Business Insider talks about why Amazon might venture into physical retail and nail it when they say:
Firstly, Amazon doesn’t have anywhere to express its brand or showcase its products. When it was a huge marketplace for other people’s merchandise that wasn’t such a problem but as it has moved into its own branded consumer electronics the need to demonstrate its range has become more crucial, especially as a means of brand-building.
Secondly, the RadioShack outlets would provide Amazon with a ready-made and extensive national infrastructure for collection and returns, or even act as a distribution point enabling the speedier delivery of goods to local customers, a service the company has recently launched from a new site in Manhattan.
One can say it comes down to three things; showing off your products, showing off your brand and receiving returns. It could be argued that much of the footprint of physical retail today is not profitable but for the reasons above (among others) physical retail is not going to go away.
Source: Business Insider