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Amazon to Open 4-star in Dallas to Bolster Retail Presence

Zacks Equity Research

Amazon’s AMZN is leaving no stone unturned to expand storefronts across the United States in a bid to strengthen physical presence in the retail space further.

The company is now all set to launch Amazon 4-star store in Dallas, TX which is a testament to the aforesaid fact.

Notably, the store sells various products like kitchen appliances and other items, home stuffs, toys, books, devices, consumer electronics and games.

Further, 4-star store leverages Amazon’s huge customer shopping data from its e-commerce platform to stock four-star or beyond rated products in these stores.
The establishment of such store will aid the company enhance offerings and accessibility in the city of Dallas which in turn will help it to boost customer reach in the city.

4-star Holds Promise

The concept of 4-star store is designed to benefit Amazon’s position in both retail and e-commerce market.

The store enables shoppers to check the products before buying them. This will enable Amazon to deliver better shopping experience and reach customers who are hesitant to shop online and still prefer to do shopping in the traditional way.

All these are likely to strengthen Amazon’s position in the core retail market.

Additionally, testing and verification of authenticity of the best rated products from Amazon.com in person will help the company in winning customers’ trust on its online retail platform.

This in turn will enable Amazon to attract more customers to online retail platform which will aid its e-commerce dominance.

Further, there are digital price tags for each product reflecting its Prime price and marked price. This allows Prime shoppers to pay the online discounted price for purchases made at the store.

We note that this strategy is likely to drive the Prime subscriber base which will not only boost Amazon’s offline sales but also online sales, thanks to its customer friendly offers and fast delivery services.

Amazon.com, Inc. Revenue (TTM)


Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote

Expanding Physical Stores

The latest initiative of Amazon strengthens its presence in brick-and-mortar store space. Amazon 4-star was first established at Manhattan's SoHo neighborhood on Spring Street, NY.

The company rolled out this store in two more cities – Lone Tree, Colorado, and Berkeley, California. The upcoming one in Dallas will be marked fourth.

Apart from 4-star, the company has recently rolled out its second Amazon Go in New York, which is in sync with its intention to take the number of its cashierless stores to a record of 3,000 stores by 2021.

Further, the e-commerce giant is reportedly pursuing inauguration of a new chain of grocery stores, with the intention of disrupting the retail space further. The company is planning to spread the new chain across all the major cities of the United States including San Francisco, Seattle, Chicago, Washington D.C. and Philadelphia. Notably, the first one set to open in Los Angeles.

We believe its growing number of offline retail stores is likely to sustain Amazon’s momentum in the booming U.S. retail space.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector worth considering are Rosetta Stone RST, PayPal Holdings, Inc. PYPL and Nuance Communications, Inc. NUAN. While Rosetta Stone sports a Zacks Rank #1 (Strong Buy), PayPal and Nuance Communications carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Rosetta Stone, PayPal and Nuance Communications is pegged at 12.5%, 17.91% and 5%, respectively.

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