Amazon Ramps up Brick-and-Mortar Presence in New York

Retailer to open its fourth bookstore in a prime Manhattan shopping center later in 2017

a1Amazon.com Inc. (NASDAQ: AMZN) has firmed up plans to ramp up its brick-and-mortar presence by opening its fourth bookstore in a prime Manhattan shopping center later in 2017. Amazon’s 4,000-square-foot bookstore is set to open in Related Co.’s Shops at Columbus Circle, which is part of the Time Warner Center complex near Central Park, as reported by Bloomberg on January 05th, 2017. The online retail giant opened its first physical bookstore in Seattle in 2015 and has since opened two more, in California and Oregon. Bookstore openings are also being planned in Chicago and Massachusetts as well. The format looks like a traditional bookstore, but uses online data to determine which titles to stock.

a2The New York store, to be located on the third floor in a space formerly occupied by Armani Exchange, will be able to fulfill orders to ship books across the world. Amazon.com forayed into building physical stores to let customers discover new products and test its line of e-readers and tablets before buying them.

Amazon.com mulling launch of grocery stores

Apart from bookstores, Amazon.com announced in October 2016 that it is expanding its grocery business by launching convenience stores as well as curbside pickup locations. The Company aims to build small brick-and-mortar stores that would sell produce, milk, meats and other perishable items. Primarily using their mobile phones or touch screens around the store, customers could also order peanut butter, cereal and other goods with longer shelf lives for same-day delivery.

The grocery stores, known internally as Project Como, are slated exclusively for customers of its Fresh subscription service. In October 2016, Amazon dropped its $299 annual price for Fresh and instituted a $15 monthly fee, available to members of its $99-a-year Prime delivery service. The grocery store and curbside pickup service is mainly meant to compete with other large grocery distributors such as Wal-Mart Stores Inc. (NYSE: WMT). Groceries account for about a fifth of consumer spending in the US. In a Morgan Stanley survey of US consumers in October 2015, 8% of people said they got fresh groceries delivered and 26% are expected to do so in 2016. Amazon.com is also testing out a system at a grocery store in Seattle that tracks which items a shopper picks up and lets the person leave the store without going through check out, charging the customer Amazon accounts automatically.

Amazon.com’s Echo technology coming to cars

Shopping from the steering wheel could soon become a possibility after Ford Motor Co. (NYSE: F) plans to announced that it would begin offering Amazon.com’s Alexa digital assistant with its Sync 3 car infotainment system. An automotive version of Amazon’s popular voice-activated Echo assistant, Alexa, would let drivers order items on Amazon.com, listen to audio books, play music, check news, search for restaurants, and get directions. The driver just has to push a button on the steering wheel and say, “Alexa,” followed by a command such as “how is the weather today”. Amazon is also working with automakers such as BMW AG to integrate Alexa into its luxury cars.

a3Many automakers are entering into alliances with technology giants to explore opportunities in the areas of the Internet of Things as well as connected and autonomous cars. Hence, it is not surprising that Apple Inc.’s (NASDAQ: APPL) CarPlay and Alphabet Inc.’s (NASDAQ: GOOG) Android Auto, which are simplified dashboard versions of their smartphone controls, are slowly appearing in newly launched cars. For all its worth, consumers can now look forward to an extraordinary connected car experience with the ability to use voice-activated devices to control their smart home, access entertainment, manage to-do lists, and much more.

Amazon introduced Alexa with the Echo speaker in 2014 as an intelligent home assistant that responds to voice commands. With a broad reaching partnership with Ford, which sold 2.6 million cars and trucks in the U.S. in 2016, controlling 14.8% of the auto market, Amazon hopes to widen Alexa’s reach. The first Alexa applications will find their way to Ford’s Focus electric car and its two plug-in hybrids, the Fusion Energi and C-Max Energi. Those cars will be equipped with an “Alexa at home” app that enables drivers to start their cars, lock and unlock the doors, and check driving range and how much charge is left in the battery.

a4Will American Apparel be a good fit for Amazon.com?

Amazon.com, teen apparel store chain Forever 21 Inc., and California-based apparel maker Next Level Apparel and brand licensor Authentic Brands Group LLC, were in talks with beleaguered clothing retailer American Apparel Inc. and its financial advisers to submit offers ahead of a deadline on January 6th, 2017. Any successful offer would have to top a $66 million bid by Canadian apparel maker Gildan Activewear Inc., which American Apparel agreed to when it filed for bankruptcy on November 14th, 2016.

Under the deal, Gildan has agreed to acquire American Apparel’s intellectual property assets and inventory by Q1 FY17, including the chance to maintain some or all of the Company’s Los Angeles production and distribution operations. However, Gildan is not buying any of American Apparel’s retail stores, prompting American Apparel to hold an auction for these.

Founded in 1989, American Apparel still remains the only American clothing manufacturer, distributor, and retailer with tag of “Made in USA”, compared to its peers who outsource it from Third World nations. The Company has a seven-storied 800,000-sqft factory in downtown Los Angeles, California, making its products dearer and uncompetitive. American Apparel has dwindled to just 110 stores in 28 states and the District of Columbia, and has already initiated liquidation proceedings for all of its foreign operations that comprise 83 stores.

a5Apparel is an increasingly important part of Amazon’s retail business. The Company has been pushing its own private-label clothing brands such as the Lark & Ro line of dresses and swimwear and suits from Franklin Tailored. In 2009, Amazon bought Zappos.com for about $850 million and let the online shoe store continue to operate independently.

Despite its financial woes, American Apparel remains a strong brand with an enduring connection with millennial shoppers, who like American Apparel’s urban wear and are more inclined than their elders to shop online. American Apparel would presumably become an online-only entity should Amazon acquire it. Moreover, American Apparel’s clothing factory in Los Angeles would position Amazon.com to respond to fashion trends more quickly than competitors that make clothes overseas, a major advantage in terms of cashing in on fast fashion trends in the market.

Stock Performance

a6Amazon.com’s stock stood at $796.92, inching up 0.12%, at the close on Monday, January 09th, 2016, having vacillated between an intraday high of $801.77 and a low of $791.77 during the session. The stock’s trading volume was at 3,442,336 for the day. The Company’s market cap was at $371.28 billion as of Monday’s close.

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