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Amazon to close its Style experiment in ‘symbolic’ move

Amazon says it will close its Style stores. With only two of them, the decision to shut the operation is not all that noteworthy in terms of scale. However, it is symbolically significant in that it represents another retreat from physical non-food retail following last year’s closure of Amazon Books and Amazon 4-Star shops.

This is part and parcel of Amazon’s wider efforts to curtail ventures that it does not see as having long-term potential or that are not generating good returns for the business. Amazon Style falls firmly into this category as it is hard to see how the initiative would scale and become a powerhouse of apparel retail.

Amazon Style is an interesting enough concept, with well-designed and pleasantly merchandised stores. However, in our view, the automation of the fitting rooms is an over-engineered solution in search of a problem. Amazon is simply trying to reinvent something for the sake of reinvention and ended up with a business model that was more complex and costly than a regular clothing store.

Unlike most apparel shops, Amazon Style also lacks a distinctive point of view. While it sells some good brands and has an interesting range of apparel, it lacks the handwriting or personality of most traditional clothing stores so struggles to build a base of regular, loyal customers in the way that other brands do.

As a result of all of this, Amazon will now focus its efforts on selling apparel online – an arena where it has considerable success.

Amazon is not giving up on physical retail entirely as it is still committed to building out a much bigger grocery business, expanding both Whole Foods and its own-format grocery stores. This is sensible as a successful grocery operation needs physical stores both to satisfy customers and to drive profitability.

We believe that Amazon has made very good progress in grocery, but we maintain our view that it has not yet developed a compelling new format that is able to successfully compete with mainstream grocers on a national level. The freeing up of resources from ventures with less potential will allow Amazon to keep investing and expanding as it seeks to crack the grocery nut.

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