Amazon store gives taste of retail future in UK

Amazon's first bricks and mortar store in London will not be a threat to leading supermarkets in the United Kingdom, but the big stores will be paying attention, say retail experts.

The e-commerce giant opened its first till-less grocery store outside the United States last week in Ealing, west London, where shoppers can pick up their items and leave without waiting to pay at the cashier.

The Amazon Fresh store is available to Amazon customers who would need to scan in a code on their phone to enter. Shoppers then pick items off the shelves without scanning them, and the bill is automatically charged to their Amazon account when they leave the store.

The store deploys Amazon's Just Walk Out technology, which uses cameras to track shoppers and their purchases.

Karl McKeever, a retail analyst and director of retail agency Visual Thinking, said the UK store means "simply there is an opportunity to extend the consumer's broader relationship with Amazon in a market where trust, reputation and positive experience has been established".

McKeever explained groceries are an important category for retailers as food for the home accounts for a significant percentage of shoppers' regular expenditure.

"Consumers will typically remain loyal to a retailer for many years, if they are generally satisfied, creating an important ongoing revenue stream. It is why loyalty is so hard won and fought over," he said.

The Amazon Fresh store in the UK is not competing with already established big supermarket names, but "through high innovation, and extensive PR and outlet technology" it is learning about the convenience and grocery market in the UK, "to potentially open a small number of stores in travel hubs and key city locations, with the greatest profit opportunity", he said.

But as Amazon ramps up services, it could put pressure on other retailers to raise their game.

"All big retailers will take notice. It offers the prospect of disrupting the established sector model and creating an innovative game-changing shopping experience that some shoppers may like," McKeever said.

'Consider alternatives'

He added Amazon could push other retailers to "consider their own operations and alternatives".

Nick Carroll, associate director of retail at global market researcher Mintel, said: "Naturally being an Amazon store it has unique technology woven into it, but notably Amazon has 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."

According to Mintel's latest research, 76 percent of Britons surveyed said they would shop at a physical Amazon grocery store.

Carroll pointed out the e-commerce giant "will not be looking at this new store as simply a 'one-off' experience for shoppers".

"It will want to create engagement that keeps shoppers returning by building on the basics it got right in the US, including an aggressive pricing strategy and a full range offering of all the categories you would expect to find, from big name brands to Whole Foods ranges and Amazon's growing private label offering," he said.