Amazon has found a surprising new retail role model – Argos

Author

Ben Wright

October 13, 2014

Amazon has in the past been accused of hastening the demise of the high street; now it looks like the retailer might start re-colonising it

Amazon, the global online retail megamonster, is planning on doing something in New York that is simultaneously pretty mundane and really rather surprising: it is going to open a shop.

Some time before Christmas, customers will be able to walk into a good, old-fashioned, bricks-and-mortar store in midtown Manhattan and peruse actual, physical objects. According to reports, it is primarily envisioned as a place for customers to pick up items that they have ordered online but it is also likely to stock some inventory – especially Amazon’s own devices such as Kindle e-readers and Fire smartphones.

For the company that is leading the online shopping revolution and even experimenting with delivery drones, this is quite a departure. Some may see it as a retrograde step. Amazon has in the past been accused of hastening the demise of the high street; now it looks like the retailer might start re-colonising it.

What’s going on? The fact is that high street shops and online portals both have their pros and cons. The future of retail increasingly looks like a hybrid of both.

For retailers, the beauty of the internet is that it is cheap – no rent, fewer staff and none of the hassle of ensuring hundreds of shops are appropriately stocked. For the customer, online shopping is quick, convenient and does not require you to trudge out of your way to fight through the crowds.

But online shopping has its own downsides and hassles. The retailer can glean a great deal of information about regular customers but is unable to really interact with them; shoppers buying anything larger than the opening of a letterbox have to be around when it is delivered.

Hence the rise of click-and-collect – where online shopping meets physical stores. This phenomenon has picked up markedly in the UK and especially over the past few Christmases, with shoppers reluctant to entrust high-value items to the vagaries of the British postal system.

There are several initiatives. John Lewis is collaborating with Collect+, a scheme which allows shoppers to pick up and return items they have bought online at several thousand independent retailers; Network Rail has created Doddle pick-up-points at stations and Amazon itself is putting lockers in Co-op stores and car parks.

Argos, however, is travelling in the opposite direction. A traditional mainstay of British high streets, its shops act like a kind of retail Tardis in which an entire department store is squashed into a very small space. Customers pop in, buy whatever they want and leave. It is convenient but it has also traditionally been fairly down-market.

However, under John Walden, who became the managing director of Argos over two years ago and more recently was made chief executive of its parent company, Home Retail Group, the model has been tweaked. Argos has started to develop “digital concept stores” where the minimalist interiors house the gleaming tablets that have replaced old-fashioned laminated catalogues and little blue pens.

Click-and-collect orders already account for a third of Argos’s business and there are only two shopping websites in the UK that receive more visitors – eBay and, you guessed it, Amazon. Argos has already struck a deal with the first of these competitors. Earlier this year, it extended a relationship with eBay, which enables online shoppers to collect their goods at its stores.

We won’t know how similar Amazon’s shop is to Argos’s “digital concept stores” until it opens but it can already tell us two things about the company – one bad and one good.

The first is that Jeff Bezos’s company still has a lot of work to do. For its size, sales and astonishing growth, Amazon is still not profitable. Famously, this is all part of the master plan. Mr Bezos was very upfront when he listed the company saying that Amazon would never chase short-term profitability in the longer-term pursuit of becoming the world’s biggest retailer.

But the new store also demonstrates some of the attributes that have helped Amazon grow so fast: it is unafraid to try things. Success is quickly built upon and failures fast forgotten. If midtown Manhattan doesn’t work out, well, it’s only one store. But, if it’s a success, expect to see an Amazon shop coming to a high street near you very soon.

Argos and Amazon – it would be hard, at first, to imagine two companies further apart on the retail continuum but, from the extremes, these very different retailers are converging and may, extraordinarily, end up looking quite a lot like each other.

Great ! Thanks for your subscription !

You will soon receive the first Content Loop Newsletter