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Episode 19: Amazon Fresh
Join Andrew Grant and Darren A. Smith in the nineteenth episode of Grocery Guru. Today, the topic of discussion is the new Amazon Fresh store in Ealing, London and its innovative new checkoutless and frictionless operation.
You Can Read the Full Amazon Fresh Episode Transcript Below:
Darren A. Smith:
Welcome to episode 19 with the Grocery Guru, that is Andrew Grant. Andrew, how are you?
Andrew Grant:
Morning, Darren. Yeah. Very good thank you. Very good indeed.
Darren A. Smith:
Hey, hey. Good, good. Our topic this week, I believe is something to do with our friends at Amazon. Is that correct?
Andrew Grant:
Well, I think yeah, we try and make these things as topical as possible, and I don’t think many people could have missed the fact that Amazon Fresh opened their first… Well, their first physical store, actually a physical food store in the U.K. yesterday, in Ealing.
Darren A. Smith:
Okay. Right, okay.
Andrew Grant:
On top of that, it happens to be one of these checkout less… Where you don’t even have to scan the products, there’s so much Artificial Intelligence technology in the store watching you, that it knows exactly what you pick up and charges you post your visit, which is quite clever.
Darren A. Smith:
It is. And I’ve got this article. This is the BBC’s article, which you sent me yesterday across to discuss. And I can see some new terms coming out like, “Till-less. Checkout less.”
Andrew Grant:
Yeah.
Darren A. Smith:
They’re terms that are coming. That’s what Amazon’s driving here. And as you say, it’s opened in Ealing. And you walk in, they scan you as you walk in, you grab your products and just walk out?
Andrew Grant:
Well, no. Interestingly, it’s effectively a members-only club, because you’ve got to have Prime membership in order to be able to register before you go in. And I can imagine there’ll be quite a few people wanted to grab a sandwich or grab a can of something and the barriers won’t let them in because they’re not a Prime member.
Darren A. Smith:
Never thought of that.
Andrew Grant:
Which yeah, would be quite interesting. So yeah, effectively, it’s a members-only. A bit like a Costco, but on a smaller scale.
Darren A. Smith:
All right. So we’ve got Amazon Fresh with their first store in the U.K. It’s in Ealing. Till-less. I’m just picking up some things here. It says, “Its first, just-walk-out shop outside the U.S.” There’s also some terms like, “Frictionless,” that Amazon Fresh is putting out there. “Frictionless shopping.” Never thought of that.
Andrew Grant:
Yeah. Do you know what? Is that the big thing? I mean, I think yesterday will go down as a seismic change in U.K. retail, and I think I know that sounds very grand, but not because of a checkout less store. A lot of people will think it’s very trendy, very hip and very easy. There will be some people who… And the press was full of it yesterday. Big Brother’s arrived. Infringement on our civil liberties, being filmed picking stuff. And I don’t think many people will worry about that.
Andrew Grant:
But hey, checkout less store, what’s it going to save you? At busy times in a Tesco Express or a Sainsbury’s Local, you may be two minutes waiting, to wait for the self-scanner. So I don’t think that is going to be the game-changer, the fact it’s checkout less. The game-changer is how many of these things suddenly appear on our high streets and how fast will Amazon roll this out?
Darren A. Smith:
And that’s the worry, isn’t it? Because they’ve barely made a dent in the U.K. grocery market, but they’ve got the cash, they’ve got the position, they’ve got the status, the experience, the speed to go, “Boom,” and grab our high street.
Andrew Grant:
Well, look at what they did to bookshops. I mean, they started with books. They’ve killed the high street bookstore, effectively.
Darren A. Smith:
Yeah.
Andrew Grant:
Absolutely. What are they worth? A trillion or something? Two options, actually, quite interestingly, because the word on the street is, “Why doesn’t Jeff Bezos just go and buy Morrisons?” I mean, they’ve had a distribution tie-up with Morrisons for two years now. They’ve been selling Morrisons products online for two years. Why wouldn’t you just get your wallet out and buy Morrisons, and suddenly you’d get, what is it, 80% share of the U.K. market, like that? At Hilton-
Darren A. Smith:
Sorry, go on. Sorry.
Andrew Grant:
No. Honestly, think about it. If they want small convenience stores on the high street, how many are empty high street fashion stores and other stores are there at the moment where landlords would be desperate for a new blue-chip tenant?
Darren A. Smith:
That’s very true. You were telling me that… What used to be at this Ealing store before it was the Amazon?
Andrew Grant:
A Monsoon Accessorize.
Darren A. Smith:
Right.
Andrew Grant:
So a fashion accessory store.
Darren A. Smith:
Yeah.
Andrew Grant:
I mean, it’s a small store. It’s two and a half thousand square feet. So it’s small, probably smaller than an average Tesco Express, but just think how many Next’s, Topshop’s, Topman’s, Dorothy Perkins, Monsoon Accessorize. I mean, I’ve lost track of how many businesses have gone out of business.
Darren A. Smith:
Have you? It’s a shame.
Andrew Grant:
So they could pick up leases and be in 20 shops in London within three months, five in Manchester. They could build scale very quickly that way.
Darren A. Smith:
Well, they could-
Andrew Grant:
But I think they have to because the interesting thing for me is not the checkout less. It’s a gimmick.
Darren A. Smith:
Yeah. Yeah. And I can understand that. Yeah.
Andrew Grant:
It’s the reports say… And I must get down there. Lots of brand new Amazon Fresh own-brand food products, so own-brand ready meals, and own-brand sandwiches and snacks. Now, I don’t know if you shop Amazon, but certainly, in clothing, they’ve had their own-brand going for about a year.
Darren A. Smith:
Yep.
Andrew Grant:
And their Amazon Basics on things like batteries, and printer ink and what have you, I mean, the quality is superb for the price.
Darren A. Smith:
Oh, good.
Andrew Grant:
Amazon Basics batteries are just phenomenal. So if they can put that much effort into the food offer, then that suddenly then becomes, I think, a little bit scary for the likes of Tesco, Sainsbury’s, anybody with a big convenience operation.
Darren A. Smith:
Well, it does. And do you think the U.K. is of interest by Amazon more than other countries? I mean, why here? Why not anywhere else? Is it because we are World-class grocers? Or…
Andrew Grant:
No. We’re a very, very sophisticated and compact market.
Darren A. Smith:
Right.
Andrew Grant:
So unlike the States, which is effectively 50 different markets, one in every state, we’re a pretty homogenous economy.
Darren A. Smith:
Yep.
Andrew Grant:
And 60 million people, still the fourth richest economy in the world. Why wouldn’t you come here? The only thing against it is obviously, we do have absolute world-class retailers who won’t go down without a fight.
Darren A. Smith:
Yeah. And that’s what I was thinking. The bit that’s particularly interesting to me about this report, is the shopper bit. So imagine I’m picking up a ready meal, something I used to buy as a buyer, but now, as a consumer, I pick one up. I do that sleeve thing, when you look inside it, put it back and pick the next thing up.
Darren A. Smith:
All a Clubcard and the like can do, is tell me what I’ve bought, or tell the suppliers and so on what they’ve bought. But now, with these scanners and these cameras, hold on, are they checking out that I’ve picked that, tried that, squeezed the apple, felt the pineapple? Are they now doing these things, as well?
Andrew Grant:
Well, they can. And if you think, the big suppliers like Unilever, and Coke or what have you, have for years put little cameras on certain parts of the fixture to watch people’s eye lines and… For category management, work out how shoppers shop the fixture. Now, Amazon Fresh can do that 24/7 with every customer. That gives them a lot of data.
Darren A. Smith:
It does.
Andrew Grant:
Yeah.
Darren A. Smith:
And it’s also, those cameras that you mentioned before with eye line. I remember there being hundreds of thousands of pounds of a project. And you get this much data and you go and do something. Now you’ve got it streaming all the time and updating. Wow.
Andrew Grant:
Yeah.
Darren A. Smith:
That’s where the real win is, for me.
Andrew Grant:
Well, I think it gets even scarier than that, actually. There’s always the quip that with Clubcard because Tesco knows what you eat, know where you live, know how old you are, they actually know, better than your doctor, how healthy you are. Amazon. Do you know what Amazon’s next big move is? They’re already doing it in the States.
Darren A. Smith:
No.
Andrew Grant:
One hour prescription deliveries.
Darren A. Smith:
Oh, wow.
Andrew Grant:
So you give Amazon your prescription details and they will get your pills to you within the hour. Now, all of a sudden, yeah? Amazon are the doctor. They know your health history, your age, where you live, what you eat, what you choose to buy and not use to buy. I mean, is there anything left that they actually don’t know about you?
Darren A. Smith:
Well, and how long is it before they say, “Mr Smith, we see you’ve been having this diet for three months. We’re just going to put forward some Vitamin B tablets because we think you need them”?
Andrew Grant:
Yeah. Yeah. Or, “We’re going to send you some insulin because we reckon you’ve got type two,” or something. Yeah. Or, “We’d rather you not be a shopper of ours because you’re eating too healthy, you’re eating unhealthy and it’s not profitable.” I mean, scary stuff.
Darren A. Smith:
Just for our last few minutes, let’s really just pick up on a couple of other things they said in here. Amazon with the Morrisons and the boost high up. Okay. You talked about Morrisons for a couple of years. You’ve got Boots, they’re selling their products, as well. Amazon are saying, “Hand the product over and we’ll do the rest, or you just walk out.” “Technology,” is another term that’s coming in. Yeah. And the threat to the big established grocers. Okay. That picks up on most of what the BBC have reported in their article.
Andrew Grant:
Yeah. Yeah.
Darren A. Smith:
Okay. All right. Andrew, what’s our takeaway to leave the guys with before next week? Also, our take-away on this week?
Andrew Grant:
The takeout is, take out without going to a till, I think’ss a bit of a gimmick.
Darren A. Smith:
Yeah.
Andrew Grant:
Shoppers won’t choose to shop because you don’t spend a minute at the checkout. The bigger one is, I think yesterday, the 4th of March, will go down as the point at which Amazon Fresh became a serious grocery player. So if you want to bet £10 of your own money, in two years time, Amazon Fresh will have 10% of the U.K. grocery market, is my bet. Be bigger than Morrisons, be knocking on Sainsbury’s/Asda’s door.
Darren A. Smith:
I see. Well, and that’s why we talk to the Grocery Guru. Andrew, we’re going to check back in with you in two years, but until then we’ll talk about Amazon, maybe next week, the week after, and we’ll come back to this story.
Andrew Grant:
Okay.
Darren A. Smith:
Thanks very much. Take care.
Andrew Grant:
See you next week.
Darren A. Smith:
Bye for now.
