AMAZON 4-STAR STORES – The Good and the Not So Good

I was prepared not to like the new Amazon 4-star stores. I expected to see numerous examples of poor merchandising and just dumb retailing.

Amazon is clearly testing a new strategy. There are only three 4-star stores in the nation. There are just nine Amazon bookstores in California, and this one 4-star store. I visited the Amazon 4-star store in Berkeley, California on a weekday morning, and I have to say, it looks pretty good.

The concept behind the 4-star stores is that they carry all the items that are rated 4 stars on the Amazon website. In other words, the best sellers.

And there are a lot of them across numerous categories. Books—of course—and pet supplies, electronics, toys, and kitchen gadgets to name just a few. No food or furniture, mostly small items that will fit into a bag.

The Good

The employees seem happy and energetic. So they appear to be adhering to the First Law of Retail, which is “People First.” And the positive atmosphere generated by the employees is contagious to anyone who walks into the door.

What’s more, dogs are welcome. There’s a dog bowl by the entrance—a smart move in Berkeley, where it seems like everyone has their dog out shopping with them.

The products are great. Things you never thought you needed, but start thinking you do when you see them. Amazon management has done its homework and recognizes the Third Law of Retail, “The Power of Product.” Everything is presented in an easy-to-understand way. The price and product information are available right next to each item.

The store is segmented in a clear and clean fashion. Categories are grouped together and well signed. The day I was there, they had two nice Mother’s Day presentations and a table featuring items that have sold well online in this particular market.

So those are good things, especially the culture of the store. If I were consulting for them, I would urge them to remember that culture has to be reinforced and built upon if they hope to be viable.

The Not So Good

The 4-star store is a test of concept. The not-so-good isn’t that bad, and they have time to get it right.

The problem is that it is not clear what they stand for. Let me explain.

You go to a Crate and Barrel when you want glasses, dishes, serving ware, and some other things for the house. You know roughly what you are looking for and go there to get it. You go to a Pottery Barn when you want furniture, rugs, and other stuff for the house. When you want footwear, you visit an UGG store. This idea applies to either the online or physical stores. Those brands stand for something specific, and you know what it is.

What do you go to an Amazon 4-star store for? Miscellaneous cool stuff?

Maybe. I think what’s going on here is that the Amazon online site can carry everything. Almost literally everything. They have huge warehouses and ship directly from suppliers. The online store is not limited by physical space. But a physical store is limited to what you can display and stock in 2,500 square feet, and there should be a clear message. A brand. An identity. The Amazon book stores have that. They are book stores. You go there to buy books.

The Amazon 4-star stores are not addressing a lifestyle, like young adults or mature apparel or a category like electronics or mattresses. They carry merchandise that is there because it has been selling well online. But it doesn’t hang together to make any kind of “statement.” And that can be okay. Customers like the “thrill of discovery.” That’s what energizes a clearance store or flea market. Amazon could have a killer, dynamite, and unbelievably successful outlet store strategy if they wanted.

But they have time and the resources to learn and adapt. I think they are going about the right way by testing the concept. I hope they keep a positive culture, and it will be interesting to watch the stores evolve going forward.

Learn more about The Five Law of Retail in the book to be released June 18, 2019. Available for pre-order at Amazon and Barnes & Noble.