By The Drum Team | Editorial

April 30, 2021 | 6 min read

Amazon’s rollout of its cashierless stores is in full swing, with three popping up in London in just a few short months. But what’s the long-term game plan? Is it really a Tesco competitor, or a trojan horse to hook other retailers on to its tech? The Drum’s founder Gordon Young finds out.

Amazon opened its first till-less grocery stores – a ‘just walk out’ shop – in London’s Ealing, Wembley and most recently White City.

Out to prove it’s not just a gimmick with a few products to choose from, the stores stock hundreds of own-brand items, as well as a wide range of third-party products from brands including Morrisons and Booths. The stores also contain a counter where online orders can be delivered and returned.

The experience

Amazon’s pitch is simple: visitors scan their smartphone when entering, they collect what they need and are automatically billed as they leave and later emailed a receipt.

However, the reality for a first-time shopper was a little less frictionless. As Steve Hewett, VP at Capgemini, points out, the process can be clunky if you don’t have the app already downloaded and set up with payment information. “It can be a bit of a faff,” he says.

The technology behind it is in plain view throughout the store. Cameras line the aisles to keep track of customer movements, while weighted shelves and shopping baskets record when a customer has ‘bought’ something.

Despite facing some criticism from privacy campaigners for creating a dystopian, total-surveillance shopping experience, Rob Holland says he didn’t find it intrusive. “It doesn’t feel like Big Brother,” said Holland, the managing director at IoT agency Sharpend. “They make it clear they are tracking your app, not you as a person.”

Hewett, on the other hand, was overly aware that he was being watched: “I found it a little bit disquieting.”

Young, Hewett and Holland were all impressed by the orderly, clean, almost clinical layout of the store and product display, but questioned how Amazon would be able to maintain this with minimal staff as the stores attract more shoppers.

“They have reduced staff at the checkout but they might need more staff to ensure the shelves are kept pristine so that the technology works,” Hewett explains. “It will be interesting to see if that then pushes up the prices.”

The long-term plan

So, what is Amazon’s big plan for its shop-of-the-future concept? With just three UK locations it’s still very much in its infancy, but already questions are being asked if the e-commerce giant really has the ambition to take on physical retailers including Tesco, Asda and Sainsbury‘s in the crowded grocery sector.

Aaron Shields, executive strategy director of experience at Landor & Fitch, says if it really wanted to then there’s no better time, as all important high street estate becomes more available on the back of the devastating effect the pandemic had on small retailers.

“There’s no denying that Amazon Fresh stores threaten to upset the status quo. As traditional grocers continue to work out how to run a dual physical and digital distribution, Amazon Fresh Stores – backed by the company’s deep pockets – has the name and legacy to position itself as the new hyper-convenient grocery shop on the block. Especially for its 15 million Prime customers,” says Shields. “Amazon will likely look to take advantage of this and launch Amazon Fresh stores in locations where some of its most affluent Prime customers live and who are happy to walk to their local stores for their grocery shop.”

But Hewett says opening a single store at a time is a slow and expensive route to market, and if Amazon really wanted to have a stronghold in the UK grocery sector then an acquisition would make more sense. It has already bought Whole Foods, which only has a handful of locations in Britain.

More likely is that the company is trying to sell its Just Walk Out tech on to other retailers and is using its own stores not only as a proof case to them, but as a way to create demand among customers.

“Amazon Fresh hasn’t been introduced to merely generate profit, however. It could be a savvy move to convince other companies to invest in Amazon’s technology. If the roll-out is successful, it showcases to other businesses that consumers want an innovative shopping experience,” Naji El-Arifi, head of innovation at Wunderman Thompson Commerce.

“We know that consumers care about speed and convenience (75% of consumers wished that all retailers and brands offered the same level of service as Amazon), so once they get a taste of the most seamless high-street shopping experience they’ve ever had, it’s highly unlikely they’ll find a better one elsewhere. Amazon knows there is money to be made and customers to be won over. What’s more, supermarkets have been privy to this demand for a frictionless experience for years, hence why many offer scan and shop and click-and-collect options.”

However, the challenge will be finding the balance between stopping Amazon from dominating the market, and working alongside the behemoth to have a fighting chance in a very crowded sector.

“It is like a switch going off. Now going to a till ever again will feel like walking back in time. That will catalyze everyone to up their game,” says Holland.

The Future of Retail will be explored at The Drum Labs, our three-storey innovation space which is home to the most forward-thinking brands, product designers and retailers. To find out more visit the website.

Technology Brand Strategy Ecommerce

More from Technology

View all