Friday 3 September 2021 2:00 pm

Amazon's department store incursion onto the high street will force retail to transform

Neil Debenham is the CEO of Fintrex

Last month, it was reported Amazon was looking to open a chain of large department stores. The online shopping behemoth has always had a reputation for disrupting the high-street, keeping bricks-and-mortar stores and traditional retailers on their toes with a tireless ability to reinvent itself. 

These are not Amazon’s first in-real-life stores. It already operates a number of specialised shops, including grocery stores in cities around the world, including London. Its acquisition of Whole Foods back in 2017 was a consolidation of its plans to expand beyond our phones and laptops and has acted as a bridge between online and in-store.

Even after the high street has undergone a hellish year, with shuttered shops accelerating a transition away from in-store purchases, Amazon is pushing ahead with its plans to expand. Clearly, Amazon sees a gap in the market. In reality, what consumers want from their physical shopping experience is changing. Shops have failed to appreciate what they want – ease and convenience – and Amazon is stepping in to fill the void. 

Think about what Amazon is at its core: a data hub. They have information on consumer demands that many retailers would do a deal with the devil to get their hands on. This spans what products people are buying at different times of the day, week or year, to the demographics of who is buying what and where they live. All of this can be used to tailor department stores into the most efficient and convenient version. Stores will be able to ensure they have the most sought-after shoe size or the most popular crockery range. Valuable shelf space will only be filled with products that will sell quickly and maximise profit.

This is not a superhero mission to rescue the high street. This is a salvage operation to take what is left over after the pandemic, and turn it into something else. Amazon has always operated with an aggressive growth strategy and a willingness to take risks. As founder and executive chair Jeff Bezos put it, “Amazon is what it is because of invention. We do crazy things together and then make them normal.” What we can’t conceive of now – Amazon is already hashing out plans to implement. 

Amazon department stores will have a focus on speed, convenience, service and price. It has the ability to undercut its competitors on price because of its sophisticated infrastructure. It has the additional benefit of Amazon’s pre-existing storage facilities and delivery, meaning people could feasibly try on six dresses in-store, buy them, and have them arrive the next day, without having to wander around laden down by bags for the rest of the day. 

Given it’s competition – specialised discount shops and fast-fashion retailers – who have been in the high street game long before Amazon, the scale of innovation to make it worthwhile will need to be immense. The convenience stores already open in London, for example, are checkout free, and automatically connect to people’s Amazon accounts. This is done with an army of ceiling-mounted cameras and grocery shelves that double as scales. 

Doing super-fast shopping for milk is a different ballgame to opening a department store for luxury retail, for example. Amazon’s decision goes against the general belief that the high street will soon be a relic of history. Retailers keen to ride on the coattails of Amazon should be prepared to deploy technology in every aspect of their shopping experience.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.