Will other grocers beat Amazon Go to the punch?

Discussion
Source: Amazon
Dec 28, 2017
Matthew Stern

While the U.S. continues to wait for the arrival of Amazon Go, other retailers are entering the cashier-less store space — including Amazon’s biggest emerging e-commerce rival.

Walmart recently began discussing Project Kepler, an initiative headed by the co-founder of Jet.com which, according to Recode, aims to create technology that, like Amazon Go, will eliminate the need for cashiers in-store.

In China, online retailer JD is launching hundreds of cashier-free store locations using technology that appears similar to Amazon Go. A combination of cameras and RFID tracks movement and item selections throughout the store. Facial recognition, also expected to be employed by Amazon Go, identifies customers.

According to the Telegraph, “JD explained that cameras on the ceilings of the stores can recognize customers’ movement and generate heat maps of their activity to monitor customer traffic flow, product selection and customer preferences, which helps store owners to stock efficiently.”

Facial recognition also enables the store to show customized adverts and promotions based on a customers’ shopping habits and demographics.

“With automated stores, you get rid of any chance of bad interaction with a miserable or untrained human being,” Shaun Rein, managing director for market consultancy CMR China, told The Financial Times. “They also want to look cool. Things like facial recognition still have a big wow factor among Chinese consumers.”

JD intends to offer its cashier-free checkout technology as a platform third parties can license, and is also already planning to use driverless vehicles for delivery, according to The Telegraph.

Apparently still working on overcoming challenges handling large number of customers, Amazon Go’s openings are reported to be imminent, according to a November report from Bloomberg.

While JD and now Walmart are aiming for a full “just walk out” store experience, a new successfully-implemented, cashier-less c-store in China requires more work from the customer. Although the store, Bingobox, is largely automated, customers must scan the items’ barcodes or QR codes and then pay via mobile wallet to check out.

Alibaba, Xiaomai and 7-Eleven are among other Asian retailers that have opened staff-less stores.

DISCUSSION QUESTIONS: Do you see a major first-mover advantage to cashier-less stores? Will “just walk out” stores take hold in the U.S.? What features of the concept stores do you think will win over customers and which, if any, will be turn-offs?

Braintrust
"The proper analogy here is with self-checkout, which didn’t give any retailer a true first-mover advantage. "
"The cashier-less stores will provide an advantage versus other grocers that don’t have it only if it is executed well. "
"Strange that no one has mentioned Kroger’s Scan-Bag-Go app in test markets that has been in stores for almost a year and a half."

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17 Comments on "Will other grocers beat Amazon Go to the punch?"


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Phil Masiello
BrainTrust

Amazon has been refining this technology for quite some time. Walmart, on the other hand, has just begun discussing this initiative. It took Walmart seven years after Amazon launched Prime, to implement a bad rendition of free two-day shipping. So I do not see Walmart as the challenge.

This is absolutely technology that will be embraced by U.S. consumers. The issue in brick-and-mortar is never the shopping, it is always the wait at the checkout that consumers complain about. The convenience of exiting without going through a checkout will be the biggest draw for consumers.

I can see this technology taking hold in the food and convenience channel. Other concepts such as electronics and fashion will have their own challenges which will slow down adoption. The biggest challenge is to ensure the technology is theft-proof and works consistently. If the “system” went down, it could create a chaotic situation.

It will be interesting to see how this evolves. I had the benefit of observing it up close and found it fascinating.

Ron Margulis
BrainTrust

The proper analogy here is with self-checkout, which didn’t give any retailer a true first-mover advantage. One retailer in the market will introduce it, then others will follow. There will be a lot of adjustments as customers either like it or don’t and operations work or don’t. Some retailers will pull the plug on the systems and others will expand them. Just like self-checkout.

Ken Lonyai
BrainTrust

The technologies that make cashier-less checkout work properly require a lot of complicated integration — I know, I’ve been designing applications with them for years. So as much as I support these initiatives, they (as Amazon has learned) are not infallible in a number of edge cases. I imagine that for stores going this route, the resulting shrinkage will be offset by labor savings.

More interesting will be the reaction consumers have as self-serve stores roll-out. Most people talk the talk against job loss but ultimately choose what suits their needs over principles. So it will be intriguing to see over time (if the systems truly add convenience) how they will be embraced. My bet is that if they are time-savers and don’t create additional hurdles for shoppers, cashier-less checkout will become standard in many verticals including grocery and convenience despite the objections of employees, unions, and pundits.

And … note to Shaun Rein: there are ways to minimize miserable or untrained human beings.

Jennifer McDermott
BrainTrust

I think Amazon is too far ahead of the game here. They will be the first-mover, by a long stretch, but I’m not sure the concept has longevity beyond the buzz it will create for the brand. Remember the drone delivery news? It created a media avalanche for Amazon but isn’t part of its day-to-day operations.

Assessing the self-serve over cashier counters in the supermarket, it doesn’t appear an overwhelming number of customers have a strong preference for the DIY experience.

This will do the job it’s meant to do for Amazon, but I don’t think that job is creating a spread of cashier-less outlets across America.

Richard J. George, Ph.D.
BrainTrust

Retailers have long understood the two basic caveats of shopping in-store. First, the longer you keep customers in stores the more they buy. Second, the quicker you get them out, the quicker they will return.

In my research on customer food shopping needs, the number one attribute after the big three (price, cleanliness and quality) was “speedy checkout.” Staff-less stores address this long-standing impediment to shopping at brick-and-mortar stores. There will be first mover advantages, albeit short in duration.

However, in this pursuit of time-saving and burden-reducing technology, let’s not forget the first caveat, namely a good in-store experience. In a dash to be first to offer speedy and convenient checkout, do not neglect what is happening in-store. Mistakes were made with the introduction of self-checkout. Front end labor was reduced without any redeployment in the store aisles. This time let’s reallocate some of the labor savings to enhance the customer’s experience before they breeze through the checkout.

Shep Hyken
BrainTrust
I’d be surprised if another retailer beats Amazon to the punch but even if they do, it probably won’t be by much. Amazon has taken time for one major reason — they want to get it right. The last thing they want is a customer service crisis because if it’s wrong, it’s not as simple as firing a manager. No, it’s potentially closing a store (or group of stores). So I’d still put my money on Amazon, regardless of whether they are there first or not. As for the “just walk out” stores catching on … This is about convenience. Customers, especially in the U.S., love convenience. This will work. It will start with the idea that it’s just “cool” to go in, grab merchandise and walk out. It will end with the idea that it is easy, practical and convenient. The stores that succeed will be selling merchandise that needs no human interaction. I don’t see a consumer walking in to a “just walk out” store to purchase their next big-screen TV. Groceries, prepared… Read more »
Larry Negrich
BrainTrust

A choice of self-scan/pay, attendant and cashier-less gives the shopper choice and comfort so the retailer that can offer choice will have the advantage. The single option of cashier-less is really no option so I do not see that as an advantage.

Joy Chen
BrainTrust

The cashier-less stores will provide an advantage versus other grocers that don’t have it only if it is executed well. The execution of cashier-less stores must provide convenience, efficiency and a better shopping experience for the store to have an advantage.

Cashier-less stores will still not be able to compete with more convenient, online shopping options like Amazon Prime Now or on-demand services where a product arrives in a few hours without you ever leaving your location.

Steve Montgomery
BrainTrust
There is certainly an appeal to being able to buy and go as this technology promises. However, there are still areas that need to be addressed. Let’s skip the development and deployment of the basic technology and assume it works. The first issue is that customers must adopt mobile payment and the systems must accept all forms of mobile pay. The customer also has to be willing to accept face recognition as a condition of shopping. I expect this will be another one of the “age” things we have discussed before with stratification across the generations. Then come the handling of all the age restricted items. A definite issue for c-stores, dollar stores, supermarkets and other retailers who sell these items. Finally, the bagging process. This will have to be handled by the customers. As retailers have discovered, people are willing to do it at self-checkout because the orders are small, but with a basket of groceries it is not so accepted a concept. Can all this be worked out? Possibly-to-probably; but it will not… Read more »
Al McClain
Staff

Or, since we talk every day about the need for brick and mortar retailers to create a better shopping experience, they could just do that. I’m fortunate enough to live in an area dominated by Publix, where there is an available check out lane 99% of the time with no waiting; a cashier who is friendly and competent; and usually a bagger who also offers to bring your groceries to the car. Meanwhile, Publix’s prices are in line with Walmart if you take advantage of the specials. Automating everything in physical stores seems to me to be just another way to drive shoppers online.

Michael La Kier
BrainTrust

If retailers can save shoppers time and money and make their lives easier they will be rewarded. Obviously the technology has yet to be perfected here, but it’s likely that cashier-less — or “just walk out” — technology can be a boon for convenience-type stores; less so for big box and grocery.

Herb Sorensen
BrainTrust

Amazon Go and other automated checkout technologies are the final mile in “self” service that began 100 years ago. But even if perfected, there will be a place for human interaction. That’s part of one of the two unassailable assets of brick-and-mortar retailing: 1.) The 360° experience, including “selective” human interaction and, 2.) Immediacy — you can get it RIGHT NOW! Not next day, not in two hours, but RIGHT NOW!

Online also has two unassailable assets: 1.) The infinite long tail — “The Everything Store” Amazon and, 2. “Algorithmic selling,” the process of using “personal selling” techniques to get the shopper from interest to “YES! to the dress” or whatever merchandise is being considered for purchase. See: Selling Like Amazon… in Bricks & Mortar Stores!

The ultimate retail store will involve a convergence of these four points. It’s what I have been calling for several years, “Convergence of Online, Mobile and Bricks retail,” COMB retail. You’ll see it in the coming years — all four assets smoothly integrated.

Lee Peterson
BrainTrust

We did a test with more than 3,000 consumers and the “just walk out” factor scored very high in terms of increased purchase intent. But realistically, we’re a long way of from being about to actually execute that. It seems easy; scan and go (Apple already does it), but things like shrink, inventory levels, the right technology, returns — you know, physical retail ops — keep bogging the idea down in the board room. That is to say — it’s hard to actually DO!

Having said that, this reminds me a lot of when e-commerce first got on the radar and all the dinosaurs just sat around and watched an outsider (Amazon) come in and steal their lunch. And then their dinner before they got going.

Regardless of how hard it is to execute, someone, like 7-Eleven or even Dollar General, should step up, fail fast and get ahead of some newcomer lurking around the corner about to pounce.

Ken Morris
BrainTrust
A first mover advantage won’t be a huge competitive differentiator, as the consumer adoption of this concept will take time. Just like self-checkout at grocery and hard goods stores, it takes time to change consumers’ habits. I don’t see Walmart or any other store beating Amazon to the punch, but fast followers won’t be in a bad position. They can learn from any mistakes Amazon encounters. Checkout-less stores will eventually take off, as consumers appreciate anything that is more convenient and saves time. The key will be to test, test and test to eliminate any friction that could cause consumer frustration. Concepts that require consumers to physically scan their items may be perceived as “work” and if items don’t scan properly, it will hinder adoption. Facial recognition might deter some shoppers as it may be perceived as a “big brother” or a “creep factor.” While there are a lot of technical and social factors to overcome, when it eventually works, it will transform the retail industry but for now … fast follower is the place… Read more »
Dave Nixon
BrainTrust

Strange that no one has mentioned Kroger’s Scan-Bag-Go app in test markets that has been in stores for almost a year and a half. They just announced an expansion of this capability. Scan at item location, bag it and checkout at a kiosk or via the app. This technology will not create much of an advantage (except in urban locations) because it is simply a convenience opportunity. No a major disruptor (like delivery) but one tool in a wide range of CX tools a retailer should leverage.

Pavlo Khliust
Guest

Well, I have been working with cutting edge software technologies quite a while and it’s obvious that with current technological complexity, cost of development and maintenance, “just walk out” stores will not be widely adopted at least for the next 5 years.

Harley Feldman
BrainTrust

While cashier-less stores will continue to grow and evolve, consumers will not go out of their way to go to a cashier-less store rather than one that is more convenient or has the item selection they are looking for. Therefore there is little first-mover advantage to cashier-less stores. Just walk out stores will grow but Americans like customer service so they will not become the dominant type of retail location. It will most likely be seen in small stores created in buildings for employees. The features of the concept stores consumers will like are the quick checkout and not standing in checkout lines. On the downside, there will be no associates to answer questions of provide advice about products.

wpDiscuz
Braintrust
"The proper analogy here is with self-checkout, which didn’t give any retailer a true first-mover advantage. "
"The cashier-less stores will provide an advantage versus other grocers that don’t have it only if it is executed well. "
"Strange that no one has mentioned Kroger’s Scan-Bag-Go app in test markets that has been in stores for almost a year and a half."

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