Amazon to open large physical stores in the US to step up the retail battle

E-commerce giant Amazon plans to open large physical retail stores in the US that will compete with department stores, as brick-and-mortar shops are coming back into the fore with more people now vaccinated.

The company, based in Seattle, is initially expected to open stores in Ohio and California, spanning nearly 30,000 square feet (2,787 sq metres), the The Wall Street Journal reported on Thursday, citing sources. It would be smaller than most big department stores that usually cover an area of about 9,290 sq metres.

“The Amazon stores will dwarf many of the company’s other physical retail spaces and will have a footprint similar to scaled-down formats that Bloomingdale’s, Nordstrom and other department-store chains have begun opening,” the WSJ said.

The news sent shares of some key retailers down on Thursday. Target’s stock dropped 2.1 per cent, while Best Buy fell 1.8 per cent.

Amazon did not respond immediately to The National's request for comments.

It is not clear which brands Amazon will sell in its stores, but it is likely to sell items across categories including electronics goods, household objects, sports equipment and clothing, according to the report.

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“[The] company’s private-label goods are expected to feature prominently … Amazon sells scores of products including clothes, furniture, batteries and electronic devices through many of its own labels,” the WSJ said.

Currently, Amazon has physical stores selling books and groceries and the company runs pop-up stores across the US. Pop-ups bring the goods from the millions of products available on Amazon.com to shopping malls.

In February last year, Amazon opened its first, full-size, cashier-less grocery store – Amazon Go Grocery – in the Capitol Hill neighbourhood of Seattle.

In March, this year, it opened a convenience store in west London, its first physical outlet outside North America. As of July 2020, Amazon's physical retail store count reached 89 stores, or 589 stores including supermarket chain Whole Foods.

Driven by the growth in online shopping after the coronavirus pandemic, Amazon’s second-quarter net profit surged almost 50 per cent on an annual basis, rising to $7.8 billion, almost $2.6bn more than the same period last year.

From April to June, sales at the company’s online stores grew 16 per cent to $53.2bn, while physical store sales surged by 11 per cent yearly to $4.2bn.

What the law says

Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.

“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.

“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”

If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.