Knowledgeable, helpful employees would be the key here. They have the brand name and Amazon is just as big of a household name as Walmart. If they can somehow keep the prices lower than Best Buy (for electronics) and offer up knowledgeable, helpful employees and CS reps that actually care then they have a recipe to crush the other retailers.
They could also offer up unique items not sold anywhere else, amazon has a ton of unique food items and other items not typically sold in retail stores which could help drive customers to the stores.