Retail

Amazon Go Has Spawned Imitators, But Also Innovation

Much of the excitement surrounding automated retail — aka cashierless retail — has been driven by Amazon Go, but the enthusiasm for “just-walk-out” technology has been tempered by the stores’ limited locations.

While not exactly an empire yet, the online retailer launched its 13th store in New York City last month and it features the ability to use cash, answering a complaint that’s been lodged at unattended retail generally.

The next wave of automated retail might be heralded by U.K.-based Tesco that earlier this month debuted its version where shoppers can take items off of shelves, tracked by cameras and can walk out without paying.

The latest Automated Retail Tracker explores trends and new developments in the world of cashier-free retail and smart vending.

This is the wave of the future, if new CBRE research is to be believed. A recent report from the commercial real estate investment and services company forecasts that online grocery share will reach between 5 percent and 10 percent by 2022 and will change but not replace the traditional store.

The firm also predicts that within a decade physical stores are going to shrink and checkout lines will become extinct, mostly due to cashier-free payments, including shopping carts equipped with barcode scanners and credit card readers, mobile payment apps, robots capable of scanning items and more.

New Developments

While the seamlessness of Amazon Go may have grabbed the most attention, the experimental retail model has spurred other retailers to innovate.

French retail giant Carrefour SA has also been testing camera and image-recognition technology in grocery stores.

Zippin, a new cashierless convenience store, has launched in San Francisco with the goal of reducing typically long lines. Shoppers log in with an app, pick up goods and can walk out. The store now takes cash since San Francisco banned cashless businesses.

“We expect pretty much all stores to be checkout-free,” Zippin CEO Krishna Motukuri, said in an interview with PYMNTS. “Once they’re used to this experience, customers won’t want any kind of self-checkout, or anything where they’re required to do a lot of work.”

In India, online fashion company Myntra opened a cashierless store, selling items from its Roadster outdoor lifestyle brand. The venues rely on radio-frequency identification (RFID)-technology and self-checkout, which is a slightly different approach than the cameras and product sensors many other retailers use.

Unattended Retail Can Boost Sales

Currently, about a quarter of the nation’s 4.3 million to 4.5 million vending machines can accept cashless payments. One fear about cashless vending machines has been that credit cards or mobile wallets might cannibalize cash sales. But a recent study found that wasn’t the case.

The study measured performance in 250,000 machines over an 18-month period and discovered cashless sales increased 78 percent in all machines studied and increased even more (131 percent) in low-performing machines that normally brought in less than $2,000 per month.

The study found there is a 37 percent increase in dollar spend when consumers pay with a card versus cash. The conclusion was that there was less price resistance when using credit cards and the users could purchase more in one transaction than with cash.

Similar results were reported by RBC Capital Markets after analyzing Amazon Go productivity. Shoppers spent about 50 percent more on average than at a typical convenience store.

Retailers vs. Customers

Retailers like the cashierless model because it keeps staffing needs low and frees up cashiers to do other things—ideally, improving customer service—and can potentially allow stores to stay open longer hours or 24/7.

Automated retail falls into two camps: cashierless stores like Amazon Go and so-called smart vending machines. Self-checkout, which is seeing renewed interest from retailers like Costco, borrows from both.

Perceived downsides from the consumer perspective are loss of human interaction (and the potential for eliminating jobs), privacy concerns and the cashless backlash.

A survey by packaging company Schorr last year found that while lack of social interaction would be a deterrent for customers to shop at a cashierless store (24 percent) as well as not being able to pay with cash (12.5 percent), the biggest drawback compared to traditional grocery stores was not being able to pay with coupons (34 percent).

However, 84 percent said they would find an Amazon Go-type shopping experience more enjoyable than traditional grocery shopping and three-fourths would be likely to shop at this type of store if opened up nearby.

There might be an emerging middle ground, however. Last year, Kroger launched a system that allows customers to scan and bag products as they shop, then pay by scanning a final bar code. Kroger wants to make shopping and payments faster but hasn’t fully embraced the cashierless model yet.

——————————–

Latest Insights: 

The Which Apps Do They Want Study analyzes survey data collected from 1,045 American consumers to learn how they use merchant apps to enhance in-store shopping experiences, and their interest in downloading more in the future. Our research covered consumers’ usage of in-app features like loyalty and rewards offerings and in-store navigation, helping to assess how merchants can design apps to distinguish themselves from competitors.

TRENDING RIGHT NOW

To Top