Whilst in New York for #nrf18 last week, I took the opportunity to visit Amazon's bookstore in Manhattan, which opened in October. On initial sight, it looks just like a regular bookstore (albeit with a display of Kindles and Echos to play with). However, on closer inspection, and following conversation with the ready to help brand evangelists (masquerading as shop assistants), the way Amazon has intertwined it's digital know how into this 3000 sq ft space started to become clear.

For a start, the labels for the books include a scan-able barcode and also the 5 star score from the online reviews. 

The idea is to encourage you to use your Amazon app (over the freely provided & instantly available wifi) to find out more info about the physical book in front of you. As you do so, you'll quickly notice a difference in the online price vs the price printed on the book's jacket, and this is where the Prime marketing kicks in. As an Amazon Prime customer, you get access to their online prices whilst in store - absolutely differential pricing for the same product in the same place at the same time differentiated by customer. 

To get this price, the customer either shows their Amazon app at the till, uses the same card registered to the Prime account, or most simply, generates a QR code within the app which is scanned at the till. The till itself is a interesting double sided tablet, where the customer can see each item being added to the basket, along with the Prime savings being made (26% on average according to an instore sign). Without any friction, Amazon have elegantly tracked the customer's physical browsing and purchasing activity and linked it to their online activity.

In fact, given the number of overhead access points and cameras, it would be hard to believe that there is not also detailed analytics going into each customer's flow around the store, dwell time at each point, and individual conversion rate, translating back into layout optimisation.

Speaking to the in store Amazonians, it's also clear that similar analytics are being used to determine the initial assortment, with Amazon using data on what people within the locality of each store are not only buying but also searching on to shape the range. This is then augmented by customer and staff feedback - an example provided was year planners were not included initially, but many customers had asked for them, and so the staff requested them. They didn't arrive in Prime "next day", but within a week, the assortment had adjusted to include them. This shows that people meeting real customers can still add value to the algorithm, picking up new trends and gaps which the data will miss.

There were a few other "human touches" that were nice too, including a roll of brown paper displayed behind the till for the store Amazonians to write comments or thoughts - it's still trying to look and feel like a traditional corner bookstore staffed by bookish enthusiasts.

It's also borrowed from the proven recipe of including a great coffee shop as part of the footprint, which was busy with many customers sitting on their own reading books.

Click and collect is available through an Amazon Locker just outside the store, and you can of course order anything via the app for delivery to home as normal.

Whilst Amazon's new self checkout grocery format, Go, rightly is gathering all the press this week on launch, it's the bookshop which I think has demonstrated a number of important lessons for retailers grappling to redefine themselves in this digital age:-

1. Stores are not dead - they are very much part of the journey, and play a key role in giving your customers the chance to interact with your brand and your products and services

2. Think creatively about how you can use technology to maximise customer value and reduce friction on the instore journey

3. Data and analytics play a key role in defining and optimising your assortment

4. Don't be embarrassed about differentiating pricing or offer based on the customer - your loyal customers want to be made to feel special, and like their custom to be appreciated and rewarded

5. Your people will always have the most important part to play - they are your brand ambassadors, the living and breathing embodiment of your values, and the ones who can build or damage customer relationships the quickest. They also provide a good source of local intel and can generate creative energy which creates connections with their customers

What's also clear though is that Amazon are not planning on stopping their drive for global retail supremacy any time soon, and standing still is not an option. Knowing how your values connect with your customers' values, and then reinforcing these at every physical and digital turn, would appear to be the only way to differentiate, to survive and hopefully to thrive.