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  5. Lockdown delivers early Christmas gift to Amazon

Технологии

Lockdown delivers early Christmas gift to Amazon

It was a week of two halves for bookshop manager Vivian Archer. By Wednesday, she had never seen the store so popular. New releases were flying off the shelves, schools were getting their orders in for the months ahead, and Christmas stock lined the walls ready for the November rush.

“We’ve really had a very busy few days,” Archer says, as yet another customer bundles through the door. “You see, many books have lifted their embargoes this week.”

But a day later, it’s a very different picture. On Thursday morning, like many across the country, Archer was forced to keep the doors of Newham Bookshop closed. “We’re just hoping we’ve got enough in place to keep things going through lockdown. It will be tough, but I guess the more we can resist Amazon…” she trails off.

Her bookshop is just one of the many stores selling “non-essential items” which has fallen victim to the new lockdown restrictions, imposed last weekend in an effort to bring down the spread of Covid-19 before Christmas.

For shop owners, it has come as a heavy blow. The new rules mean they are forced to be idle at one of their busiest times of year: Black Friday and the start of the festive season.

All non-essential stores have been forced to close down until at least December 2

Credit: Mark Hawkins/ Barcroft Media/ Getty

Estimates from the British Retail Consortium suggest that non-food store-based retailers will suffer over £2bn a week in lost sales as a result of the restrictions. Already, larger chains are feeling the squeeze. Sainsbury’s last week cut 3,500 jobs and closed 420 Argos stores. John Lewis will reduce its headcount by 1,500.

Once again, it appears that Amazon, the US online retail behemoth, will be lockdown’s big winner, helping swell boss Jeff Bezos’s already vast fortunes. Over the course of the pandemic, his net wealth has surged by a third to around $191bn (£145bn).

With Santa’s grottos closed in shopping centres up and down the UK, it will be Amazon Prime delivering this year’s Christmas cheer. According to its last quarterly numbers, Amazon profits rose by 200pc and revenues jumped to $96bn.

Estimates from eMarketer suggest online retail will top £28.5bn in the UK over November and December this year, up 17pc on last year. Amazon is expected to take around 21.4pc of all e-commerce sales, suggesting it will make at least £6bn.

xmas Amazon

A new lockdown will only strengthen those numbers. During the last forced closures, online’s share of sales increased by a third, from around 20pc of all UK retail to 33pc.

Some smaller businesses may be able to tap into that trend. Around one in seven high street retailers are estimated to have “enhanced their online offering” or established a web presence for the first time this year.

Others have opted to partner with the enemy, Amazon itself, by becoming third-party vendors on the site to bring in sales as their shops remain shuttered.

While hundreds of thousands of businesses have gone down this route, it is not an attractive option for all, given the extra costs it introduces and the effect on margins.

Still, this, as well as Amazon’s sales of its own stock, is expected to draw in vast swathes of customers to the online retailer this year, outstripping any other e-commerce option.

Chris Mole, chief executive of Amazon advertising agency Molzi, says he expects the average Amazon shopper to spend as much as £400 over Christmas.

The ‘golden quarter’ of Christmas

“It is the expectation it will almost double with retail closed at least for Black Friday and Cyber Monday. From the first lockdown, we had clients selling on Amazon with sales up 150pc.” Categories such as beer and wine, and toys, with toy shops banned, will do well, he adds.

In Wales, where supermarkets have already been blocking off shelves, the policy has been dubbed the “Welsh fire-break – sponsored by Amazon”.

It is true that it is set to be a merry Christmas for Amazon. Neil Ackerman, an ex-Amazon executive, predicts “double-digit holiday season growth” this year for the Seattle giant, but says “stores that have not embraced e-commerce will fail”.

The highlight of November’s shopping month is Black Friday, this year on Nov 27.

Deals during this period last year made UK retailers £9bn. But physical stores will miss out entirely for the first time.

Staff at the Amazon Fulfilment Centre in Peterborough prepare for Black Friday and the Christmas rush

Credit: David Rose

An American invention, Black Friday was brought to the UK a decade ago, says Philip Green, a former Amazon finance director.

“In the first year, it really didn’t work, but since then it has grown. It has now become a deal fortnight. From a logistics perspective, that allows you to smooth out demand through the peak.”

At Amazon, you would think the mood would be jubilant. A purely online Black Friday will likely result in bargain hunters flocking to its site rather than hitting the high street.

What is more, this month, huge numbers of people will be stuck indoors, and there is “probably going to be much greater propensity [for them] to grab their computer and browse than they would ordinarily because the shops are shut”, says Clive Black at Shore Capital.

“I imagine Amazon has been girding its loins since the Prime Minister announced that non-essential retail would be closed down.”

Still, internally at Amazon, not everyone is bullish. When the first lockdown hit, Amazon was forced to pull back deliveries of anything deemed non-essential to free up capacity. This time around, executives are also having to keep an eye on the spectre of a no-deal Brexit, which could cause further log-jams.

“The main thing is getting that balance right between usual seasonal goods and essential items,” one insider says.

Black agrees that the problem will not be “cleaning orders”. “It will absolutely be about whether there are enough white vans and van drivers out there to deliver the things.”

Yet, this is something Amazon is acutely aware of, and has been preparing for. Since March, it has ramped up its logistics capabilities and is hiring 20,000 seasonal workers this year, on top of 7,000 new permanent posts unveiled in September.

Pickers and packers at one of Amazon's regional Fulfilment Centres in Peterborough prepare for Black Friday

Credit: David Rose

For other retailers, with less advanced logistics capabilities, the question now is whether consumers will wait until the lockdown lifts for their Christmas shopping sprees.

If figures from earlier this year are anything to go by, the outlook does not look good for bricks-and-mortar stores.

Covid-19 has prompted many shoppers to adopt a risk-averse approach. Despite restrictions being looser in September, footfall in stores was still down 33pc from a year earlier.

Shopkeepers think footfall will collapse this month — and also in the run-up to Christmas

What is more, many remain unconvinced the lockdown will lift on Dec 2, following comments from Michael Gove that restrictions could be extended.

The Prime Minister has since insisted the measures will expire on Dec 2.

Still, as store owners shuttered their doors last week, many were unclear as to when they would open again. For people like Archer, there remains hope.

“People are very conscious of supporting their local shops,” she says. Some have even started delivering books to customers on their bikes.

It is not just books people are buying from her, as a few are now opting for a tote bag too. The words emblazoned on it read: “Resist Amazon, shop local.”

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