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Illustration: Rebecca Zisser/Axios

Amazon has reached staggering heights and revolutionized shopping in the U.S. and beyond, but CEO Jeff Bezos still sees a threat: the physical stores he has supposedly vanquished.

The big picture: For all the hoopla around e-commerce, physical stores continue to command some 90% of the retail pie in the U.S. — and will for at least another decade, experts predict. That has left Amazon and other online retailers preparing to set up their own physical stores, with the aim of capturing as much of the remaining pie as they can.

What's going on: Big chains have shuttered stores, but U.S. physical retail is alive and well.

By the numbers:

But the big players in both worlds are betting that the future of retail will be a hybrid of online and offline, pairing the perks of each model. Large Chinese retailers have been at this for years, and now Amazon is embracing the strategy too, opening its third Go store in Seattle earlier this month and planning 3,000 more by 2021.

"You don't get a full picture of your consumer if you're only online or offline."
— Alibaba spokesperson Brion Tingler

There is logic to the hybrid strategy. In a physical store, you can touch what you're about to buy and take it home right away. Online, you can order something delivered to your door with a single click.

  • New retail gives you some of both: it injects tech into physical stores, and gives online platforms brick-and-mortar homes.
  • Shoppers transition seamlessly between both experiences.

An example is the cashier-less corner store, like Amazon Go, where you grab your snacks and just walk out. Machine vision takes care of checkout.

  • Amazon has some competition in this space. Silicon Valley startup Standard Cognition has developed automated checkout and is working with four retailers to outfit their 70,000 U.S. stores with the tech, co-founder Michael Suswal tells Axios.

Reality check: Unmanned stores and smart checkout are already mainstream in China. JD.com has 20 unmanned stores, including one abroad in Indonesia. And Alibaba owns and operates 64 futuristic supermarkets. Both are also peddling the technology to over a million smaller shopkeepers in China.

The key advantage to brick-and-mortar stores is that they control shoppers' experience. And physical stores are leaning into this, thinking carefully about cool interior design or top-notch customer service to make the schlep to the store worth it.

  • Younger, digital-first brands moving into physical retail make sure their stores are Instagram-ready to attract millennials and Gen Zers.
  • Reformation, a women's clothing store, uses iPads so shoppers can build virtual shopping carts. Then, when they enter dressing rooms, the clothes they picked are waiting for them, in all the right sizes.
  • Neighborhood Goods, a startup with $6 million in venture capital money, is calling itself "the department store of the future." The store will have about 25 small brands — from sneakers to bedroom furniture to contact lenses — in the form of pop-ups within a big open space. In the middle, there'll be a restaurant.
"We're not trying replace Nordstrom's or Macy's. ... We're trying to emulate retail as it was 100 years ago. It's about an experience that has been specifically curated for where you are."
— Neighborhood Goods co-founder Matt Alexander

Amazon doesn't intend to be left in the dust. Thursday, it opened a store in New York City called "Amazon 4-star." The shop features goods with 4-star ratings or higher on the site, and swaps out the offerings based on what's trending locally.

Go deeper

More corporations are requiring workers to get vaccinated

Graphic: Axios Visuals

Life for the unvaccinated could get more difficult as bosses increasingly move to make COVID-19 vaccines mandatory.

The big picture: The federal Government in May said that it is legal for companies to require employees to get vaccinated for coronavirus.

White House: Over 500,000 new shots recorded Friday, highest since July 1

Photo: Anna Moneymaker/Getty Images

The United States recorded more than half a million new COVID-19 vaccine shots on Friday, the highest number since July 1, White House deputy press secretary Karine Jean-Pierre said.

Why it matters: The Delta variant is continuing to spread across the United States and it now comprises over 80% of the coronavirus cases in the country, Jean-Pierre said. A report from the Centers for Disease Control and Prevention noted that "vaccination is the most important strategy to prevent severe illness and death."

Biden to announce sanctions, other efforts to address crisis in Cuba amid protests

Photo: Sarah Silbiger/UPI/Bloomberg via Getty Images

President Biden will announce sanctions against one entity and two Cuban individuals this afternoon and provide details on his administration's efforts to improve internet connectivity in Cuba, a senior administration official said Friday.

Why it matters: After initially hoping to place the issue on the back burner, the White House has recently ramped up its focus on Cuba amid protests on the island and in the United States, congressional backlash and political pressure from the South Florida Cuban community.

  • The president is also expected to make announcements on remittances and plans for U.S. embassy augmentation, the official said.
  • The official noted that the administration is in talks with private sector providers about the possibility of providing wireless LTE communications to the Cuban people.
  • "Given the protest of July 11, it is important for U.S. diplomats to engage directly with the Cuban people and if we can do that in a way that ensures the safety of U.S. personnel, that is something that we will undertake," he said, noting that the president would announce more details later this afternoon.

The details: The president will meet today with Senate Foreign Relations Chairman Sen. Bob Menendez (D-N.J.), a Cuban-American, and House Foreign Affairs Committee Chairman Rep. Gregory Meeks (D-N.Y.), among other political and community leaders and artists.

  • Sen. Marco Rubio (R-Fla.), an outspoken voice on Cuban issues, is not expected to attend the meeting.
  • The meeting follows a series of engagements by Cedric Richmond and the Office of Public Engagement with the Cuban-American community, the official said.

What they're saying: "We're gonna do everything we can to keep Cuba on the front burner, so we can keep the conversation on the rights of the Cuban people and their rights to manifest peacefully," the official said on the call with reporters.

Be smart: Cuba is a tricky political issue for Democrats, who are split on the matter. The president was defeated by Donald Trump in South Florida during the 2020 election, and Democrats fear similar results, particularly in the upcoming midterms, if they mishandle the situation.

Go deeper: The newly announced sanctions today will follow already imposed sanctions against Cuban officials and entities allegedly responsible for human rights abuses during the government's crackdown on island-wide protests earlier this month.