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New themed Amazon pop-up stores built on consumer data

In its never-ending quest to establish unique physical locations, Amazon has plans to launch a chain of themed pop-up stores that will focus on a specific product category or trend.

After closing some 90 pop-up stores over the course of last year, Amazon appears ready to take another stab at the concept with plans to open a chain of themed Amazon pop-up stores with inventory in each store being regularly swapped out as part of rotating themes.

The company has established, or is in the process of establishing, five Amazon pop-up stores this year in or around major metropolitan areas including Las Vegas, Los Angeles, Denver, Houston and Chicago. The sixth location will be in Seattle, next door to Amazon's corporate headquarters and an Amazon 4-star store, as the company continues its experiment to find the right mix of physical locations. According to Amazon's website, the new retail stores will serve as "physical extensions of Amazon.com."

One example of a theme in the Las Vegas store is a focus on cameras. Other themes that have been explored in Amazon pop-up stores include Barbie's 50th anniversary, Marvel's Avengers, an Audible reading room, the Food Network and a holiday toy list.

Amazon stores built on consumer data

Amazon's themed physical stores add to the 26 Amazon Go locations in place or being renovated, 22 Amazon Books stores, 18 Amazon 4-star stores, two AmazonFresh Pickup stores and hundreds of Whole Foods stores. In the next month or two Amazon is set to debut a new chain of grocery stores in the Los Angeles area.

"Amazon is continually iterating with its physical locations, so it will be interesting to see where they end up landing with these different formats," said Thomas O'Connor, a senior director with Gartner. "They can leverage all the data collected in these stores to more clearly see where there is an opportunity [to] further scale out.  Also, it is another opportunity to go after shoppers who don't yet have Amazon Prime memberships."

Another analyst agreed that data, again, will play an integral role in the potential success of the latest Amazon pop-up stores. Not only can Amazon collect more specific data on what customers prefer in certain locations, but the company can apply data it already has in hand about what customers might prefer in a certain zip codes with data collected as part of its 4-star store launches.

This fits the method of operation Jeff Bezos has of taking data and not being afraid to experiment. That's what these themed pop-up stores say to me.
Guy CourtinFormer vice president of industry strategy, Infor

"This fits the method of operation [Amazon CEO Jeff] Bezos has of taking data and not being afraid to experiment; that's what these themed pop-up stores says to me," said Guy Courtin, a former vice president of industry strategy at Infor. "He'll use the demographic data in those areas he wants to put in (a pop-up store), and if it does well then great, he'll milk those revenues. If it doesn't do well, he will pull the plug quickly. It's a bit like the Halloween stores that pop up for Halloween season and then they're gone," he said.

The new pop-up stores remind Courtin of the kiosks companies such as AT&T and Verizon set up in malls to sign up random customers for their respective cellular services, only Amazon is looking to sign up customers for Prime memberships, products and services.

"Once they get you in the store, they are looking to sell you on [Amazon] Prime giving you access to their streaming video and music services, along with whatever themed products they have in a particular store," Courtin said. "They [Amazon] are masters at locating and capturing new revenue streams."

Amazon's themed pop-ups give malls hope

With many mall management companies desperate for revenues from renters, Courtin and other analysts believe Amazon's pop-up stores will be welcome additions -- even if they only stay for a few months at a time and continually swap out inventories with every "theme" change.

"Mall management companies are losing their big anchor tenants like a Sears and others," Courtin said. "If I'm a mall management company and can get Amazon in there for even two or three months, not only will Amazon benefit, but a dozen other stores right next to the Amazon stores will benefit. Also, it gives mall management companies the opportunity to look more modern to have a giant retailer in their location," he said.

According to the company's latest earnings report, physical stores account for about 6% of Amazon's $70 billion in revenue.

Amazon officials declined to provide comment for this story.

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