Future of Work

Amazon’s cashier-free bricks-and-mortar grocery store could be a better fit for Britain than the US, experts have said.

The online retail giant has announced that it will open a store in Seattle next year and use technology that automatically detects when products are taken from or returned to shelves, allowing customers with the Amazon Go app to walk out of the store without queuing or scanning their items.

Shortly after leaving, customers will be charged for their shopping via their Amazon accounts.

Amazon has not indicated whether international stores are in the pipeline but Nicla Di Palma, an equity analyst at wealth manager Brewin Dolphin, says the model may be more successful on this side of the Atlantic.

“I would say that it is even more likely to work in the UK than in the US,” she said.

“For example, one of the reasons why Fresh & Easy -Tesco’s business in the US – did not succeed was that they were focusing on self-checkout, whilst the American consumer likes service.

“Obviously, Amazon would be a pure play but I am sure that Tesco, Sainsbury and the other majors could come up with a similar solution. Tesco already has a “scan as you shop” model.”

Self-scanning technology has gained traction in Britain, where cost pressures such as high rents, the national living wage and import cost inflation as a result of the collapse of the pound have encouraged retail models that cut costs, increase sales volumes and reduce wait times, Peel Hunt retail analyst John Stevenson said.

“As a nation I wouldn’t say we fully embrace, but are happy with models like self-scan and, therefore, it could certainty be the next phase,” he said.

It could also address issues around self-service, where customers accidentally or purposefully scan items incorrectly, but it could be years before the technology is widely adopted, Mr Stevenson added.

Amazon already has a presence in the British grocery market through a wholesale deal inked with Morrisons earlier this year.

But if Amazon Go was to expand in Britain, it might be hindered by limited commercial retail space. Clive Black, a retail analyst at Shore Capital, said: “Building a notable real estate network is not quick nor easy noting that the best grocery locations in the UK have already been snapped up. Additionally, offline grocery retailing implies a lot of new disciplines in terms of merchandising, waste management and shrinkage.

“Such factors do not apply online.”

The concept is in early stages, though, and may not even work in the US, Mr Black said. Amazon’s 1,800 square foot (168 square metre) Seattle store is set to focus on food-to-go, groceries such as milk, bread, cheese and chocolate, and will sell Amazon Meal Kits.

Companies such as Apple launched their own version of self-service via their app back in 2011, but that model of scan-and-go has yet to go mainstream Stateside.

“Amazon is not afraid to fail fast, and experiment with innovative solutions to determine what the ultimate shopping experience looks like,” Malcolm Pinkerton, the vice president of eCommerce & Digital Insights at Kantar Retail, said

“While we might not see these stores in every major city, as a technology business, it would not be surprising to see Amazon making the solution available to retailers as part of the services offered in its ecosystem.”

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