UK Brick-and-Mortar Retail Scene Equipped to Handle Amazon Entry

Amazon 4-Star

After the launch of its first 4-star store in New York in 2018, Amazon has chosen the U.K.’s Bluewater shopping center in Kent as the location of its first 4-star shop outside the U.S.

Read more: Doors Open at First Amazon UK 4-Star Store Outside US

The 3,500-square-foot store offers a curated range of non-food products from the top categories across – those rated four stars and above by customers – including books, electronics, games and homeware. In addition to its own products, the company will also display products from small business sellers sold through Amazon’s marketplace operation.

The model, which the company considers “a physical extension” of the website, has “worked really well in malls in the U.S.,” and was the reason behind the company’s choice of Bluewater, as Andy Jones, the director of Amazon 4-star U.K., told the U.K.-based news outlet Metro.

Work on the physical outlet began before the coronavirus pandemic. The company is keen to welcome U.K. customers and see how well they embrace the concept, Jones said.

“We’ve seen that the model has worked really well in malls in the U.S., so a location like Bluewater made total sense to us,” he noted, adding that “there are the Amazon products they will expect, but also local products from small suppliers, because that is a huge part of the Amazon business.”

The launch of the Kent-based outlet comes after a string of recent launches by Amazon in the country’s capital, and expands its business in the U.K.’s brick-and-mortar retail sector.

In 2018, the firm opened a fashion pop-up shop and a high-tech hair salon in April of this year.

And in March, Amazon opened its first “Just Walk Out” grocery store in west London, allowing shoppers who have downloaded the Amazon app on their phones to pick up goods and leave without going through the hassle of checkout lines. Amazon has since expanded its brick-and-mortar presence to six grocery convenience stores across London.

Impact on the UK Retail Scene

One asset Amazon has that no competitor can match is its large database of product ratings and reviews, which it is now weaponizing to grab physical retail market share in the U.K.

This poses a serious threat to U.K. high-street retailers and SMBs, who represented 99.3% of the total business in the country as of the start of 2020, according to data from the U.K. National Federation of Self-Employed and Small Businesses.

In its U.S. home base, Amazon has long been accused of destroying the retail industry ecosystem. Back in 2019, then-U.S. Treasury Secretary Steven Mnuchin accused the global firm of harming the retail sector. “I think if you look at Amazon, although there are certain benefits to it, they’ve destroyed the retail industry across the United States, so there’s no question they’ve limited competition,” he told CNBC at the time.

Read more: The Global Digital Shopping Index: SMB Edition

But findings from a PYMNTS SMB-focused study, “The Global Digital Shopping Index” — which examined the main changes triggered by the pandemic in four markets, including the U.K. — showed that an important subset of SMBs, those that make most of their sales in-store, perform as well as large stores in consumer satisfaction.

This means that as much as Amazon has the money and the technology to attract consumers, SMBs equally have consumers on their side.

The study also revealed that in offering digital services, smaller retail enterprises can leverage some of their unique advantages, like the connection and presence they have in the communities they serve, something Amazon would struggle to compete with given its inexperience with managing physical stores.