There’s been plenty of hype and comment surrounding the opening of the Amazon Fresh store in Ealing (West London) this week. But the vast majority of it only picks up on it being the first contactless store in the UK, and Amazon’s first outside of their experiments in the US. And misses an equally important element – Amazon’s ability to execute a compelling UK grocery offer in competition to some of the world’s most accomplished food retailers.
I visited mid-morning on the Saturday before Mother’s Day and found an impressive shop – well beyond the headline, iconic, no-checkout operation.
First impressions were of an attractive, well laid out convenience store with clean lines and easy navigation. With upbeat music and friendly staff – not that you needed them.
A sensibly curated assortment (judging as a consumer, rather than with any data – I’m not a retail food buyer). Everyday low pricing (EDLP) included some judiciously stunning prices giving a strong overall price perception (e.g. a nice looking ‘By Amazon’ chicken pie for £1.50 next to Higgidy at £3.90). Promotions were conspicuous by their absence. Could Amazon’s wider price perception be the brand that is needed to wean us off hi-lo grocery pricing?
A surprise for me was a strong sense of quality both from product freshness and a nicely executed, unfussily branded, extensive own label offer. It understands the importance of a strong fresh bakery offer. With a few (very few) Morrison’s label products, which remind us of the tie-up they have, along with the strongest category brands. The only disappointment was the alcohol section – just about reasonable on wine but weak on spirits & beer – might have been an early availability problem rather than ranging. This was behind a manned ‘entrance’ for age checks.
A bit of trading nous would be behind a seasonal lead gondola end – with very nice quality flowers for Mother’s Day. Flower of better quality than even Waitrose or M&S and plenty to replenish when I had a sneak peek behind the scenes. The macro space and product development understood the importance of a strong fresh bakery offer.
A small hole in the wall ‘Amazon Hub’ makes it easy to pick-up and drop off Amazon parcels – with less front-of-house footage taken than with the Amazon lockers in my local Co-Op.
The curiosity was the space & window prominence given to coffee – maybe I don’t understand enough about market value for ready-to-drink coffee but this seemed to be over footage and not the strongest perception driver to the main link between pavement and store. Maybe the coffee machines and speed of self-service is judged to be additional evidence to the overall speed/convenience proposition. But I’d have preferred to see more prominence to the excellent fresh food offer.
Then on to missing checkouts. Which I found, actually, to be pretty bloody awesome.
Seeing a store without checkouts beautifully lands how much space is taken up by checkouts - much more valuable re-purposed for the product.
The experience as a customer is seamless - easy app check-in at the entrance (normal Amazon app), and an e-mail a couple of hours after exit charging your card. The tech is all ceiling mounted and unobtrusive. Personally, I suspect any debate about personal liberties & privacy will be quickly forgotten. And it works. Of course, I tried to trick it - picking the product up and putting it down - but all were captured perfectly.
The configuration and thinking to get the software to work makes my head hurt, I bow down to the boffins that can make that kind of thing happen. But I don’t get the impression that the hardware and capital spend would be too prohibitive. 3 scanners at the front, wi-fi boosters occasionally, then two ceiling-mounted angled cameras every metre or so. Intuitively the return on investment - capital costs versus freed up selling space, reduced staffing, and a more convenient experience - feels achievable. You’d have to factor in some chunky data, might be handy that there’s a cloud storage company in the family! It would be an easier business case for a new shop (in this case in a repurposed unit) rather than retrofitting an existing convenience store.
Most critically, it was one of those tech experiences where, as a customer, I loved the thought and design of the experience. It made me smile – in the same way, I still smile with the ease and wonder of traveling around London tubes and buses just tapping my phone. Cycling to Ealing I wondered whether it might feel like a gimmick or, as I too often see as an investor, ‘a tech solution desperately searching for a problem to solve. But absolutely not. It feels like there is significant value in the convenience and speed. If I was a local it could well snap me out of indifference between branded convenience stores and garner my loyalty, given that the rest of the proposition is as good as, and in some ways better, than the competition.
Amazon’s customer focus shines through. Along with a sense that owning Wholefoods and working with Morrisons and Booths in the UK is helping them tackle physical grocery. It feels like they have gained a march over all other convenience stores – all the more remarkable given their online grocery feels like a poor relation to Ocado or Tesco.
Usefully for me as an innovation consultant, it is a compelling example of strong proposition development. With one, super-strong ‘iconic action’ at its core – that thing you’ll tell your mates about. Supported by multiple ‘experience cues’ that in themselves are not so newsworthy, but ladder up into a proposition that is much stronger than the sum of its parts.
So cycling away, I was pondering where this may go. Tesco started experimenting with self-checkout in 2003 (yes 2003, really). My sense is that with Amazon’s economic heft and customer obsession this technology will take hold much more quickly (beyond just the 10 London locations that are rumoured to have been identified already). It feels like the convenience offer that Morrisons has always deserved. And I’d love to see what Morrison's vertical integration and Amazon’s technology could do with a full-line supermarket. I certainly won’t bet against a closer (much closer) future relationship between those two.
Matthew Cushen is an innovation consultant working with the leaders of many global brands, including retailers such as Waitrose & IKEA. He is has a small venture capital company investing in high-growth UK consumer & B2B brands.