The news of Amazon opening their first physical store – a bookshop in Seattle – is an interesting move for them, and typical of the current wave of innovation and expansion we’re seeing in the post-recessionary retail world. Whereas the downturn years saw online businesses flourish due to their lack of additional costs, now that the economy is brighter, a new agenda is coming through.
The move is one which will be a steep learning curve and force them to tweak many of their business operating systems. Would the low prices we expect still hold when you have to factor in the costs of shops – rent / rates / staffing / lighting / heating – not to mention the various legislation surrounding health & safety laws and trading hours. From a back office perspective there will need to be changes. The distribution and warehousing currently works for their channels of selling, but would need amending to work for a retail business. And the way the stock is forecasted will take on some of the complexities of high street retailing, with factors such as the weather or major holidays and events (like sporting tournaments and major royal celebrations) impacting sales hugely – so a whole new approach to merchandising will be called for too.
I’ve often commented on the lack of “experience” that exists when we shop online these days, versus shopping in physical stores and the sense of retail theatre one feels. It’s impersonal, and the customer interaction is lost. That’s an easy shift for traditional retailers to embrace, because they have spent years building their loyal customer following and developing a sense of brand loyalty. But Amazon will have to set up a blueprint for what they want shoppers to feel when instore – those things are all about staff training, music, carpet v hard flooring (which of course is used to slow our pace as we walk through the stores). These things are all key to how a business represents itself in the market – and its success and failure.
Something that Amazon are famed for is the convenience factor – being able to shop at 1am, and we all know parents of new babies up in the middle of the night doing their shopping. I wonder how much of Amazon’s success has been about that? It will be interesting to observe how they perform alongside other core retailers, and if they still have that pull. And let’s not forget that a few years ago we saw HMV & Waterstones all but disappear, blaming Amazon for taking their business. Mothercare also reported poor trade figures, again naming online businesses like Amazon for beating their prices and taking their customers…
It will be interesting to see how successful this venture is for Amazon, and whether it leads to a roll-out programme in the US, and indeed here in the UK too. They’re certainly not alone in making the move from clicks to bricks, and there seems to be a current trend for some multichannel retailers taking their businesses onto the high street.
Online and catalogue business N Brown opened a high-profile store on Oxford Street in the last year, taking their Jacamo and Simply Be brands into a far more public arena than ever before. It remains to be seen if this store serves as effective marketing and brand exposure, or if it becomes a flagship shop and cash cow for them. Another name we could mention is the hugely successful Boden who currently just trade from one shop at Hanger Lane, although have a strategy to open more in the UK & US.
Gemporia are best known as GemsTV, the television shopping channel, but are spreading their wings to a new wave of concessions in selected Debenhams and House of Fraser stores. This sort of move is really exciting, but of course poses questions as to how their pricing and profit margin could be impacted given their low prices are achieved partly through avoiding the high street costs.
Probably the biggest retail online success story is ASOS, and rumours have always circulated of plans to open stores. So far this hasn’t happened, but they will be watching Amazon closely I’m sure!<< back