Three Things Commercial Real Estate Brokers Should Know About Amazon Go
It could be argued that Amazon has been the biggest disruptor of the 21st century to retail. Almost single-handedly responsible for the ensuing change to online retail from brick-and-mortar stores, Amazon’s prowess will be tested as it attempts to reverse the trend and bring commerce back to brick-and-mortar stores. If Amazon Go succeeds, it could affect CRE on multiple levels. Here’s what brokers need to know about Amazon Go.
1. Amazon Go Could Bring Foot Traffic Back to Shopping Centers
This year, Amazon is set to go live with its Amazon Go grocery stores, currently in beta testing exclusively for Amazon employees in Seattle. It’s a store where all you need is an Amazon account and the Amazon Go app on your Smartphone; no cash is necessary. These stores don't even have cashiers or registers. You walk in and grab what you want, and through sensor technology, your items are tallied and added to your cart. When you walk out of the store, your Amazon account is charged. This brilliant idea combines the convenience of online shopping with the physical ability to see and feel the products that you are buying.
For CRE brokers, that means that if Amazon Go, well, goes, you have new avenues for buying and selling countless acres of retail space. Especially when you consider how many sinking anchor stores in shopping malls across the United States are about to reach the end of their lease, CRE brokers can be making smart deals.
2. Amazon Go Is Not Opening Everywhere
According to rumors, the mega online retailer is opening several Amazon Go stores in addition to its Seattle location, including one in Washington, D.C., which has made some CRE brokers nervous. But it shouldn’t.
The scale is not nearly what has been speculated according to Amazon. Amazon is not building massive 40,000-square-foot grocery stores, and they do not plan on putting an Amazon Go in every city and state like Wal-Mart. They are, however, believed to be working on a drive-thru option for people who want to order online and then go pick up their items.
3. Amazon Go Is Targeting College Campus Bookstores
When Amazon first came into being, it mostly lived on book sales. It basically obliterated brick-and-mortar bookstores by offering cheaper books and free front-door delivery. In the same mode as the current reversal back toward brick-and-mortar stores, Amazon is targeting the college crowd, which appreciates going outside and walking to the store. Already, Amazon Campus has more than a dozen stores on campuses across the United States selling books specifically to college students. Amazon Campus bookstores currently are being built or are opening in New York, Maryland, and California.
CRE brokers know that campus real estate is not cheap. However, when you factor in the kinds of returns that an idea like this can have on small campuses with low-quality book selections, having access to market data in some of these local markets can position you to capitalize on Amazon Go’s potential success.
To better understand how Amazon Go will affect the CRE market, contact me today.