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As Amazon opens a grocery shop in London, will high streets welcome more tech tenants?

Joanna Bourke
·4-min read

Hearing a retailer say they are looking to expand with more store openings in the UK has been a rarity during the pandemic. Hearing a online giant say they want to have a physical store estate is even more unusual. But that has just happened. It really has been a strange 12 months.

Amazon, known for clicks, is eyeing bricks, at a time when numerous chains are looking at how to exit some sites amid the fallout from the virus crisis, and due to high costs linked to operating branches.

But Amazon hasn’t chosen London’s famous shopping destination for its debut physical grocery store in the UK.

Rather than the West End, the ecommerce behemoth has headed to west London’s Ealing. The company has agreed a letting with FTSE 100 landlord British Land for 2500 square feet of space where it will sell meat, fish, fruit and veg and other groceries.

The Amazon Fresh site marks a less conventional high street retail model for the UK: shoppers can a use a smartphone app when entering, bag items as they go along, and walk away without using a till. They are automatically billed as they leave.

In an update that may be welcomed by landlords but leave some grocers unsettled, more of these sites could be on the way. Matt Birch, director of Amazon Fresh Stores UK, says: “We’re excited to be launching our first store outside of North America in London. We hope to open a few more in London in areas like Ealing and believe it will work in residential areas and city centres.”

As more vacancies arise on the high street, which retailers have faced well-documented headwinds, could Amazon help fill some of the empty space? And will more digital brands eye physical sites?

As Amazon’s Birch puts it, a “few more” sites are hoped for, so let us not get carried away and imagine empty department stores could soon be full of the web giant’s goods. But, its investment may make some rivals look at stepping up their game on the high street.

Daniel Kornitzer, chief business development officer at online payments company Paysafe, says: “As the UK high street continues to grapple with the impact of Covid-19 and plans for a return to in-store shopping later this year, retailers will need to follow suit and leverage technology such as this to deliver more sophisticated experiences that meet consumer demand in a post-pandemic world.”

Shore Capital analyst Clive Black says: “The key innovation to the outlet is not necessarily what it sells but the way that it does so; this Fresh store is likely to be cash and card less and so it is the payment method that is somewhat revolutionary for the British scene, albeit this is now well set in the USA where Amazon trades from over twenty-five grocery outlets.”

Black adds: “Cameras and digitisation are to the fore. It will clearly be most interesting to see how this feature pans out in the UK.”

If the new shop is successful, it is possible Amazon’s move might encourage other food, or non-food, businesses to look at investing in new stores and tech that could entice more customers.

KPMG’s UK head of retail Paul Martin does not envisage many conventional high street brands, such as in the clothing and jewellery categories, will be looking to swoop on empty shops.

Martin thinks landlords, many of which have seen rental income plunge during the coronavirus crisis, will gladly “welcome new innovators to their spaces”.

He adds: “With consumers wanting safety and convenience from their high street experience, along with the huge move to online shopping, it makes sense that more spaces previously used for purely retail will now need to adapt to accommodate online shoppers.

Ted Schama at property agent Shelley Sandzer believes “tech will be a dominant force in the future of the high street”. The leasing expert points to part of West End landlord Shaftesbury's estate: gaming venue Wanyoo and gaming equipment brand Razer sit next to each other in London’s Chinatown.

Schama adds: “Traditional mini golf is being taken from coastal towns to high streets, led by technology in brands such as Swingers and Putt Shack. It surely won’t be long until we have some mega gaming e-sport venues seen in the USA over here.”

The pandemic has created scores of new online shopping fans, but post-lockdown, these customers may also enjoy embracing digital in various forms on the high street.

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