Last week, Amazon opened its first large-scale, fully automated Amazon Go grocery store in Seattle. The 7,700 square foot store offers baked goods sourced locally, fresh seasonal produce, meat, seafood and ready-made meals, as well as beer, wine and spirits.
How It Works
There are no cashiers. To make purchases, shoppers need an Amazon account and the free Amazon Go app which they can download onto a recent-generation iPhone or Android phone. They swipe a QR code from the app to enter the store. Sensors and overhead cameras track everything placed in or taken out of shopping carts. Amazon uses machine learning and artificial intelligence to enhance the shopping experience.
Amazon reportedly has plans to open more such groceries, and there are rumors that it will fully automate stores in its Whole Foods chain.
In retail where margins are thin, automation removes two main headaches: labor scheduling and shrinkage. Tech doesn’t call in sick or not show up at all, and it doesn’t steal.
Changing the Shopping Experience
Customers tend to abandon shopping carts or shorten shopping trips because of long checkout lines, costing retailers in the United States “tens of billions in sales”.
The resulting consumer dissatisfaction also negatively affects the probability that they will return. By reducing checkout times and improving the buying process, automated stores can potentially increase retail sales.
The Way of The Future?
Many companies, large and small, are working on autonomous technologies for “cashierless” stores.
Amazon has opened at least 26 Go convenience stores in Seattle, Chicago, San Francisco and New York City since January 2018. Using the Amazon Go app to enter the grocery store lets Amazon track customers’ locations in the store, their time spent there, and considerations and purchases. This makes it possible to deliver personalized discounts and recommendations based on the customers’ data.
Amazon’s data collection also allows delivery of in-store augmented reality applications on customers’ mobile phones to present interactive information such as recipes.
7-Eleven piloted its first “cashierless” store, for employees only, at its corporate headquarters in Irving, Texas. It offers an experience similar to Amazon’s automated stores. Customers download a 7-Eleven app, which provides a QR code that lets them enter the store and make purchases. 7-Eleven uses custom-built technology developed in-house.
Sam’s Club began piloting a “cashierless” store in Dallas in October of 2018.
The Pros and Cons of Going “Cashierless”
Going “cashierless” is not necessarily applicable to all kinds of stores. For commodity goods like staples, it makes sense to move to this model, but anyone who’s tried automated checkout with specialty items knows sometimes the personal touch of humans is needed.
Walmart, the nation’s largest “brick and mortar” retailer, has abandoned “cashierless” checkout in a large number of stores because of high levels of shoplifting.
Amazon believes the shoplifting threat can be mitigated through the use of cameras, along with scanning and product verification technologies. Depending on the success of Amazon Go, further rollout of the technology may be expected.
One big caveat for retailers installing a “cashierless” option is that consumer impulse sales take a nosedive. Shoppers aren’t tempted to grab an extra item or any other impulse buy when there’s no checkout line to stand in – think magazines, gum, mints, candy, and toys that kids would ask parents to buy for them.
Finally, If this technology becomes widely adopted, there will be fewer entry level jobs affecting 2 very important demographics – students and retiree’s.
The jury is still out – let’s see where this goes over the next 3-5 years.
