Reuters
Racks of shoes wait to be photographed at Amazon's Fashion Studio in the Brooklyn borough of New York. Opening physical retail stores could help Amazon's fashion business.
The store will be located in the Herald Square neighborhood and will also serve as a mini-warehouse with same-day delivery, the Wall Street Journal reports.
Despite the widespread popularity of online shopping, brick-and-mortar stores are essential to the success of retail companies, according to a recent report by consulting firm AT Kearney.
The report, written by Michael Brown, Mike Moriarty, and Andres Mendoza-Pena, notes that 95% of all retail sales are captured by companies with a traditional retail presence.
Here are a few reasons Amazon should open stores.
1. Customers could discover more Amazon products.
"The majority of consumers prefer in-store discovery for key retail categories such as apparel and accessories, health and beauty, and furniture," the analysts write.
While e-commerce is very convenient, shoppers still prefer to see and touch many products before buying.
Having physical stores could help Amazon in its push to become a major fashion retailer. It could also help drive purchases of new products in the health and beauty section.
2. Shoppers like trying out merchandise.
Having a brick-and-mortar location can drive sales for products like electronics, according to the report.
Product displays are important for driving sales on products like tablets, televisions, and cell phones.
"Shoppers don't really know the difference between LCD and LED; they choose what looks better to them," the analysts explain. "Immediacy, ease, and accuracy of testing are all cited as reasons for preferring in-store trial.
If Amazon opened a store, it would be able to better-display electronic products like the Fire Phone.
Getty / David Ryder
Amazon could drive sales of the Fire Phone if customers had a place to test it out.
3. Stores beat online for investment purchases.
Customers strongly prefer to buy investment pieces like furniture or jewelry in-person, according to AT Kearney.
If the shopper is spending a lot of money, he or she would rather see the product and get input from a sales associate.
Consumers also like the immediacy of buying such products in stores.
Amazon's stores could be an opportunity to sell more big-ticket items.
4. In-store pickup is preferred over home delivery.
Many consumers experience anxiety about valuable products being delivered to their homes and feel that in-store pick-up is a safer option, AT Kearney analysts write.
Shoppers also like the instant gratification of taking home their new purchase.
Having a physical store could help Amazon sell a wider range of products. It could also help shoppers feel more connected to the brand.
5. Returns are much simpler.
"This clear preference for in-store returns is a product of the desire for accessibility, immediacy, and time efficiency, which translates to a behavioral pattern of returning products to the nearest store," AT Kearney's analysts write. "And this is great news for physical retailers."
The ability to return items to a store could also help drives sales at Amazon because shoppers would feel like their purchases were less of a risk.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.