Why Amazon’s new store shows the high street is “far from over”

Just as independent food retailers were learning to master the world of e-commerce, digital retail giant Amazon threw the industry a curveball, opening its first physical store outside the US in Ealing, London.

But it’s no ordinary food shop – Amazon Fresh sells prepared meals, fresh groceries and Amazon devices, and it has a counter for picking up and returning online orders. The shop is also till-free, with customers able to walk out without paying thanks to Amazon’s ‘Just Walk Out’ tech, which uses a system of cameras, sensors and algorithms to track the items a shopper picks up and bill them automatically.

Matt Birch of Amazon Fresh Stores UK said the aim is to create as convenient a shopping experience as possible, reported Sky News. “We recognise that UK customers want to shop in a convenient way so we really think they will appreciate being able to walk in and walk out with the shopping they need.”

What can independents learn from Amazon’s new shop, and can fine food retailers use some of Amazon’s tactics to maintain or even grow their audience?

1. Physical retail isn’t over

Despite the huge growth of e-commerce over the past year, the physical retail experience is still desirable for consumers. “Amazon’s move to a physical store is a major signal that the high street is far from over,” Michelle Ovens CBE, founder of Small Business Britain told Speciality Food.

“While the pandemic has accelerated changes to our towns and cities that have been coming for some time, the trend for people to support small businesses and shop locally is also reshaping things.” In fact recent research from ThoughtWorks revealed that 31% of shoppers plan to buy more locally produced food to support their community going forwards. “It is no surprise that Amazon has chosen to test its first physical store in a thriving local community like Ealing,” Michelle said.

2. Novel experiences can boost interest

Amazon’s ‘Just Walk Out’ technology is the centrepiece of its Fresh format. Nick Carroll, associate director of retail at Mintel, said this makes the Ealing store a ‘destination’. “Naturally being an Amazon store it has unique technology woven into it, but notably it also focused on the basics. So we shouldn’t look at this as a direct assault on the grocery leaders. This is a destination store and a technological show of force from Amazon, designed to give shoppers a glimpse into the future,” he said.

Indeed, this is something that independents can look to replicate – albeit without the expensive tech. “The launch has, of course, received a lot of attention, partly because it is offering shoppers a novel in-store experience,” said Michelle. “Small retailers can also generate buzz by being creative, even if they don’t have this type of technology on offer.”

Some indies have already done this over the past year by installing on-site vending machines. The key is in finding something that not only generates interest and transforms a shop into a destination, but also serves a purpose. For example, during the pandemic vending machines have offered a safer and easier way to purchase goods with social distancing. Once social distancing is no longer in place, however, they still offer the benefit of extending trading hours and improving food hygiene.

3. Accessibility and convenience matter

The convenience Amazon offers its customers through offerings like next-day delivery and ‘Just Walk Out’ tech continues to be a key selling point for the e-commerce giant, especially for younger generations. While Mintel’s research found that just 17% of Brits were drawn to the prospect of cashier-less technology, that number rose to 27% of 16-24 year olds.

Moreover, 44% of respondents cited the importance of a quick shopping experience thanks to Covid-19. “In the current climate, it is very practical as shoppers are cautious about spending too long in-store,” Nick said of the till-free technology.

Indies often position themselves as the point of difference to impersonal shops like Amazon – they offer a place where customers come to linger, chat and discover new products. However, the pandemic has shown that these ideas are not mutually exclusive. “The pandemic has seen many small businesses become a lot more accessible to customers by offering local delivery, click and collect and takeaways. Many are also now offering these services nationwide, allowing them to reach a much bigger audience,” Michelle said.

“Look at the fabulous independent restaurants offering meal-boxes to people all over the country, for example. It is definitely worth thinking about how you can bring greater convenience into your sales and delivery channels.”

4. Embrace technology

“Independent retailers should embrace digital tools like e-commerce and the multichannel retail model as much as possible,” Michelle said. “But that also means looking at how they can make the most of digital platforms like Amazon or Ebay, which offer a lot of marketplace opportunities for small sellers.”

Countless new marketplaces have recently emerged for the food sector with a focus on helping local producers and retailers extend their reach beyond their local communities, or to simply make the process of online shopping easier for customers. We recently rounded up seven online marketplaces that offer interesting opportunities for indie retailers.

5. Focus on loyalty

Mintel’s research uncovered an interesting fact about Amazon Fresh: when asked what would encourage them to shop at a physical Amazon grocery store, almost two-thirds of consumers said they would be attracted to discounts for Prime membership.

“Amazon Prime is central to Amazon’s consumer-facing business. It is the glue which holds the potentially disparate retail, services, and products together, and it is a core way for the business to derive more than one revenue stream from its millions of users,” Nick said.

What can indie retailers learn from this? Building loyalty is key. Michelle shared an example of how creative thinking and a personal touch can influence this: “Our local pub has a really simple and effective ‘text’ system for ordering takeaways. People don’t forget this type of service and it adds up to customer loyalty.”

Driving loyalty from the perspective of a fine food seller may not be as simple as offering Amazon Prime, but considering what sets your business apart can be a good starting point. “People turn to small businesses for the personal service they get, the unique goods they offer and their links to the local community, so this is a real USP to make the most of,” Michelle said.

Amazon’s grip on e-commerce is significant, but retailers that take Amazon’s strategies and apply them to their own business’ USP may be able to discover the best of both worlds.