By Martin Heubel, Founder and Director of Consulterce, a strategy consultancy for B2C Household & CPG brands.
Gone are the days when Amazon wanted to open hundreds of Fresh stores in the UK.
The unfolding cost of living crisis has highlighted the biggest vulnerability of Fresh’s business model:
Its ‘Just Walk Out’ (JWO) technology is not what customers are looking for right now.
Instead, shoppers seek lower prices and a relentless focus on value on the physical shelf.
So can Amazon turn it around and become more relevant to UK shoppers?
Yes, but only if it focuses on two things:
1. Customer Centricity
Shoppers don’t want to spend more, even if inflation eases. Looking at the US, where inflation is down at 3%, we still don’t see any major signals that Amazon’s offline grocery offering is expanding more than before.
As a result, Amazon will have to focus on the needs of its actual customer base. And this need isn’t to focus on check-out free stores. It’s to get a broad range of products at a great value.
2. Meaningful Differentiation
If JWO doesn’t resonate with shoppers, the question becomes why Amazon Fresh exists with physical stores in the first place.
The online retailer expanded into the physical world to expand its customer footprint. But that’s not a good enough reason for shoppers to visit its Fresh stores.
Let’s not forget that the UK is an incredibly competitive market that requires product and service differentiation.
Yet, Amazon isn’t using its greatest strength to create a true omnichannel experience.
It rather seems that Amazon is slowly giving up on its physical Grocery arm in the UK.
Related item:
Amazon To Close More UK Grocery Stores
