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ANALYSIS Amazon’s approach to high street stores could change the retail rules

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Amazon to open shops. It’s a rumour that started last autumn, and is still under fierce discussion this week. First, the world’s largest online retailer was to sell in a Manhattan store set to open ahead of Christmas. That’s yet to happen. This week the internet has been alive with rumours that Amazon will buy stores operated by US retailer Radio Shack. There have even been pictures of Amazon’s ‘first store’: a staffed pick-up location on the campus of Purdue University, Indiana. The difference between that shop, however, and a lockerbank seems to lie in the five members of staff who will help customers collect their online orders. The full picture of what a full-scale Amazon store might look like, it seems, is yet to become clear.

Interest remains intense because what an Amazon shop looks, as and when they do appear, is set to have an enormous impact on future of high street retailing. If the pioneer of internet retailing, an Elite IRUK 500 retailer, opens a network of shops, it will show that it’s concluded a bricks and mortar presence is vital to future customer service.

Amazon has recently focused on speedy delivery, offering same-day delivery in the UK – and, in Manhattan, fulfillment within an hour. Stores could help it to offer even quicker and more convenient pick-up. Amazon already offers more than 16,000 pick-up points in the UK, delivering same-day to newsagents who are members of the Pass the Parcel network, to 10,500 Post Offices, and to convenience shops in the Collect+ network. Its lockerbanks are present in locations from supermarket branches to Birmingham International Airport. If it needs stores to improve that customer service, by implication, it must have concluded that only by offering multichannel retailing can it serve customers most efficiently.

“Pure play retailers have for a long time avoided the high street due to the perceived costs and limitations, however Amazon’s interest in Radio Shack stores shows that the retailer is aware of the value of establishing a ‘bricks and clicks’ strategy, and fast,” said Darryl Adie, managing director of Ampersand Commerce . “How it plans to use the space for example, for showrooming, collection points, fashion or actual stock, will determine what other retailers will need to do to compete.

“If Amazon plans a similar roll out out in the UK, other multichannel retailers might be in serious danger if customers can order via click and collect and pick up almost immediately afterwards.”

Rupal Karia, managing director of retail and hospitality in UK and Ireland at Fujitsu, concurs. “Amazon’s move into bricks and mortar stores highlights the importance of the high street – even for online businesses,” said Karia. “Though the retail landscape has never been more digital or mobile, this move allows customers to have more options when it comes to their shopping experience, giving them the choice to either shop online, click and collect and pay through different channels.

“As we move to a more digital landscape, giving the customer a choice when it comes to shopping will only become more apparent. According to Fujitsu’s recent study Digital Insight Out, one in four consumers always choose a digital option (when available) when it comes to retail, while online shopping and click and collect were the second and third most used digital services respectively. With this demand for both digital and face-to-face services, retailers need to create a balanced, efficient offering that caters for all customers.”

The comments come in the week that the Local Data Company found widening levels of shop vacancies in the North, compared to the South. Professor Heiner Evanschitzky, chair of marketing at Aston Business School, said in response that as online shopping grows, physical stores are becoming increasingly less relevant to consumers – and that had to change.

“The High Street needs to move away from being a place where we physically buy ‘stuff’ to being a place where we can find inspiration and experience what we’re interesting in buying,” said Professor Evanschitzky. “Retailers should open more ‘brand experience showrooms’, presenting brands and letting customers try them out in a relaxed, pressure-free environment. Customers would then be encouraged to go online to buy. This is the model Apple have been following, with the company now holding more cash than the US government. This approach will make the High Street a destination to become inspired, motivated and informed, putting it back into the heart of the community, boosting the fortunes of retailers and giving customers what they want.”

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