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Is Amazon the saviour of the high street?

Online giant Amazon has thrown its considerable weight behind a series of pop-ups across the UK. Drapers analyses the impact

A shiny new shopfront appeared on Manchester’s St Mary’s Gate on 3 June. A sign on the windows reads “Clicks and Mortar”, and is surrounded by cursor arrows – a somewhat crude indicator of what is inside. The pop-up shop stocks brands that were previously only found online, selling anything from smartphone accessories to fashion.

Under the sign are the logos of its four supporters: small business incubator Enterprise Nation, insurance firm Direct Line for Business, payment company Square, and Amazon. The pop-up is part of their new Clicks and Mortar programme, which aims to help small businesses to grow on- and offline.

Throughout the year-long pilot programme, more than 100 small online businesses will be supported to sell on the high street for the first time. In total, there will be 10 Clicks and Mortar shops – Manchester will be followed by Wales, Scotland, the Midlands, Yorkshire and the south-east of England.

The programme will also help small businesses to upskill their workforce through a new £1m fund to train more than 150 full-time apprentices. Independent research on the success of the pilot will be submitted to the government, to help shape its Future High Streets strategy.

Pretty vacant

Enterprise Nation founder Emma Jones believes Clicks and Mortar will be a shot in the arm for an ailing high street. The pop-up shops will be in vacant units, which are rising in number. Last month, the British Retail Consortium revealed that one in 10 high street shops is empty as embattled retailers such as Debenhams and Arcadia Group close stores.

“[Clicks and Mortar] will benefit the customer, who can discover new brands on the high street, and benefit the high street in that we are putting empty spaces to good use,” argues Jones.

Small businesses are one of our most important customer groups 

Doug Gurr, UK country manager at Amazon

But what are Amazon’s motives for supporting these bricks-and-mortar pop-ups? No sales will be made to, or via, Amazon through Clicks and Mortar. The brands stocked in the shops will contribute a nominal fee each week towards the cost of rent and rates, but pay no commission on sales, so there is no obvious financial gain for the online giant.

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Amazon explains that 58% of physical gross merchandise sales on its site came from third-party businesses in 2018, which was only possible following years of “heavy investment in technology, infrastructure and selling tools to help them grow their business”. It believes Clicks and Mortar will help more small businesses to grow their brand awareness, which will have a halo effect on Amazon’s sales.

“Small businesses are one of our most important customer groups,” says Doug Gurr, UK country manager at Amazon. “From giving up-and-coming online British brands the chance to experience physical retail, to funding the training of full-time apprenticeships, and helping to increase SME [small and medium-sized enterprise] exports, we are committed to supporting small business growth.”

Ulterior motive

Nevertheless, some industry observers take a more cynical view of Amazon’s motives. Joshua Bamfield, director of the Centre for Retail Research, points to the PR value of the Clicks and Mortar venture for Amazon, which has faced repeated criticism over its UK tax bill.

“This comes at a time when there is both public action being taken by governments against Amazon, and more anxiety about its increasingly dominant role in commerce,” he says. This dominance was underlined by a recent GlobalData report that predicted Amazon will account for one-fifth of UK online spend by 2024.

Other commentators point out that Amazon has tried bricks-and-mortar retailing before, and suggest Clicks and Mortar will give it further insights into this channel. Amazon ran a four-day pop-up in London to promote its Black Friday deals in 2017, and last October opened a temporary fashion shop in the capital. It also owns Whole Foods Market, which has seven supermarkets in London, and operates in the US.

Amazon is not alone in testing the multichannel waters: Ebay opened a pop-up in Wolverhampton last month. It supports 40 small online retailers.

Rob Hattrell, vice-president Ebay UK, says: “The store has helped boost sales, and we are analysing data from it to help better understand the links between online and offline. The pop-up space helps explore how stores of the future can combine technology with vital human connection, which is so important in fashion retail, to powerful effect.”

Daniel Bobroff, founder of creative technology advisory firm Coded Futures, says: “While the growth [in online retail] is staggering and double digit, it is still the case that stores do offer a more profitable route to their customers and it’s a question of how to make those two things work together. The days of pureplay ecommerce are under threat. Amazon will be part of that emerging [bricks and clicks] sector as physical stores become increasingly digital.”

This could breathe new life into the UK high street, says Kien Tan, director, retail strategy at PwC: “Any initiative like this that gives consumers another reason to visit is great news for driving footfall to the high street.”

Testing the water

For brands in the Clicks and Mortar stores, meanwhile, the benefits lie in the opportunity to test out physical retailing at little risk. The Manchester pop-up can stock up to 10 brands, which are typically locally based and have built up successful trade online. Launch brands include ethical womenswear label Careaux, scooter maker Swifty Scooters, smartphone accessory brand Torro Cases, and men’s skincare brand Altr for Men.

Careaux navy ivory

Careaux set up a pop-up in Manchester earlier this month

Careaux launched in Manchester in 2018 and, until now, has only sold online. Co-founder Rachel Beattie says its Clicks and Mortar pop-up, which ran on 3-8 June, was invaluable: “From feedback from our customers, the importance of seeing the fabric and the quality of pieces is a huge focus, so to be able to display our pieces for people to come and see for themselves has been brilliant.

“The format of Clicks and Mortar worked really well, as it was a commitment of one week for us, which provided a great opportunity to test a pop-up before committing to longer leases.”

For small online brands keen to build a presence on the high street, the advantages of Clicks and Mortar are clear. The year-long programme will also give the industry – and government – a better idea of whether there is appetite for this approach among consumers.

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The Drapers Verdict 

There is no single solution to the problems facing the UK high street. Bricks-and-mortar retailers are hobbled by business rates and high rents, and these rising costs are eating into stores’ profitability at a time when footfall is dropping.

The Clicks and Mortar initiative is a reassuring sign that physical stores still have a place. Modern retailing is not a war between bricks and clicks – most consumers want both. Programmes such as this have the potential to reinvigorate the high street by filling vacant units and bringing new brands to local communities.

For Amazon, the project is a positive PR exercise and will strengthen its connections with regional corners of the UK. It will also help to grow its core small business customers. Whatever its motives, Amazon is investing in the high street at a time when it needs it most. 

 

 

 

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