Amazon has announced it is permanently closing its Amazon Fresh store in Dalston, north east London.
The store, powered by Amazon’s Just Walk Out (JWO) technology, is closing its doors after just 18 months after the US retail giant embarked on an aggressive assault on the UK high street.
Grocery stores were opened all over London by Amazon, as it sought to barge into the UK grocery sector, however the concept while remaining impressive to customers, came during a difficult economic period for consumers and the company alike.
Amazon strategist Martin Heubel wrote in a LinkedIn post: “Not a major surprise amid the current economic climate. It’s expensive to get into retail and even more expensive to remain.
“With inflation at all time highs, customers are prioritising to save money. Even the most advanced self-checkout technology won’t revert this trend in the short-term. It seems, Amazon has come to realise this, too.”
Ex-Amazon and strategy consultant Brittain Ladd agreed with Heubel’s claims that the store closure is nothing out of the ordinary and said the problem instead lies with the JWO technology.
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He said: “It’s not unusual for a retailer to close stores. However, what makes the closure of the Amazon Fresh store interesting is that it was using Just Walk Out technology.
“I’ve stated many times that this technology will not increase sales, and the operating costs of the stores are still high.
“In my opinion, Amazon continues to use the wrong business model in the UK. I won’t be surprised if it closes all of the Amazon Fresh stores.”
Ladd believes that in order for Amazon’s grocery operation to survive in the UK, they should consider one of three options; operate a solely online grocery business, or acquire either Morrisons or Ocado.
On the latter, he added: “I believe this is the best strategic decision. It will help Amazon grow in the UK through Ocado CFCs and Ocado Zoom. In addition, it will give Amazon ownership over Ocado’s strategy for Kroger and CFCs; a major competitor.”
“I anticipate that if Amazon attempts to acquire Ocado, Kroger will make the argument to Ocado that it has the first right to acquire Ocado. Either way, it’s a great deal for Ocado.”
A spokesperson for Amazon told Charged: “Just like other retailers, we regularly review our business and from time to time adjust to ensure we are able to best serve our customers.
“We remain committed to Amazon Fresh UK physical stores and in fact, are excited to confirm we will soon open two new Amazon Fresh stores in the Greater London area”.