store stocks about 5,000 titles at any one time, compared with millions on its namesake website.

The Seattle bookstore carries the same prices as Amazon's online store, generally are at a discount to other retailers. It showcases customers' online book reviews for some titles and, like many independent stores, has curated sections featuring selections from employees, including Chief Executive Jeff Bezos.

While Amazon can overwhelm competitors with its vast online inventory, it still cannot rival the immediacy of shopping at the mall. Not that it isn't trying: Amazon has begun one-hour deliveries in about 20 cities and same-day drop-offs in other markets. At a handful of U.S. colleges, Amazon has physical locations for students can pick up or drop off merchandise and speak to Amazon representatives.

In addition to the Seattle bookstore, Amazon footwear division Zappos and diaper seller Quidsi have experimented with U.S. retail outlets.

Mr. Mathrani noted that other online retailers, like fashion site Bonobos and eyeglasses seller Warby Parker, are opening physical stores. Online makeup subscription service Birchbox "is cutting their overhead to open bricks-and-mortar stores," he said.

Such stores also can serve as mini warehouses for home delivery in urban centers, a concept Wal-Mart Stores Inc., Target Corp. and others have explored. Warby Parker has said its physical stores are profitable in their own right.

Amazon's Seattle bookstore has no apparent delivery component, though people familiar with its operations have said the retailer is using it to experiment with stocking shelves quickly using nearby warehouses and doing other types of data collection.

GGP's Mr. Mathrani suggested another possible motivation for Amazon to open a chain of physical stores: returns. The CEO of the Chicago-based company said 38% of online purchases for what are known as soft goods, such as clothing and paper products, are returned to brick-and-mortar locations.

Write to Greg Bensinger at [e-mail]

(END) Dow Jones Newswires

February 02, 2016 18:55 ET (23:55 GMT)

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