On the 2nd of March 2022, Amazon opened its first checkout-free grocery store of the year in Southwark, London. The previous year had seen an aggressive roll out, with 17 Amazon Fresh stores opening their doors in the capital, all utilising the company’s white-label Just Walk Out technology.

In June, the first non-London Fresh store opened in Sevenoaks in Kent, with many believing it was a sign Amazon was ready to expand its bricks-and-mortar grocery footprint beyond the capital.

Just a few months later, and Amazon’s push onto the high street has ground to a halt, with the company walking away from plans for dozens of potential sites after disappointing sales figures amid the cost-of-living crisis.

So what went wrong? Amazon’s infamous Just Walk Out technology has undoubtedly changed the game for the grocery industry, with hundreds of cameras and sensors monitoring products and charging customers’ Amazon accounts automatically, removing some of the biggest pain points for both grocers and consumers alike; payment and the queue for the checkout.

But is this time-saving, cashless technology really what shoppers want?

The rise and fall of Amazon Fresh

Normally any newcomer to the UK grocery scene would have struggled to make an imprint against the sector’s incumbents. However, the financial clout that comes with a new Amazon project – coupled with the revolutionary Just Walk Out technology – meant that there was both justification and industry support for this experimental assault on the high street.

As its store portfolio grew, Amazon’s efforts to become a major player in UK grocery appeared to be paying off, with 55% consumer awareness nationally, rising to 68% in London, according to TWC.

The TWC report, which came out earlier this month, revealed that just over one in 10 shoppers had shopped at an Amazon Fresh store.

“Amazon appears to be powering ahead with its bold ambitions for the UK grocery sector,” TWC communications director Sarah Coleman concluded at the time.

However, fast-forward barely three weeks, and the tech giant announced its grocery operation was grinding to an absolute standstill , citing rising costs, rocketing inflation and the cost-of-living crisis hitting consumers’ wallets.

It was a swift U-turn for a company which had plans to roll out a further 260 stores in the UK by the end of 2024, but was it really a surprise?

The true cost of Amazon Fresh

“Amazon Fresh and the Just Walk Out technology is basically a solution to a problem that doesn’t exist,” retail expert and consultant Ged Futter told Charged.

“When it comes down to bricks and mortar, these technology-based stores are not the future – they’re too expensive to get set up.”

The cost of the tech-heavy stores are undoubtedly difficult to justify if sales are low. Each one is reported to cost around £200,00 to get up and running; fit-out costs which are far higher than those accrued with a standard convenience store.

READ MORE: Amazon’s pharmacy division is struggling to attract interest from consumers

Despite the till-free stores offering a potential cost-cutting solution of hiring less staff, the savings are not as significant as initially expected. Stores still need employees to be stacking the shelves, taking deliveries and helping confused shoppers enter the store through the barriers, as well as the normal day-to-day tasks associated with running a grocery store.

“If we think about it as a customer, then Amazon Fresh is saving you a matter of seconds – if those seconds are important to you,” says Futter.

“The only member of staff not needed is someone who’s on a till, every other member of staff is still needed in the store. On top of that, you’ve got all the technology that goes with it. So the stores are both expensive to set up and expensive to run.”

What consumers really want

So why have consumers lost interest? While the idea of not using a checkout was exciting from a novelty perspective, interest in the concept has dwindled, as inflation skyrockets and basic living costs – including food – spiral out of control for many.

For the more tech-savvy demographic, the concept of scanning your smartphone to enter the store isn’t hard to wrap your head around.

However, for shoppers of a certain age, it may seem more trouble than it’s worth – and for what? Certainly not cheaper prices; a basket of 21 items came in at £31.79 according to Which? data from April – more expensive than any of the other big grocery retailers.

With most consumers currently focusing on value, many will be left wondering what Amazon Fresh really offers.

The worry for Amazon that its very expensive concept is not quite what consumers need at the moment – the main priority for many is finding the cheapest groceries, not whether they can save two minutes standing at a till.

“If we look at what is happening with with retail, then actually one of the areas that has more buoyancy is the high street, with independent retailers actually talking to customers,” says Futter.

“The customer doesn’t want all this innovation, all this technology; of course they want keep costs low but they also want to actually to talk to people when they go and do their shopping.”

It is unclear when Amazon will reignite its physical grocery push, or if it even will. But for now, the plan is on ice. Amazon will probably switch its focus to its healthcare division after recent heavy investment in the space, this would make sense given consumers will need to spend money on their health no matter what the global economic sphere is looking like, unlike luxury retail concepts such as Just Walk Out.

As far as the retail sector, a number of other companies including AiFi have implemented their own checkout-free solutions. Amazon’s retreat from the space could force the hand of the small number of startups to push their white-label solutions in Amazon’s absence.

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