Inside the Quiet Boom of Retail Lockers and Smart Shelves

The pressures facing retailers were in place long before tariffs and the specter of rising inflation dominated headlines. They’ve been dealing with theft (also known as shrinkage) and the changing expectations of consumers.

Consumers need 24/7 convenience when it comes to commerce, born from the times of the pandemic, Elyssa Steiner, head of strategy at Cantaloupe, told PYMNTS. They expect merchants to deliver what they want, when they want it.

“Among the key things for retailers to think about is how to give access to those customers anytime and anywhere — and self-service really meets that demand,” Steiner said.

Self-service retail also has the benefit of helping merchants deal effectively with operating pressures such as labor shortages, she said.

Moving Toward Smart Stores

While self-service retail conjures up images of kiosks in pharmacies and grocery stores, Steiner told PYMNTS the concept extends to automation in inventory management and underpins the emergence of “smart stores” on offer from companies such as Cantaloupe.

“There’s the blend of the physical with the digital,” she said, most readily apparent in the locked cabinets that house goods that are tendered when a customer taps a card at a 10-inch point-of-sale screen. All transactions at Smart Stores are cashless and done with cards or digital wallets on mobile devices.

That action “unlocks the cabinet, pre-authorizes the card and everything uses advanced, weighted shelf technology … anything you grab as a consumer, it detects and adds that item right to your cart,” she said.

The Smart Store bypasses the need to scan items or go through multiple steps for payment, and thus speeds up the overall transaction, Steiner said. On the retailer side of the equation, the use of inventory tracking and cameras to detect (any) suspicious behavior means that shrinkage declines (to less than 1% of inventory, compared to double digits at some merchants) and provides alerts when it’s time to restock.

Smart Stores use telematics to detail exactly what’s selling and where those items are being sold.

“It’ll give you recommendations on merchandising,” she said, so that brands can optimize their sales.

The Smart Store has proven to be transferable to any number of settings (most are perhaps now most visible in airports), ranging from gyms to train stations to college campuses and even quick-service restaurants, Steiner said. Retailers are becoming more mindful of the ways in which they can drive sales without having to incur the time and expense (especially in terms of fixed costs) that would be tied to a brick-and-mortar storefront.

“Smart Stores automate and create a small footprint,” she said, even in environments that are not open 24/7.

She offered an example where Smart Stores on military bases can sell gloves and other items that might be needed outside of “traditional” retailers’ hours.

The customizable nature of the Smart Store concept is seen in another example, where Cantaloupe has set up retail lockers at pickleball courts, allowing consumers to rent rackets and balls, she said.

At a high level, Smart Stores allow for adroit inventory management and the ability to test new offerings on the fly, Steiner said. Field or service technicians can “swap” rows within the machines to hold different items, as well as recalibrate the weights and sensors to test new merchandise strategies.

The Smart Store also allows brands and merchants to extend their sales reach. In collaboration with Woody’s, a quick-service restaurant, Cantaloupe set up “grab-and-go” Smart Store options in airports that, in a single location, added nearly $6,000 in monthly sales.

Looking ahead, Smart Stores will gain momentum as brands “eliminate friction but at the same time give consumers what they want,” Steiner said. “…With some of the retail brands that we’re talking with today, it’s exciting to see the light bulbs go off … as we’re giving them the opportunity to really expand in a whole new way.”