Retail

Retail Pulse: Amazon Opens ‘4-Star’ Store; Inspire Brands Acquires Sonic For $2.3B

eCommerce retailers are blending the online and offline worlds with their latest brick-and-mortar efforts. Amazon, in particular, began its march into the offline world with its first bookstore almost three years ago and has recently opened a series of Amazon Go cashierless C-stores. The retailer’s latest venture? A store in New York City that leverages its trove of online data by selling only items that are rated 4-stars or higher on its site. The new concept is aptly named the Amazon 4-Star Store, and sells items with an average product rating of 4.4 stars.

In a blog post announcing the store’s opening on Thursday (Sept. 27), Amazon described its selection as “a direct reflection of our customers — what they’re buying and what they’re loving.” To that end, the store also carries products that are most added to Amazon’s Wish Lists, and, in a bit of local flavor, it features a section of products that customers from the New York City area are buying. The store offer items that are “Frequently Bought Together” and “Amazon Exclusives” — much like its website. In addition, items come with “customer review cards with quotes from actual customer reviews.”

Further melding Amazon’s online and offline spheres, Prime members pay the Amazon.com price for the items they purchase in the store — Amazon has also applied this policy to its Amazon Books stores. The strategy also could conceivably encourage customers strolling the aisles to sign up for Prime. For those willing to join the membership program in-store, Amazon will allow them to access the discount as well. And, in an interesting twist, the store will feature dynamic digital price tags that show the latest online price. The Wall Street Journal noted that the “cash register should also ring up the current online price if it lags behind.”

In terms of market, the store allows Amazon to introduce itself to a “non-online audience,” according to USA Today, and showcase its evolving line of Alexa-compatible products by allowing customers to play with smart devices. It should also be noted that Amazon’s interest in brick-and-mortar retail comes as much of retail spending still happens offline. That especially rings true for food and beverage products — an area that Amazon has recently dove into with its acquisition of Whole Foods last year.

With its move into groceries, Amazon has been rolling out a new perk to Prime members in an ever-growing list of cities: Prime members can order grocery delivery. More recently, the retailer has been rolling out grocery pickup in some cities as well. What offline retail concepts will Amazon take interest in next? That remains to be seen, but Amazon’s latest moves show its desire to develop omnichannel concepts. 

In Other Brick-And-Mortar News

Inspire Brands announced that it will acquire Sonic for approximately $2.3 billion. The agreement was unanimously approved by Sonic’s Board of Directors, and represents a premium of approximately 19 percent per share to Sonic’s closing stock price on September 24, 2018 ($43.50 per share).

Inspire already owns Arby’sBuffalo Wild Wings and Rusty Taco and Sonic will continue to operate as an independent brand. In a press release, Sonic CEO J. Clifford Hudson said, “This transaction delivers significant, immediate and certain value to Sonic shareholders, and the private ownership structure will provide important benefits to our guests, franchisees and employees.”

On another note, Home Depot has launched express same-day and next-day local delivery for more than 20,000 of its most popular items to 35 major metros across the U.S. To use the service, customers need to choose “Express Delivery from Store” through homedepot.com or the Home Depot app, where available.

The new offering is part of the company’s five-year expansion of its delivery offerings for DIY and Pro customers. Mark Holifield, executive vice president of supply chain and product development, said in a press release, “This is just the beginning of our expansion of improved delivery options, but it’s a significant milestone in the way we’re serving customers.”

J.Crew plans to create a brand that appeals to younger women. CEO Jim Brett said the retailer sees itself as a company with more than two brands, the Chicago Tribune reported. “We’ll be announcing one new brand this year,” Brett told Bloomberg TV. “It is aimed at women, and it’s younger than any of our existing brands.”

Currently, the retailer is revamping its eponymous brand. To that end, it is offering more size options. In addition, its Madewell brand is a “bright spot” for the company, as that brand, which has denim clothing and accessories, could reach millennial customers. For more information on retailers’ efforts to reach millennials and other developments in commerce, read next week’s Retail Pulse.

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