Amazon Fresh and the rise of automation in retail

Years ago when someone walked into a shop and emerged without paying, it usually resulted in an arrest and a possible visit to the local magistrate’s court. However, in the digitally-driven 21st Century, this practice has started to be actively encouraged as a means to ease the shopping experience for consumers. This month, the UK got its first taste of ‘new wave’ grocery shopping, when e-commerce giant Amazon launched its first Amazon Fresh store in Ealing, London. Much of the hype surrounding Amazon’s new UK venture is around the notion of a cashless and cashierless store: which operates exclusively using ‘’smart shop’’ technology. While the concept may be unique to British shoppers and retail owners alike: the Bezos born business idea has already found its footing in America - currently operating 10 stores across major states such as California and Illinois - since as early as 2018. How does it work? To purchase products in the shop consumers are simply required to download the company’s app and scan a QR code before entering. Flipping the traditional retail experience on its head, consumers do not have to wait in lengthy queues or interact with shopkeepers - in Amazon Fresh there are none - but instead walk out, with the cost of their items then billed to a registered credit card. Amazon has made this concept possible through the use of ‘just walk out’ technology, and is even looking to offer other retailers the opportunity to use the system in their stores. And this is not a trend exclusive to the West, with other digitally progressive countries such as China also keen to emulate its structure. In 2018, the country launched an unmanned convenience store chain, called BingoBox. A new experience In the last decade the UK’s ‘big our’ grocers have integrated some solo shopping experiences into stores, namely through self-checkouts and ‘scan as you shop’ options - which are currently available in Sainsbury’s and Tesco. Like Amazon Fresh the tech requires consumers to scan codes via a portable handset or app - however once customers are finished they are required to pay at a dedicated card-only checkout. While the rapid growth of automation in the industry may seem unusual for some, Alex Timlin, retail analyst and SVP at customer engagement platform, Emarsys argues that the practice will “free up time for retailers to innovate and deliver better customer experiences”. Looking across the wider retail sector, Timlin believes that “automation can allow staff to help customers with their shopping and assist in other ways”. “Automation is currently aiding retailers across the world to deliver an amazing, personalised experience for customers on a one-to-one basis online, while also facilitating a quicker time to market,” he explains. “It’s helping retailers achieve that same level of one-to-one personalisation online, at scale with thousands of customers and at speed. Without that level of automation, it’s incredibly hard for retailers to build a brand for themselves online: and personalisation in such a way embeds a feeling of being valued into the customer’s mind. And it’s that positive association with the brand that will encourage them to come back and shop again.” Embracing tech to thrive? Ever since the longevity of high street stores has been brought into question - first prompted by the rise in online shopping which has since been turbocarged by the Covid-19 pandemic - it has been suggested that if retail owners do not continue to embrace the technological shift they may be left in a vulnerable position. “The key to thriving in retail as we move forward into uncertain times is staying relevant to your customer, which can be achieved through unlocking captured data-sets; providing insight on what makes customers tick,” says Paul Kirkland, retail and hospitality business development director at Fujitsu. Kirkland says it is “crucial for retailers to ensure an omni-channel strategy exists” as we move into the post Covid-19 era. “Online will continue to grow and thrive, and those retailers geared up to cope with that demand and increase capacity further across their logistics and fulfilment will continue to gain market share”, he notes. “It’s very rare for a retailer to be successful with just bricks and mortar offerings and they are now few and far between. Therefore, embracing the right technology to provide customers with choice and convenience is key, along with remaining disruptive and challenging when the industry embarks on further digital transformation.” What about workers? With retail jobs already compromised by Covid-19, it is unsurprising that workers in the field are frightened and concerned about what a rise in automated practices will mean for them. Retail Sector reached out to Usdaw, a trade body which represents workers in the sector, who explained that while employers may be “dazzled” by new technology: it is important that they “invest in staff as well as machines”. A spokesperson said: “During the current crisis retail workers have rightly been applauded as key workers and now Amazon's strategy is to cut the number of retail jobs in stores through the launch of shops with no checkouts. Retail workers deserve better. We can use new technology for the benefit of shoppers and staff but this is not the way to do it.” While the trade body may hold this opinion, Kirkland explains that it is “important to remember that not all retailers will move to a fully automated environment” - adding that a large proportion of retailers “will not be fit” for this type of technology unless they are willing to invest huge sums in “replacing all of its in-store infrastructure, store formats and customer journey”. In Kirkland’s view, if technology is adopted in the right way then the retailer can get “more value from their staff than they have done previously” - noting that automation will “help to facilitate a slicker, more dynamic customer experience which enables staff to ensure the right products are on the shelves at the right time, focus on order fulfilment, click and collect and spending time with the customers in-store”.

Amazon Fresh and the rise of automation in retail

March saw the launch of Amazon’s first unmanned grocery store in London, but what does the growing trend of automation mean for the wider UK retail market?

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