Stephen Foley: Amazon really does have to hit the high street
Stephen Foley is a former Associate Business Editor of The Independent, based in New York. He left in August 2012. In a decade at the paper, he covered personal finance, the UK stock market and the pharmaceuticals industry, and had also been the Business section's share tipster. Between arriving with three suitcases in Manhattan in January 2006 and his departure, he witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.
Saturday 11 February 2012
US Outlook: Will Amazon take on Apple on the high street? The answer is, it must.
We have had another burst of rumours this week that Amazon is planning to test a high street store in its native Seattle this year, to sell its Kindle tablet computers and e-readers, and some of the physical books it has started publishing.
Frankly, it needn't stop there, since it has access to a vast inventory of electronics, toys, clothing and other physical goods that it sells on its website. It could become the ultimate, last-minute-birthday-gift store for those of us who can't even manage to order online in time.
It also has the logistics of supply chain and shipping licked better than anyone, except perhaps Wal-Mart.
Amazon's exploratory work was apparently the talk of a National Association of Real Estate Investment Trusts conference a few months back.
Of course, the main question for the retailer is whether it can make a decent return on what would have to be a considerable investment in bricks and mortar.
According to one report this week, the initial idea would be to recreate the low-on-inventory, high-on-staff feel of the Apple Store, with the aim of using it mainly as a showcase for the Kindle Fire tablet.
Microsoft is doing something similar, opening Windows Stores that look eerily like Apple ones, but selling a host of devices that run Microsoft operating systems, from smartphones to the Xbox. The company has decided it can no longer just rely on others to sell Windows devices.
It desperately needs to pull some consumers out of Apple's orbit and into its own. The more people using Windows devices, the more people will download digital content, from games and videos on the Xbox to apps and music for phones, from digital stores that pay a cut to Microsoft.
The imperative is the same for Amazon, which launched the Kindle Fire precisely to win customers for its movie streaming, video downloads and app store. Whether it eventually plumps for Apple-style minimalism or a gift store offering the best of its online souk, Amazon simply has no choice but to hit the high street.
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