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March 5, 2021

Amazon opens AI powered grocery store in London

By MarketLine

Amazon opening its first UK store shows how the US tech giant seeks to revolutionize the UK food retail market.

The new store in Ealing, West London, will be till-less with customers able to simply walk out of the store with AI technology tracking their purchases. Customers will need an Amazon account with the app installed on a smartphone for entry.

Matt Birch, director of Amazon Fresh and former Sainsbury’s employee, told the Financial Times that Ealing was chosen due to it being a location where people enjoy shopping locally and have good transport links.

Amazon has already established similar stores in the US under its Amazon Go brand. It currently has 26 Go stores focused on takeaway food, two Go Grocery stores and 10 Amazon Fresh supermarkets across the Atlantic. Whether this is the first of many stores is unclear, but domestic retailers may be concerned about one of the largest global firms establishing itself in the UK food market.

Amazon has sourced many of its own-brand groceries from UK suppliers as it looks to establish a domestic supply chain. It has received other items from Morrison’s and Booth’s, with which the firm already has working relationships.

Establishing a strong presence in the UK market will be difficult for Amazon

The move follows efforts in the summer to improve Amazon Fresh’s online service, with free same-day deliveries for Prime members in selected cities back in June 2020.  This demonstrates the firm’s commitment to challenging in the UK market despite the presence of established consumer favourites, dubbed the ‘big four’.

Establishing itself as challenger in the UK will be difficult. Tom Brereton, Retail Analyst at GlobalData, argued in June that the emotional bond between UK consumers and retailers will difficult to break.

According to GlobalData, leading players Tesco, Sainsbury’s, Asda and Morrison’s had market shares of 20.9%, 11.8%, 10.8% and 7.9% in 2019 respectively, illustrating the high concentration of the market. However, this has been declining marginally with discounters Lidl and Aldi rising in popularity, suggesting people are welcome to change.

Amazon still has a long way to go to if it is to compete in the UK market. Despite this, the new store does show a statement of intent from the firm and the use of cutting edge technology will attract attention.

Leading firms Tesco and Sainsbury’s as well as popular up-market retailer Marks & Spencer have looked to new technology as a strategy, with the pandemic accelerating this push. This involves scanning items to a smartphone instead of using a till.

New technology shows potential change to the way people could shop in the future

Despite growing technology in the food retail market, Amazon’s technology is at ground-breaking level and it has hinted it may be willing to sell it to other firms.

The till-less stores uses complex artificial intelligence software in conjunction with hundreds of cameras and depth-sensors. The firm does not require shoppers to check items are paid for due its confidence in its own technology.

However, inevitably this has raised concerns over the use of people’s data, especially with other big-tech firms Google and Facebook recently coming under fire over data gathering.

Silkie Carlo, from Big Brother Watch, told the BBC that the new store “offers a dystopian, total-surveillance shopping experience” and tracking shopping data will create larger personal data footprints than any other retailer”.

However, the company has responded to such concerns by reiterating it will only keep the data for a month and how the data will be used is fully disclosed online.