“Amazon Fresh and it’s Just Walk Out Shopping lives up to its promise, feeling truly like no other shopping experience. However, what is most surprising is that Fresh is not just a technological show, but a top-tier modern convenience store that can go toe-to-toe with rivals on the basics of retailing.”
– For more see: Amazon: Influence and Ambition in the Grocery Sector – UK, January 2021 

What we’ve seen

  • Amazon entered the UK grocery sector in 2016 through both its Amazon Fresh service and its partnership with Morrisons at Amazon service through Prime Now. Over the years these have been developed and expanded with Morrisons at Amazon brought onto the main site in August 2020,

  • Mintel’s Amazon: Influence and Ambition in the Grocery Sector – UK, January 2021 found 76% of consumers would be interested in shopping at a physical Amazon grocery store.

  • On 4 March 2021 Amazon opened the doors to its first Amazon Fresh physical store in Ealing, West London. A second store in Wembley opened on 18 March 2021 with further stores to open in Greater London in the coming months according to the retailer.

Just Walk Out, it is just that simple

After years of rumours of a UK entry following the slow expansion of Amazon’s own-name physical grocery stores in the US, physical Amazon grocery stores have now landed in the UK.

Taking the ‘Fresh’ moniker from its London-centric online service, the two stores are a hybrid of the Go and Fresh stores Amazon operates in the US. Both the Ealing and Wembley stores are roughly 2,500 sq ft, equivalent to Go and Go Grocery, but take in a broader range of categories seen in the larger Fresh stores in the US.  The headline grabbing Just Walk Out technology that made headlines when first shown with Go in 2016 is present and the star of the show, at least on first use.

The process of gaining entry to the store has been streamlined in the years since it was first debuted. No separate app is needed, anyone with the core Amazon App can access the store instantly by finding their unique QR code with both staff and signage helping those without the App to download and access the store.

Figure 1: Amazon Fresh entry, March 2021
[graphic: image 1]
Source: Mintel

There is no comprise here, no app – no entry, and combined with the ability to pay with cash this will naturally removes some potential customer base. However, the Fresh store and the technology is not about comprise. Since Go was first debuted, we have seen many in the convenience market get close to the experience through their own mobile-scanning technologies. Mobile scanning may be more practical and ultimately where the market ends up, but the experience of Just Walk Out is a world away from such technology and the glimpse into the future that makes the Fresh the destinations stores that they are.

The QR code on the mobile App is scanned on entry gates, and then the shopper is free to go about their shopping. The technology works just as advertised; any product taken from shelf is added to your basket on your mobile with a complex array of sensors and cameras keeping track of customer choices. Unless buying alcohol and fortunate to look young enough for a staff member positioned in the section to require proof of age, which this author was not, then there is no need for any human interaction.

With that being said this is not a ‘soulless’ experience, actually comparative to other c-stores in London both stores are heavily staffed – both helping customers gain entry and ensure shelves are filled.

Once shopping is completed customers do indeed ‘Just Walk Out.’ There is no need to scan the code on exit, and this is perhaps the ‘oddest’ feeling in the experience. All other mobile-scanning technologies do require some user input to ‘complete the transaction’ but here leaving is all that is needed. On first-time use a slight fear of accidental shoplifting is present, until a few minutes later your receipt lands in your Amazon App.

Figure 2: Amazon Fresh entry gates, Wembley March 2021
[graphic: image 2]
Source: Mintel

Away from the technology Amazon has built a very capable format

While there was little concern that Amazon would be able to create a best in class ‘store of the future’ experience, there was some concern in the retailer’s ability to create the bones of a store to compete in one of the most competitive and modernised convenience sectors in the world.

More than the technology, it is here that Amazon truly impresses – Amazon Fresh is a top tier convenience format comparable with any in the market.

In terms of store layout and categories, Amazon has packed an awful lot into under 3,000 sq ft. The removal of checkouts certainly helps but all categories from fresh, to ambient to frozen are represented.

Figure 3: Amazon Fresh, Meat & Fish, Ealing March 2021
[graphic: image 3]
Source: Mintel

There is depth through every category and this is a store aiming at the ‘fuller-basket’ end of the convenience sector rather than the CTN end of the spectrum. Indeed the only category not available is tobacco/vaping products.

Figure 4: Amazon Fresh, Household and Frozen, Ealing March 2021
[graphic: image 4]
Source: Mintel

All elements of the convenience mission are present and accounted for. There is a strong focus on food-for-tonight with a variety of pre-prepared and meal kits options.

Figure 5: Amazon Fresh, Meals for Tonight, Ealing March 2021
[graphic: image 5]
Source: Mintel

There are also food-to-go options taking in both the traditional meal deals…

Figure 6: Amazon Fresh, Food-to-Go, Ealing March 2021
[graphic: image 6]
Source: Mintel

… alongside fresh bakery, hot food-to go and to-go coffee. Notably each store has two coffee stations, one with semi-skimmed milk and one with an alternative provided by Oatly!

Figure 7: Amazon Fresh, Bakery and to-go Coffee, Ealing March 2021
[graphic: image 7]
Source: Mintel

Amazon is not re-inventing the wheel here in terms of convenience assortment. However for debut store(s) the ranging is incredibly well-realised and makes good on the promise of this not simply being a store to show off technology – but a practical competitor where consumers can shop at day-in day-out.

From books to bok choy

A well-presented store is nothing if there are not the brands, quality and pricing to back this up. Again here Amazon exceeds, at least this author’s, expectations.

Amazon Fresh takes its name from the London-centric online Fresh service launched in 2016. In terms of product range, much of that service has been transplanted into these physical stores. This means Amazon’s partnerships with Morrisons and Booths means both brands are represented on shelf, with the latter a particularly welcome surprise for Londoners.

Figure 8: Amazon Fresh, Partner Brands, Ealing March 2021
[graphic: image 8]
Source: Mintel

All big name brands that you would expect to see on shelf are present and correct. There is also a ‘speciality’ edge to much of the ranging, with many exciting and less familiar brands within the mix – with Amazon again bringing a touch of the ‘Marketplace’ to its range.

There are also some interesting solutions from up and coming brands, with the Meal Kits from Mindful Chef particularly catching the eye.

Figure 9: Amazon Fresh, Mindful Chef, Ealing March 2021
[graphic: image 9]
Source: Mintel

However, the majority of the range, particularly in fresh, is made up of Amazon’s ‘by Amazon’ ranges. Amazon is one of the most recognisable retail brands in the UK, but association with the grocery sector is limited. Here focusing on ‘by Amazon’ is clearly a calculated move designed to better tie Amazon and grocery together and legitimise its move into, under its own name, physical grocery retailing.

Figure 10: Amazon Fresh, by Amazon, Ealing March 2021
[graphic: image 10]
Source: Mintel

Supporting the brand name and aiming to give further legitimacy to the Amazon brand and food and drink are both screens and other printed POS which promote the range and tie it into key trends – be it sustainability or British-sourced.

Figure 11: Amazon Fresh, in-store POS, Ealing March 2021
[graphic: image 11]
Source: Mintel


While Amazon may be looking to legitimise its brand in the grocery sector, it is also not forgetting its position as the largest non-food retailer in the country.

As in Whole Foods, there is a section dedicated to Amazon devices with particularly nice signage highlighting the purpose and role each plays in Amazon's device ecosystem.

Figure 12: Amazon Fresh, Amazon Devices, Ealing March 2021
[graphic: image 12]
Source: Mintel

Of course there is also a dedicated area for Amazon.co.uk order collection – interestingly a staffed Amazon Hub rather than the usual locker-based collection seen in comparable convenience formats. 

Figure 13: Amazon Fresh, Amazon Hub, Ealing March 2021
[graphic: image 13]
Source: Mintel

One very notable admission from the Amazon ecosystem is Prime, and in particular Prime related promotional activity. This may come in time as Amazon beds in its new format, or indeed it may be saved for larger format stores down the line, with the convenience-margins potentially not able to accommodate the 41% of Londoners who are personally Prime members – in the same way Clubcard pricing does not to extend to Express.

However, based on the below research from Mintel’s Amazon: Influence and Ambition in the Grocery Sector – UK, January 2021 Report run ahead of these stores opening – it is clear that in terms of drivers to use, integration with Prime is the one area currently missing from Amazon’s debut turn in the grocery sector.

Figure 14: What would drive use of an Amazon grocery store, October 2020
Base: 2,000 internet users aged 16+
[graphic: image 14]
Source: Lightspeed/Mintel

Amazon is serious about Fresh

The major takeaway from both debut Amazon Fresh stores, is that Amazon is deadly serious about this format and its ambition in the grocery sector. Over the years I have visited many Amazon pop-ups and temporary stores, which while intriguing have boiled down to no more than well-executed PR for the business.

Amazon Fresh is an entirely different story. Ahead of visiting, the worry was the Just Walk Out technology would be the overpowering star of the show, an extraordinary gimmick that would drive infrequent footfall. Those worries proved unfounded, the technology is impressive but the basic foundations of retailing it is built upon are very solid.

Indeed if you strip away the technology Amazon Fresh is still a top tier example of modern convenience. It’s pricing is razor sharp for convenience, while still maintaining some ‘convenience premium’, although its ranging is certainly pitched towards the more premium end of the market, as Amazon past delves into UK grocery have been. This is a format that should worry M&S, Waitrose and Sainsbury’s more than it should Tesco and the symbols.

There are barriers to the success of Fresh. The first is breaking down any trust issues in shopping for food and drink with Amazon. Putting its brand on so much of the range will help, as will the larger catchment and word-of-mouth Just Walk Out Bring but ultimately quality credentials will decide this. Personally, the quality was comparable with most in the market, based admittedly on a small sampling of products and this author’s unrefined palette, including a best-in-class hot to-go sausage roll.

A potential bigger barrier is that at a time when more consumers are focused on localised shopping, and shopping with smaller brands/retailers the arrival of the poster child of globalisation in physical form on high streets may face some resistant. In reality the two are not mutually exclusive, in 2020 there was greater support for independents and Amazon experienced record growth. The focus on speciality and up and coming brands may ease some of these concerns, and at a time when physical retail needs a shot in the arm – there are few high streets who would not jump at hosting Amazon Fresh.

The biggest barrier and biggest question however for the format is how scalable it is. We know more Fresh stores are coming in 2020, but in the four years since Go was debuted it has grown into a 28 store chain in the US. The Whole Foods acquisition may have taken out some of the need to build out the format, and refinement and improvement in the technology may make it now easier to roll-out, but the technology clearly adds cost and length to how quick and far this format can be rolled. The doubled edge sword for Amazon may be that without the technology, it has a format that can be quickly scaled and able to compete, but without the technology, the format loses much of its identity and USP as a new entrant to the market.

The reality is that at say 30 stores Amazon Fresh is an impressive and localised problem for rivals, but nothing to shake the landscape. However, if the Amazon can reach triple figures warning lights should be flashing for rivals, because what Amazon has created here is not simply flashy – there is substance to this format.

What it means

  • Just Walk Out Shopping is everything that Amazon promised it would be, a seamless shopping experience that truly feels like the future.

  • However, Amazon Fresh is much more than this. It is a convenience store that hits all key trends, is ranged extremely well and has the pricing to compete in the sector.

  • More stores are coming in 2021 but whether Fresh becomes a flagship format or a true challenger will depend on Amazon’s willingness and its ability to scale the technology not just in London but on a national level.  

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