Amazon to open pop-up stores in UK town centres as it faces criticism over paying taxes

Online retail giant has launched its first shop in Manchester in the north of England

A man walks past the Amazon-backed pop up store 'Clicks and Mortar' in Manchester, Britain, June 3, 2019. REUTERS
A man walks past the Amazon-backed pop up store 'Clicks and Mortar' in Manchester, Britain, June 3, 2019. REUTERS

Amazon began opening pop-up stores across the UK selling everything from groceries to electronics as the e-commerce giant faces growing criticism that it is shirking its tax burden in the country.

Some observers said Amazon’s move to the high street is the company's attempt to improve its public image after retailers and campaigners accused it of avoiding paying all of its UK tax.

The rapid growth of tech companies has stretched international tax rules to the limit, leading the Organisation for Economic Cooperation and Development to pursue global reforms. The Paris-based institution is looking to build a new policy to prevent firms from simply declaring their income in low-tax jurisdictions, depriving other countries of billions in revenue.

Despite criticism that Amazon doesn’t contribute enough to the UK’s economy, Doug Gurr, UK Country Manager at Amazon, told Sky News that the company paid £63 million in British business rates last year.

Amazon pays its employees in the form of shares, which it can offset against corporate tax.

An Amazon collection locker is seen inside the Amazon-backed pop up store 'Clicks and Mortar' in Manchester, Britain, June 3, 2019. REUTERS
An Amazon collection locker is seen inside the Amazon-backed pop up store 'Clicks and Mortar' in Manchester, Britain, June 3, 2019. REUTERS

Although physical retailers account for 82 per cent of sales in the UK, many players are struggling to turn profits with the increasing threat of e-commerce - and now Amazon is bringing online retailers to physical spaces.

The year-long pilot programme will explore a new model to help up-and-coming online brands grow their high street presence. Independent research on the success of the pilot will be submitted to the British government, following the call for new ideas to develop the Future High Streets strategy – meaning that such shops may become more prominent on the high street in the future.

“Small businesses are one of our most important customer groups, and we’re thrilled to work with Enterprise Nation to design a comprehensive package to help entrepreneurs across the UK grow their businesses, both in-store and online,” Mr Gurr said.

The shops, called ‘Clicks and Mortar’, are part of a programme by small business support group Enterprise Nation, Amazon, insurance provider Direct Line for Business and payment processor Square.

The first store opened in St Mary’s Gate in Manchester, in the north of England on Monday.

The pilot programme looks to enable more than 100 small online businesses – including Swifty Scooters, Torro Cases and Altr for Men – to sell on the high street for the first time in 10 Clicks and Mortar shops across the UK.

“UK shoppers like to shop both online and in high street stores, and our intention is to help small businesses succeed by combining the best elements of online and high street retail,” said Emma Jones, founder of Enterprise Nation, which supports over 90,000 of Britain's small businesses. “This new concept will provide small businesses with the space, technology and support to experience physical retail for the first time, while enabling customers to discover new brands on their local high streets.”

Amazon has already explored the idea of introducing its cashier-free Go store to London’s high streets. The Amazon Go stores are currently operating in 11 locations in the US.

People are seen inside the Amazon-backed pop up store 'Clicks and Mortar' in Manchester, Britain, June 3, 2019. REUTERS
People are seen inside the Amazon-backed pop up store 'Clicks and Mortar' in Manchester, Britain, June 3, 2019. REUTERS

Amazon's foray into bricks-and-mortar comes amid trying times for British retailers. Pharmacist Boots said at the end of May that more than 200 stores could face closure following a review.

UK clothing and home-wares store Debenhams narrowly avoided administration in April, but was saved in May after creditors backed a restructuring plan that would see the closure of up to 50 stores.

Celebrity chef Jamie Oliver’s restaurant group, which includes 22 Jamie's Italian outlets, plus the Fifteen and Barbecoa restaurants in London and a Jamie's Diner at Gatwick airport, went into administration last month.

Updated: June 5, 2019 05:44 PM

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