Here’s why Amazon’s big-box store won’t change the game

Amazon’s impending entry to the big-box store channel is noteworthy, but not likely to be the paradigm shift some experts are predicting.

Ever since news reports first broke in mid-January that the online giant plans to open a roughly 230,000-sq.-ft. brick-and-mortar store selling groceries and general merchandise in a Chicago suburb in 2027, the industry has been abuzz. 

The planned store, which Amazon also reportedly intends to include a "limited" warehouse component to support on-site operation, would place the retailer in direct competition with the brick-and-mortar operations of Tier I big-box titans like Walmart supercenters and Costco. 

While Walmart, Costco and other big-box retailers should certainly pay close attention to Amazon’s encroachment on their turf, its arrival probably will not herald the arrival of a new day in big-box retailing. A more crowded one, sure. 

Here are three reasons big-box retailing may get more competitive, but not change at its core, when Amazon arrives:

Big-box retailing is already ‘Amazon-i-fied’

Anyone who thinks big-box players like Walmart and Target haven’t already adapted their brick-and-mortar strategies to adapt to the disruptive presence of Amazon hasn’t been paying attention. In-store and curbside pickup and return of online purchases, ship-from-store, "endless aisle" omnichannel inventory access, and drone delivery are just a few examples of how physical retailers are attempting to mimic the digital conveniences of Amazon.

Even Amazon’s on-site warehouse operation wouldn’t be unique. Walmart has been operating "local fulfillment centers," compact, modular warehouses built within or added to a store, since 2019. Operating on the "micro-fulfillment" model, the centers can store fresh and frozen items, as well as thousands of other high-volume products. Instead of an associate walking the store to fulfill an order from our shelves, automated bots retrieve the items from within the center. The items are then brought to a picking workstation for fast order assembly.

Amazon itself has piloted micro-fulfillment technology in its soon-to-close Amazon Fresh grocery format, and ironically one reason Walmart has been deploying the technology is to better keep pace with Amazon’s rapid delivery capabilities.

Even Amazon doesn’t always win

Amazon has a pretty impressive overall track record of succeeding in new endeavors. But even Amazon isn’t right 100% of the time. And one area where Amazon has had a lot of misfires, or perhaps “learning experiences” is a more nuanced way to put it, is brick-and-mortar retailing.

As previously mentioned, Amazon is phasing out its Amazon Fresh high-tech grocery stores and Amazon Go frictionless convenience stores to focus on its Whole Foods and Amazon Grocery banners. 

However, these are not the only brick-and-mortar experiments Amazon has conducted and then decided to end. Other examples include Amazon Style, Amazon Books, Amazon 4-star (mall-based stores carrying top-rated items from Amazon.com), and Amazon Pop Up (kiosks selling Amazon electronic devices).

[READ MORE: Amazon closing 68 physical stores in U.S., U.K.]

None of this is to say that a new Amazon big-box banner won’t be a success. But it’s not a sure thing, either. And even in the brick-and-mortar grocery category where Amazon has made its long-term presence known, its rivals are still thriving.

Big-box won’t change Amazon

Finally, Amazon shouldn’t have a transformative impact on big-box retailing because big-box retailing won’t revolutionize Amazon. It may provide Amazon with additional physical distribution points, but the retailer already operates a rapidly growing physical fulfillment network that provides same- or next-day delivery services in thousands of towns and communities across the U.S.

And physical stores have never been a major revenue driver for Amazon, falling far behind other more lucrative endeavors like its online storefront, third-party fulfillment and hosted cloud services. A profitable big-box store channel would be a "nice-to-have" for the retailer, but hardly a requirement.