Amazon Shares Sink After Report of Pop-Up Store Closures

While it is likely certain that Amazon is not going anywhere for, at least, the foreseeable future, shares took a bit of a dip midweek after a Wall Street Journal report announced the online retail innovator was in preparations for closing and/or selling its “pop-up” stores in the US. 

According to the WSJ report, Amazon plans to shutter all 87 of the company’s pop-up stores as part of this new direction, as the company reconsiders its old-school “brick-and-mortar” strategy.  This comes at a somewhat intriguing moment in the company’s expansion effort: a week after the WSJ reported Amazon’s plan to open several dozen grocery stores as a means to drive food business growth after its $13.7 acquisition of the Whole Foods grocery chain, in 2017. 

If you are not familiar with the Amazon pop-up stores you are not alone.  After all, there are only 87 across the US; and these are all located in select shopping malls and Whole Foods stores.  Amazon intended for these pop-up stores to help showcase Amazon devices and products, but that may no longer be of interest to the tech giant.  At the same time, Amazon still plans to expand its existing bookstore offerings as well as 4-star stores that showcase the company’s best-selling products (from the website), as well as new cashierless Amazon Go convenience stores. 

In a statement, an Amazon spokesperson said, “Across our Amazon network, we regularly evaluate our businesses to ensure we’re making thoughtful decisions around how we can best serve our customers. After much review, we came to the decision to discontinue our pop-up kiosk program, and are instead expanding Amazon Books and Amazon 4-star, where we provide a more comprehensive customer experience and broader selection.”

Speaking of Amazon Go, it should be noted that the pop-up closures are not intended to affect these particular stores.  As a matter of fact, Amazon had considered opening upwards of 3,000 Amazon Go store locations by 2021, and they may still aim for it. 

All of this is to say that shares of Amazon dropped a little more than 1 percent in late afternoon trading on Wednesday.  This trims the stock’s annual growth, so far, to 8.5 percent, after losing more than $40 billion in the session following Christmas. And while the company is outperforming consensus forecasts for December, first quarter guidance has fallen short. Increased investments in this new year—to help cover higher wage, delivery, and video content costs—should help them to balance out. 

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