Season 3, Post 26: The cutting edge

“You have to be willing to be misunderstood if you’re going to innovate,” remarked Jeff Bezos. This perhaps explains why the company that has brought its users…

Season 3, Post 26: The cutting edge

“You have to be willing to be misunderstood if you’re going to innovate,” remarked Jeff Bezos. This perhaps explains why the company that has brought its users everything from next-day delivery services to Alexa devices via cashierless stores launched its first hair salon last month. Rather than Amazon selecting its home city of Seattle or perhaps a location in Silicon Valley close to many tech-advocates, London is the lucky beneficiary of the inaugural Amazon Salon. Your author’s hair had got too long and so in the interests of research, he recently booked himself a visit.

Located in London’s trendy Spitalfields district, the site is an impressive one, spanning two floors and comprising more than 1500 square feet. There are a lot of neat gimmicks on display. Forget magazines to thumb through during your visit; every conceivable read is accessible on a tablet, which also allows you to watch Amazon entertainment content. Then there is the augmented reality booth, where customers can see mock-ups of what their hair may look like were it to be dyed a different colour. Stylists may also recommend hair products, which can be purchased via simply scanning a QR code, with the sale then billed to your Amazon account. Even if the ultimate reason for visiting the venue is to get a haircut – and your author was pleased with his – Amazon has engineered things to make the trip feel like an experience.

Two questions arise: why is Amazon doing this and what can we learn about the application of technology to retail experiences? The answers to both are interconnected. Amazon says that the motivation for launching its Salon is to “get closer to its customers,” even though it is not necessary to have an Amazon account to make a booking. Further, Amazon says it has no plans to open further salons for now, a message that was also confirmed by the stylist cutting your author’s hair. It’s perhaps just a good publicity stunt, albeit an expensive one (notwithstanding Amazon’s $73bn cash balance).

With at least 20% of all retail purchases now made online in both the UK and the US, a figure which looks only set to grow over time, it behoves retailers with a physical presence to think more intelligently about how to draw customers to their outlets. Technology may provide part of the solution. There is much to like about a proposition that can get customers excited about the tangibility of a product, allows them to purchase it with just a click or two on their phone and then have a package delivered to the comfort of their homes. Augmented reality (or AR) also offers interesting potential, particularly if rolled out in retail settings. The overall AR market is currently worth ~$18bn but is growing at a 40%+ CAGR, per some forecasts. The future is both omnichannel and (more) digital.

30 June 2021

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

Alex Gunz, Fund Manager

Photos taken by the author during his visit yesterday.

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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