Amazon’s new store proves the high street is not dead - but it must act fast to survive
Amazon's launch of their Amazon Fresh store in London shows the possibilities of the high street. Yet, its future success depends on the actions taken by brick-and-mortar retailers to embrace new technologies and make use of the first-party data at its fingertips, argues Vihan Sharma.
In recent weeks, Amazon opened their first Amazon Fresh store in London, the first physical Amazon store to open outside the US. While at a first glance this may appear a simple expansion of the online giant's grocery capabilities in the UK, it also represents an important commitment to the British high street and the continued relevance of in-person shopping.
COVID-19 has had a dramatic impact on already struggling high streets, exemplified by the collapse of retail giants like Arcadia. With non-essential retail restricted or closed for a year, the impact on physical shops is hard to measure. Brands who have focused on their online presence and accelerated digital transformation have prospered and strengthened their capabilities – from iconic high street brands like Cath Kidston moving online, to the success of Boohoo and ASOS in incorporating stores like Debenhams and the Arcadia brands.
Yet as Amazon's decision proves, the physical high street shop still holds immense value. Shoppers have clearly signalled that e-commerce cannot completely replace the experience of buying in-store. This decision proves that digital transformation can work both ways – moving online and abandoning the high street is not the only way to transform and pivot in the economic recovery. Instead, the high street should take heart from this decision and realise the value of their bricks-and-mortar stores post lockdown – with a big caveat. They must take the steps to boost their digital capabilities to extract the value of their physical presence.
An essential part of this lies in realising the value of first-party data. Many high street brands have a wealth of data at their fingertips but are yet to make full use of it. Valuable data collected via in-person sales and interactions represents an important set of data that is unique to these shops, which if used properly, strengthens their capabilities in comparison to online-only retailers.
Just collecting this data is not enough; brands need to invest in technology to manage consumer consent and preferences, connect and analyse their data across their online and offline presences. It is in this way that a clothing retailer with a high-street presence can accurately assess the impact of a digital ad campaign on a particular product in-store, or the true extent to which promotions are successful.
Major high street brands can also take this a step further in order to compete with online retailers – they can collaborate with each other and with their product suppliers. Working together to connect their data through a secure, neutral platform, brands can develop a more nuanced and robust understanding of their existing and potential customer base and identify new audiences to prospect, all while ensuring they have full control of when and which data is being accessed and by whom. And new privacy-enhancing technology removes the need to compromise data security and privacy for data utility.
As an example, a cereal manufacturer may choose to partner with a supermarket which sells their products. The cereal brand is disconnected from the transaction and cannot fully understand the impact of their marketing efforts on in-store sales. The supermarket's sales data is therefore incredibly valuable to the brand, and through connecting their data with the supermarket, the cereal brand can more accurately understand their current customer base, from the items they tend to buy alongside the cereal to popular times of the week. This allows the brand to modify their marketing strategies and assess the success of promotions in detail. For the supermarket, collaborating on offering deals ultimately helps to drive more sales for them too, all while benefiting the customer through relevant and timely offers and promotions.
Collaboration can go further still, between brands who do not already work together. For example, a vegan skincare brand may also connect their data with the supermarket, identifying subsets of customers who choose to buy vegan milks or meat alternatives as customers who might be interested in ethically-driven advertising online.
As the opening of the Amazon Fresh store proves, the high street still has immense value to offer, and digital transformation does not mean physical stores need to shut their doors. As the online and offline retail worlds become more closely intertwined and connected, now is the time for the high street to realise its potential and make use of the first-party data at its fingertips.
