It looks as though my prediction of Amazon’s showroom is about to come true. Michael Kozlowski at Good-E-Reader has the skinny:
Amazon sources close to the situation have told us that the company is planning on rolling out a retail store in Seattle within the next few months. This project is a test to gauge the market and see if a chain of stores would be profitable. They intend on going with the small boutique route with the main emphasis on books from their growing line of Amazon Exclusives and selling their e-readers and tablets.
[…]
A source has told us that they are not looking to launch a huge store with thousands of square feet. Instead they are going the boutique route and stocking the shelves with only high margin and high-end items. Their intention is to mainly hustle their entire line of Kindle e-Readers and the Kindle Fire. They also will be stocking a ton of accessories such as cases, screen protectors, and USB adapters.
This was an inevitable move. And given that it’s Amazon, the customer service will be out of this world. I hope they also have parking, and are next door to a luscious restaurant/bar/cafe. And performance space.
Comfort. Good light. Easy access. Good coffee. Excellent service. Book toys to play with. Book accessories to croon over. Books to actually heft and fondle. Joy in the job. My guess? This will be a Seattle readers’ paradise.
Readers don’t much care about the economics of publishing, or the long-term game. They want a relaxed, thoughtful, well-informed and, above all, easy shopping experience. Amazon will give it to them.
Indies will have to pick up their game. And soon. Rumour never escapes Amazon’s event horizon until they are ready to implement.
Nicola Griffith 
It's been my experience that indie bookstores are started and continued by people who love books. Does Amazon love books?
barbara, I think some of them do, yes. But it's a big corporation.
A vertical monopoly that doesn't have to pay taxes? Can't see any problems there! Compete or die, non-subsidized non-corporate non-monopolies! He said, opinion completely his own.
mordicai, they pay taxes here in Washington.
The only taxes Amazon avoids (as does any online-only retailer) are sales taxes. To avoid taxes in other states such as California, they stopped their affiliate program there. Any state they put a retail store into will force them to charge sales tax for any online sales in that state.
It is not Amazon who will pay the tax, it is their customers. Amazon will not pay tax, but collect it; that will cost them some money to do however. I find it odd that people blame Amazon for the tax laws.
Businesses that buy products online (not for resale) and do not pay sales tax are supposed to report that on their sales tax return and pay it themselves.
But I'm guessing that the retail store/sales tax issue will be carefully considered by Amazon. Until Apple had retail stores, there was no sales tax on Apple products outside CA.
As a small business owner, I detest having to compute, collect, save, and pay the state it's sales tax. Why don't I get paid to do that for them?
Jennifer, people complain because not collecting sales tax from a state's residents gives them an 'unfair advantage' over independents (and chains) with bricks-and-mortar stores in said state. But that will change soon enough: I doubt it will be long before Congress rethinks the whole sales-tax-free status of web-based shopping.