I'm in Seattle and currently an employee at a large chain retail bookstore that shall remain unnamed.

Like tubemonkey, the Amazon store is a little bit away from me so I have yet to make my way there. And has been mentioned, it's an upscale mall so it has little interest for me, but I do want to check the store out at some point. The profitability question is a pertinent one, as there used to be a B&N there that moved out, presumably due to rent costs. I'm intrigued by their approach, it sounds like the first thing that's been differently in terms of bookselling since stores started incorporating cafes.
I don't think this is nearly the threat to indie bookstores as some people fear. Indie stores already have their loyalists and most wouldn't shop at a national chain store anyway. The national chain stores though, they do have something to worry about. From what I'm seeing, the success of the big chain stores relies heavily on the naivete of senior citizens who are afraid of technology (and are easily manipulated by upselling and membership promotions). I'm curious to see how this will pan out long term, and although my job may be at risk, I kinda want to see Amazon succeed. Their $18/hr wage certainly doesn't give me warmer feelings to my current employer.