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AMAZON FRESH HITS UK
NOW THAT’S A GOOD IDEA…AMAZON FRESH
AMAZON FRESH HITS UK
AMAZON’S NEW ‘JUST WALK OUT’ STORE IN LONDON POTENTIALLY SIGNALS THE DAWN OF A NEW ERAIN THE CONVENIENCE RETAILING CHANNEL – BUT HOW MUCH OF A THREAT IS IT?
WHAT’S THE BIG IDEA?
The worst kept secret in retail: Amazon Fresh opens its first ‘just walk out’ UK store in Ealing, West London.
QUIET LAUNCH THEN?
Just a bit. Snaking queues around the block as shoppers took a liberal approach to social distancing to check the new store out.
SHOULD OTHER RETAILERS BE WORRIED?
Yes. Despite many industry observers dismissing it as a single store with a questionable range and gimmicky technology, the move is potentially a watershed moment for convenience retailing in the UK.
WHY?
In a word, data. Amazon already holds a colossal amount of personalised customer data thanks to its all-conquering online operations; its increasing presence in bricks and mortar retail through Whole Foods and Amazon Fresh means it is able to begin merging the online and offline shopping worlds. Mintel estimates that almost 95% of UK shoppers use Amazon, giving the tech giant access to an almost unfathomable amount of data and insight around shopping habits, trends, patterns and individual transactions – down to the individual human being level. Amazon Fresh extends that insight even further into the realm of bricks and mortar shopping.
ARE THE STORES ANY GOOD?
In terms of ranging, merchandising and store environment, they’re decent, but not ground-breaking. It’s the tech that is special. On a trip to the original Amazon Go store in Seattle with a few local retailers from Scotland, we tried every insider trick in the book to try to steal something (after telling the staff we were doing it). We failed. The camera-based tech just works – and the bemused looks from staff suggested we weren’t the first to give it a go.
BUT IF THE STORES AREN’T THAT OUTSTANDING..?
That misses the point. Getting the store right is the easy bit. Getting the tech right was the difficult and hugely expensive bit.
IS THE TECH BETTER THAN OTHER OPTIONS?
Frankly, yes. There are some fantastic solutions on the market for local retailers but they all involve at least a little friction that you don’t find with the Amazon solution. Shoppers scanning QR codes, scanning individual products as they go and so on is a huge step forward in terms of making the customer journey far, far simpler – but ultimately that tech will have to evolve into a full ‘just walk out’ solution.
SO IT’S ALL ABOUT TECH?
No. Ultimately, it’s not the tech that matters. All truly great tech solutions become invisible. Tech should be a facilitating factor, not a goal in itself. Amazon clearly understands that. The ultimate goal is sales, facilitated by tech and underpinned entirely by data. To see this in real life, ask yourself how many convenience stores that use clever in-store tech actually capture customer data and use it to drive future activity and decision-making. For Amazon, the tech only exists to allow the company to capture data. The sole purpose of the ‘just walk out’ technology is data capture. Yes, it makes the instore experience frictionless and seamless and novel and exciting and slick. But it’s the data that Amazon is after. The customer is almost literally the only thing that matters to Amazon – and to understand the customer at the deepest possible level, Amazon needs data. And not just data, data that’s personalised to the individual.
WHY PERSONALISED DATA?
To enter Amazon Fresh you must scan in at the door – thus identifying yourself to Amazon. Everything you do thereafter is caught on camera and on the transactional log. Amazon knows everything you did in-store. What you bought, what you looked at but didn’t buy, what you picked up then put back, how long you spent at each fixture, how many promo items you bought, when you visited, how long you spent in the store, how often you visit the store. You get the idea.
WHAT DO THEY DO WITH ALL THAT DATA?
Give customers very, very precisely what they want in every sense. And in the future we will see an increased merging of online and offline by Amazon. That will impact on the customer experience on Amazon’s digital and bricks and mortar platforms.
SO, IS EVERYBODY THAT ISN’T AMAZON DOOMED THEN?
Absolutely not. Even for a company of Amazon’s deep pockets, scaling up won’t be easy. And there are already significant ‘big brother’ concerns being raised about the potential breach of civil liberties as Amazon gathers personal data footprints that vastly outweigh those of any other business. This is potentially the biggest challenge that Amazon will face: the UK government stepping in to put the legislative shackles on Jeff and co’s immense data-gathering ambitions.
SO IT’S A RACE AGAINST TIME?
Possibly. Amazon does have very, very deep pockets. In the fourth quarter of 2020 alone, the company’s revenues were a staggering and record-breaking $125.56bn. In three months. For the full year, Amazon reported net profits of $21.33bn which was an 84.1% increase on the previous year. The point being, Amazon has the means to grow its convenience store estate quickly, if that’s what it plans to do. How big can it get before the government acts? And Amazon will undoubtedly argue that concerns about civil liberties clearly aren’t all that important to consumers, to the civilians the government is supposed to be there to protect.
