Amazon opens first physical store outside North America

Amazon has opened a convenience store in west London, its first physical outlet outside North America, as it looks to test appetite for automated store formats and their associated technology in Europe.

The store is similar in concept to the Amazon Go outlets already operating in the US, the first of which opened three years ago. But it is branded Amazon Fresh, a name used for full-sized supermarkets in the ecommerce company’s home market and synonymous with its food delivery service in the UK.

The UK store will feature the same “just walk out” technology as Amazon Go stores, allowing customers to place items in a bag and leave the store. Amazon is actively marketing the technology to other retailers.

“We’ve chosen Ealing because it is the sort of location where people enjoy shopping locally and there are also good transport links,” said Matt Birch, director of Amazon Fresh Stores.

Would-be customers need an Amazon account and the company’s app installed on their phone; this generates a code to open the entrance gate, after which no further scanning is required.

Matt Birch, director of Amazon Fresh Stores
Director Matt Birch says Amazon Fresh will ‘open a few [stores] across London, testing and learning how we get the best reaction’

Purchases made at the store appear as completed orders in a customer’s account and receipts are emailed shortly after the transaction is completed.

“We work back from customers,” said Birch, who was previously at the Co-op and J Sainsbury. “We could see that queueing was a real pinch point in this kind of store.”

The offering will be heavily biased towards food on the go, with a changing menu throughout the day. A lot of the “finishing off” will take place on site, further reducing the already-small store footprint.

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Birch declined to say how many of the stores the company intended to open, or what the capital commitment was. “We’ll open a few across London, testing and learning how we get the best reaction,” he said, adding that thriving localities with good transport links would be targeted.

“We may also look at some city centre locations,” he said.

The convenience concept, biased towards food on the go, ready meals and staples such as bread and milk, would remain the priority. Such stores in residential areas have traded well during the Covid-19 pandemic as consumers shop locally, while those in stations and city centres have suffered as commuters and office workers stay at home.

The Amazon Fresh store in Ealing, west London
Thriving localities with good transport links are being seen as prime targets for new openings

Birch would not be drawn on whether Amazon would also consider expansion into larger food stores located out of town, with potential utility as local delivery hubs.

Amazon already operates seven Whole Foods supermarkets in the UK after its $13.7bn acquisition of the company in 2017. Last year it expanded its fresh food delivery service, previously only available in a limited number of postcodes, to the whole of the UK.

The company would also not comment on the stores’ likely profitability. Although the checkout process is automated, Birch said staff numbers were little different from a normal convenience store because of the need to handle fresh food, dispense and receive parcels and assist customers with technology questions.

Steve Dresser, founder of consultancy Grocery Insight, said his experience of Amazon Go stores in the US was that “the technology is brilliant, but the ranging is baffling, a real mish-mash of products”.

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“I think they will do a better job on the ranges in the UK, given the people they have brought in to work on it,” he added.

Birch said the company had developed “by Amazon” own-label ranges of many prepared foods and household staples such as milk and an “our selection” premium range. The store will also feature products from existing wholesale suppliers Wm Morrison and Booths.

In the US, Amazon operates 26 Go stores focused on takeaway food, along with two Go Grocery stores, 10 Amazon Fresh supermarkets and more than 470 Whole Foods stores.



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