Amazon share price down 2% as it closes pop-up stores

Amazon stock falls after preparing to close its 87 pop-up stores and changing its brick-and-mortar store strategy.

Amazon is poised to close its 87-pop up US kiosks by the end of April. The e-commerce giant’s stock has fallen by almost 3% after the news was announced.

Why is Amazon closing its pop-up stores?

Amazon is closing its pop-up stores because the retailer is planning to open a chain of grocery stores across the US. The decision was explained in a statement by the company.

‘Across our Amazon network, we regularly evaluate our businesses to ensure we're making thoughtful decisions around how we can best serve our customers,’ said an Amazon spokesperson.

The pop-up kiosks were one part of Amazon’s foray into brick-and-mortar stores. Amazon already owns Whole Foods grocery stores and cashier-free Amazon Go sites across the US as well. The retailer will also expand its Amazon Books and Amazon 4-Star locations.

As they close the pop-up stores, Amazon will find new positions for the laid-off workers.

‘We will work to find opportunities within the company for employees’, said the Amazon spokesperson.

Can Amazon’s grocery stores be successful?

Amazon has been successful in online retail, but could struggle with physical stores. Amazon’s dozens of locations may not be real competition for the thousands of Target and Walmart stores that sell groceries.

Though Amazon is one of the most profitable businesses in the world, building stores could reportedly cost $100 million. Even established chains like Kroger have gone into billions of dollars in debt upgrading its locations. Amazon’s grocery stores could also have the same food shortages the company had at its Whole Foods locations because of cost-cutting measures. One Whole Foods manager detailed the problems the store was having.

‘At my store, we are constantly running out of products in every department, including mine. Regional and upper store management know about this. We all know we are losing sales. It's not that we don't care — we do. But our hands are tied,’ said the manager.

Investors will be closely watching to see if Amazon’s new venture will avoid its previous mistakes in brick-and-mortar businesses to become the latest large US grocery store chain.

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