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FROM THE DESK OF DEBORAH WEINSWIG
Amazon Launches Its First UK Grocery Store as It Licenses “Just Walk Out” Technology in Travel Retail Amazon opened its first checkout-free grocery store outside of the US this week, with a 2,500-square-foot Amazon Fresh store in Ealing, London. Although the store is branded Amazon Fresh, it uses the “Just Walk Out” technology seen in Amazon Go stores in the US. Incremental Impacts on UK Grocery Amazon’s apparent commitment to UK grocery retail is confirmed by the launch of a new “by Amazon” private label at the Ealing store. Nevertheless, the direct impact on incumbent UK grocery retailers will almost certainly be minimal even over the medium term, as building any meaningful market share in grocery is a long-term task. Even in the US market, Amazon has only established 33 physical grocery stores (excluding Whole Foods Market) and the ripples from them have been slight. However, Amazon’s venture will provide another nudge for retailers to innovate around the checkout experience. Amid Covid-19, we have seen many retailers in various countries roll out different iterations of low-contact or checkout-free technologies, although most of those implemented so far are iterations on self-scan. Closer to Amazon’s autonomous offering, in the US, we have seen 7-Eleven and Giant Eagle trialing or launching stores with entirely contact-free checkouts. Moreover, aside from full store fit-outs, Kroger introduced a line of “KroGo” shopping carts, developed by Caper, at one of its stores in Cincinnati in January 2021, while Amazon itself set the stage for checkout innovation in the US by deploying smart shopping carts known as “Dash Carts” at eight Amazon Fresh stores in 2020. The creep toward checkout-free grocery stores is therefore proving gradual, with Amazon’s innovations in the market another spur for conventional stores to compete. [caption id="attachment_124168" align="aligncenter" width="720"]
Amazon Fresh in Ealing, UKSource: Amazon[/caption] An Ocado-Type Technology Vendor? This week saw another development in Amazon’s checkout-free technology journey: Travel retailer Hudson opened a store that deploys Amazon’s Just Walk Out technology. The Hudson Nonstop store at Dallas Love Field Airport is Hudson’s first contactless store and the company has announced plans to open further such store formats at leading airports across North America in 2021. This deployment of Amazon’s Just Walk Out technology suggests a possible future for Amazon as a licensor of such retail technology as well as a retailer deploying it. That would position it in the same way as Ocado: the British company has traditionally combined being a retailer and technology supplier, and now has deals with major grocery retail names such as Groupe Casino, ICA Gruppen and Kroger. Amazon is already an established business-to-business (B2B) technology services vendor in the shape of Amazon Web Services and it has been building out other B2B services, such as advertising, too. Should we see widespread licensing of Amazon Go-style technology in the coming years, for obvious competitive reasons, we think that the company is likely to steer clear of working with direct rivals in the grocery retail space. Despite the surges in grocery e-commerce seen in many countries in 2020 and into 2021, grocery remains a predominantly offline sector and consumers that use grocery e-commerce tend to be cross-channel shoppers. To carve a meaningful share of the market, Amazon must therefore continue to build physical stores, and the unique selling point of reduced friction will remain a key competitive advantage for the company when competing with legacy retailers.
US RETAIL AND TECH HEADLINES
Apple Reopens All US Retail Stores (March 1) TheVerge.com- Apple has reopened all of its 270 US retail stores, as of the last store reopening in Texas on March 1, 2021. The retailer temporarily closed its stores last year from March 13, 2020, in response to the coronavirus pandemic.
- The tech giant has confirmed that some stores are open in-store shopping, while some are only offering online order pickup.
- Department-store chain Nordstrom has partnered with smart fitness company Tonal to install Tonal workout stations in at least 40 of its retail stores across 20 US states, including 12 states where Tonal does not have an existing physical store presence. Nordstrom will launch the demo stations, which span approximately 50 square feet each, in its Women’s Active departments starting this month.
- The partnership is in line with Nordstrom’s endeavor to cater to the current demand in active and leisure categories.
- Card and gift retailer Paper Source has filed for Chapter 11 bankruptcy, with plans permanently shut at least 11 of its stores. The retailer, which currently operates 158 stores, has received a stalking horse bid from current lenders, led by MidCap Financial, to acquire the company and provide $16.5 million in financing.
- The retailer plans to hold an auction for its business on April 21, 2021 and a sale hearing on April 30, 2021.
- Target has announced plans to invest around $4 billion annually over the next few years to accelerate new store openings, remodel existing ones and enhance its online fulfillment capabilities.
- As part of this investment, the retailer will test tech-enabled methods of restocking shelves and develop new hubs that sort packages according to the most cost-efficient delivery routes.
- Walmart has announced that it is dropping the $35 minimum order requirement for customers to access its two-hour “Express” delivery service. Walmart Express Delivery allows customers to order from Walmart’s food and general merchandise assortment, with a flat $10 fee to have the items delivered in two hours or less.
- Express Delivery is currently offered in almost 3,000 Walmart stores, reaching 70% of the US population, according to the company.
EUROPE RETAIL AND TECH HEADLINES
BRC-Nielsen Shop Price Index Falls in February (March 3) Retailgazette.co.uk- The Nielsen Shop Price Index from the British Retail Consortium (BRC) recorded a 2.4% year-over-year fall in UK shop prices in February 2021, compared to January’s decrease of 2.2%. This is the lowest rate of deflation since May 2020 registered by the index, according to the BRC.
- BRC Chief Executive Helen Dickinson stated that the fall in prices in February was “driven by a drop in non-food prices.”
- Fintech firm Klarna, a major player in the “buy now, pay later” sector, has raised $1 billion in new funding, at a valuation of $31 billion—making it the highest-value private fintech firm in Europe.
- The company has announced plans to use the funding to improve its financial relationship with its users, such as expanding its range of banking services like savings and current accounts that are currently available in Sweden and Germany. Klarna has also pledged to use 1% of the capital for a sustainability initiative, which it will launch formally on World Earth Day on April 22.
- HelloFresh reported a total turnover of $4.54 billion in 2020, with year-over-year growth of 111%. The company delivered more than 600 million meals worldwide throughout the year.
- The company announced that it expects to grow between 20–25% in 2021 and anticipates that “consumers will continue to rely on online providers like us as the pandemic hopefully subsides in 2021,” according to CEO Dominik Richter. As part of its expansion in 2020, HelloFresh acquired Factor75, a Chicago-based company that sells ready meals.
- Spanish supermarket chain Eroski opened 52 franchisee stores in 2020. These new openings include nine stores in Catalonia, eight in Madrid, seven in Andalusia, and six in the Balearic Islands, among others.
- Eroski invested over $9.4 million in this store expansion project and created around 312 jobs as a result, according to the company.
ASIA RETAIL AND TECH HEADLINES
Bulgari Re-Enters Vietnam (March 3) Retailnews.asia- LVMH-owned Italian luxury brand Bulgari has re-entered Vietnam and opened its first brick-and-mortar store, in Ho Chi Minh city. The store spans 2,088 square feet and features the brand’s full range of accessories, fragrance, jewelry and watches.
- Bulgari first entered in Vietnam in 2014 through local distributor Imex Pan Pacific Group, but withdrew its operations in March 2019. As part of this comeback, the company has set up a domestic Bulgari Vietnam member company to manage direct imports and distribution.
- Indian e-commerce marketplace Flipkart has announced that its online grocery service is now available in more than 50 Indian cities. The expansion will serve users of seven metro cities, including Ahmedabad, Kolkata and Pune, as well as more than 40 neighboring Tier 2 cities.
- Flipkart has highlighted that it is seeing increased online grocery demand from both metro cities and Tier 2 cities as well. The company aims to expand its grocery services to more than 70 cities in the next six months, stating that the expansion would boost market linkages for food processing industry and farmers.
- Chinese home appliance retailer Gome Retail Holdings, which operates more than 2,800 stores in Mainland China, has announced plans to sell HK$4.49 billion ($579 million) in new shares to cut its debt and expand its online and offline businesses. The retailer plans to sell new shares to a unit owned by one of its controlling shareholders, Wong Kwong Yu.
- The announcement comes just days after Gome Retail announced that it expects its revenue to drop by 23%–29% year over year in 2020 as a result of the pandemic.
- H&M’s Arket brand has opened its first brick-and-mortar store outside of Europe, in South Korea’s capital Seoul. The store spans 8,000 square feet and features collections for children, men and women as well as home items. The store also houses an Arket Café that offers vegetarian dishes and drinks.
- Arket launched in 2017 and operates more than 20 stores across major European cities, including Berlin and Copenhagen, as well as an international e-commerce site.
- Japanese department store operator J.Front Retailing has announced that it will launch a new subscription-based rental fashion service featuring high-end women’s apparel from local and international brands. The service will be handled by J. Front Retailing's subsidiary, Daimaru Matsuzakaya Department Stores.
- The subscription service will charge a flat monthly fee in exchange for home delivery of up to three clothing items from a selected range. The service will focus on offering upscale local brands such as Epoca, which is owned by Japanese apparel maker Sanyo, as well as international including Italian fashion house Marni and France’s See By Chloé.