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Pressure From Old-School Retailers Could Be Pushing Amazon to Open a Store

Quick delivery options from Target, Walmart and even Macy's could be behind the online giant's possible move into physical retail space.

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If Amazon follows through on its reported plan to open up a store in New York City, its customers may have Target, Walmart and other big-name retail chains to thank.

The Wall Street Journal reported on Thursday that Amazon will soon open a physical store on 34th Street where customers can pick up and exchange online orders and eventually may be able to purchase Amazon e-readers, tablets and phones. The space will also double as a mini warehouse, the report says, from which couriers will whisk off online orders to Amazon customers who live in the city.

While Amazon has for several years considered opening up its own store, the timing indicates that it recognizes that new delivery and in-store pickup options at big retail chains pose a threat to its plans for total commerce domination. Over the past year, several big brick-and-mortar retailers have been accelerating the rollout of programs that allow customers to pick up their online orders in stores. Retail store chains such as Target, Best Buy and Walmart have also started shipping some online orders directly from stores, cutting down on delivery times in the process.

Macy’s, too, is getting into the mix. This fall it will offer same-day delivery in eight major cities, thanks to a partnership with the startup Deliv, for orders placed on Macys.com and Bloomingdales.com.

These programs are meant to take advantage of something Amazon lacks: Hundreds of physical locations around the country. They are also meant to combat the increasing speed with which Amazon is getting packages to customer doors, but without the logistics network that Amazon has created.

Target digital exec Jason Goldberger said in a recent press briefing that, over the next several months, Target’s online shoppers should start receiving orders on the day after they are ordered for no extra charge. How? Target is using 140 of its stores as mini shipment centers, and Goldberger expects that number to grow. These next-day deliveries will be free for customers who use Target’s Redcard or non-cardholders who spend more than $50 on an order. That is some serious competition for Amazon’s Prime $99 membership program, which offers two-day delivery for no additional charge.

As a result, Amazon is recognizing that it should at least experiment with physical outposts of its own. And its experimentation in physical stores may not stop there. As I reported in August, Amazon has also been considering whether it can use physical mom-and-pop shops as pickup and delivery locations for online orders.

“The strategy,” I wrote then, “could also advance Amazon’s goal of getting a greater percentage of orders into the hands of customers on the very day they are ordered and fulfill one holy grail of retail — instant gratification at scale.”

With traditional retailers increasingly taking steps in the same direction, Amazon likely decided the quickest way to experiment with physical retail was to open its own store. Sometimes you need to look to the past to see the future.

This article originally appeared on Recode.net.

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