Amazon is closing all US pop-ups (AMZN)

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Amazon has decided to shut down all of its pop-up stores in the US, an Amazon spokeswoman confirmed to The Wall Street Journal. The move will see 87 pop-up kiosks — located in a variety of locations including malls, Kohl’s stores, and Whole Foods stores — across 21 states shuttered by April 29.

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This won’t affect any of Amazon’s permanent stores, which include Amazon Go, Amazon Books, and Amazon 4-star. Employees will be laid off but were told by Amazon that they’ll receive severance pay if they stay until the end of April.

It’s possible that the e-tailer considers the pop-up stores’ mission accomplished and is seeking greater control over its physical spaces. Pop-up stores offer Amazon the ability to quickly establish a physical presence that it can use to drive awareness of its devices, gauge demand for its products and physical presence in the area, and perform services like exchanges of old Kindles or Fire tablets for credit.

However, because it has experimented with these pop-ups since 2014 and launched other long-term store formats in the meantime, Amazon may feel that it’s gotten all the value it can from its pop-up stores and that resources are better spent on growing its stable of permanent locations. Another possibility is that Amazon’s seeking a higher degree of control over how it runs its physical spaces, which it can’t do when operating pop-ups in areas it doesn’t own.

The discontinuation of Amazon’s pop-up strategy may be a letdown for retailers that wanted to partner or have already partnered with the e-tailer. The strategy of using an Amazon pop-up as a “store within a store” to try to drive traffic is now no longer viable for other retailers. Kohl’s previously deployed this tactic, adding Amazon pop-ups to several stores and also having those stores handle Amazon returns.

While it’s unknown if Kohl’s will stop handling Amazon returns, it’s definitely losing its in-store pop-ups and will just be extending its assortment of Amazon products to the rest of the store, Kohl’s CEO Michelle Gass said in a conference call, according to The WSJ.

Though it may be closing pop-ups, Amazon will remain committed to physical growth, likely pushing for aggressive growth of its permanent stores. Amazon has assured landlords that the closure of its pop-up stores doesn’t mean it’s pulling back from brick-and-mortar expansion, one landlord told The WSJ. Instead, it’ll likely expand other store formats rapidly in the next few years. For example, Amazon is aiming to have as many as 3,000 Amazon Go stores by 2021, sources told Bloomberg.

And the e-tailer’s also planning to launch a new grocery store format that can offer, among other things, lower-price groceries, complementing Whole Foods’ more premium selection. While these store types may take longer to set up than pop-ups, they may also yield greater market penetration for Amazon in spaces like convenience and grocery.

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Source: Business Insider – feedback@businessinsider.com (Greg Magana)