Amazon secret recipe to save the physical store

The Amazon-Calvin Klein pop-up stores in New York City and Los Angeles may be just what brick-and-mortar retailers need to bring online shoppers back to the real world, Morgan Stanley’s Brian Nowak said.

Amazon is banking on its loyalty with consumers who rely on the company for the best prices, Nowak said. When it comes to brick-and-mortar, that transparency “could encourage more people to shop in store rather than online,” he said.

The key way it does this is by having consumers experience dynamic pricing while at the shop, prompting shoppers to scan the barcodes of items in order to see the ever-changing prices. The prices will match what’s on Amazon.com, which is often the lowest price, Nowak said.

The Amazon-Calvin Klein pop-up also offers free personalization and customization of basic items, such as underwear, the mainstay of Calvin Klein’s brand. It is also offering exclusive merchandise, which can only be found in the store or at the ‘My Calvins’ online brand store on Amazon.com.

“This phone scanning and dynamic pricing combination is another example of Amazon’s attempt to change consumer behavior/expectations in the offline world in a way to build trust with consumers that they are always getting the lowest price,” Nowak wrote in a note.

Amazon’s outsized influence as an ecommerce giant has retailers scrambling to stay relevant as it eats away at brick-and-mortars’ market share, particularly in-store sales. When Amazon announced a partnership with Nike in June, it hit Dick’s, Under Armour, Foot Locker and other competitors with many retailers reporting dismal third-quarter earnings.

The company’s attempts at providing a different shopping experience in brick-and-mortar stores may be what saves the retail industry and brings shoppers back to physical stores.

Amazon’s stock is trading at $1,133.97 a share and was up 50.39% up for the year. PVH Corp, the parent of Calvin Klein, is trading at $134.28 a share and is up 47.64% for the year.