Why Amazon Fresh could split the high street

The e-commerce giant's first physical shop outside the US will have profound consequences for the future of retail.

For more than 15 years, the retail space at 59, the Broadway – the central high street in the London suburb of Ealing – was occupied by Monsoon. But in June last year, as the pandemic heaped pressure on retailers, the clothing brand entered administration, triggering hundreds of job losses and shop closures, including its Ealing branch.

Number 59 stood empty for several months until it was filled, late last year, by a new tenant – one that could have profound implications not only for Ealing, but for high streets across the UK. After capitalising on the rapid transition to online shopping and enjoying the best 12 months in its 26-year history, Amazon announced that number 59 would soon be home to its first physical shop outside the United States.

Amazon Fresh opened its doors to a long line of eager shoppers on 4 March. The high-tech supermarket, which is similar in size to a Tesco Express or an M&S Simply Food, allows shoppers to enter only after they have identified themselves using a QR code on the Amazon app. As they browse the shelves, hundreds of ceiling-mounted cameras and shelf weights keep tabs on their movements, adding items to their bill. When they have everything they need, shoppers simply walk out, without needing to use a till or a self-service checkout.

Some Ealing locals have welcomed Amazon’s decision to open up in their corner of west London. On 7 March, three days after the opening, a 150m-long queue snaked through the Broadway Shopping Centre up to the entrance of the store. It is attracting interest to an area that residents feel has recently lost out on investment as a result of the move to e-commerce and its proximity to Westfield shopping centre in Shepherd’s Bush.

“In the short term, it’s a good thing for Ealing because people are coming to see it and it brings trade into the area,” says Jon Ball, a local Liberal Democrat councillor. Ball notes, however, that on local Facebook groups, there is “quite a split” between those who are pleased by the move and others who are “quite upset that Amazon has come here”. Ball says his own concerns about the company – which include the amount of tax it pays and the potential impact of its investments in automation – are held by many residents.

It was inevitable that Amazon’s arrival on the British high street would be divisive. The decline of physical retail is seen as inextricably linked to the rise of e-commerce – a trend for which, more than any other company, the US tech giant can claim credit.

But the way the shop itself works has exacerbated concerns. While it is a technological marvel, Amazon wouldn’t invest so much in the infrastructure unless it was confident that over time it would eventually recoup the cost by selling more products while employing fewer people. Amazon has said that the store employs around 30 people, but that just five work there at any one time.

The launch marks the start of a new era of shopping that bridges the gap between the physical and digital realms. While Amazon has long paid close attention to customers’ online spending habits, high street retailers have traditionally struggled to gain such granular data on their customers’ real-world purchases. Although supermarket loyalty schemes are designed to incentivise customers to hand over their data, Amazon Fresh takes this further by denying entry to those without the inclination or means to sign up for an Amazon account.

Because online shopping and smartphones are practically ubiquitous, signing in at the shop door might not seem that significant. But for retail it is a major step towards shops as members-only areas where consumers are personally identified and data is collected as thoroughly as it is online. The architecture of surveillance capitalism has arrived on the British high street.

This has the potential to be socially divisive. In the UK, 1.9m households lack access to the internet. This is not only a generational issue: although older people are less likely to be active online, nearly a quarter of children growing up in the poorest families don’t have devices to broadband or a tablet, laptop or desktop at home. As the recent months of home-schooling have shown, there is a growing link between digital exclusion and social inequality.

Like all of the US tech giants, Amazon is investing in digital skills initiatives. The Ealing branch of Amazon Fresh is surrounded by other supermarkets. But there is now one shop on a British highstreet in which people who can’t or won’t sign up to Amazon will not be able to buy food.

Over time, if it succeeds in providing a competitive advantage, the Amazon Fresh model is likely to become increasingly common. Amazon is preparing to open dozens of branches of the Fresh brand across the UK and license the till-less technology that underpins them to other retailers (albeit using debit cards, rather than Amazon accounts).

Given the competition concerns surrounding Amazon, this will inevitably raise fears about consumers’ inability to avoid the company’s sprawling operations. But, as the firm continues its march through the retail sector, perhaps we should be more concerned about those who will be prevented from using such services at all.