Imagine walking into a store, grabbing an item off the shelf, and simply walking straight out again. No lining up, no item scanning, no searching for coupons, and no cash. A few years ago, that scenario would’ve sounded a lot like stealing. Right now, in the midst of a global pandemic, it sounds almost too good to be true.
But for a select number of people in Chicago, Seattle, San Francisco, and New York City, that scenario is already a reality, due to Amazon Go. And this selective reality will become a commonplace reality in the near future. Where Amazon leads — at least in terms of retail technology and business innovation — the world follows.
This form of retail is not easy to pull off. Amazon Go makes use of cameras, sensors, and machine learning to make sense of it all, tracking each item you pick up and put back with near-perfect accuracy. It’s a complex system that requires a significant investment from a brand, but it also means increased convenience, decreased in-store theft, and, most importantly, access to data like there has never been before.
In research we conducted around consumer comfort with a variety of retail technologies, loyalty programs on a mobile device and using mobile pay as part of the shopping experience both ranked highly: 48 percent and 42 percent of the 500 shoppers polled were already quite comfortable using these options, and contactless checkout scored a 43 percent comfort level as well. But facial recognition and geofencing fared much worse, with only 16 percent and 20 percent comfort respectively.
So what does this likely future of retail offer us? And will consumers embrace it when it arrives?
Advantages to Contactless Systems
There are numerous advantages for both customers and retailers with a contactless, cashless system like Amazon Go. The convenience factor is the most obvious (you’d be hard pressed to find a single individual who likes standing in line and waiting), but they extend beyond eliminating checkout lines and never needing to carry cash again.
As noted earlier, in-store theft decreases significantly. When a journalist accidentally stole a yogurt from an Amazon Go store, Amazon Vice President Gianna Puerini said, “It happens so rarely that we didn’t even bother building in a feature for customers to tell us it happened.”
Those savings add up. As retailers see less of their margin lost to the so-called five-finger discount, those savings can be passed on to consumers, as certain items will no longer be priced to account for significant losses.
Convenience and savings could be enough on their own to compel an industry-wide shift, but they’re just the surface gains. The biggest advantage, by far, is the ability to gather and parse data.
To date, retail businesses have had access to transactions — what people bought, what was returned (with maybe a bit of information about why), and what was left on the shelves — but the behaviors around those decisions have been more opaque. Online behaviors are easier to track, but in-store has remained somewhat mysterious, and connecting the two is nearly impossible.
Because this new kind of retail experience relies heavily on AI-connected observation and monitoring, retailers will have insight into what was being considered, what items won out over others, and which items were never even looked at — and all of it will be connectable to the shopper’s online profile, creating a seamless, unified view of the customer.
This is an enormous potential boon to everything from pricing (what each item is sold for) to merchandising (what gets put where in a store and how it’s displayed) to inventory planning (what items are ordered and stocked, and possibly even whether they’re manufactured in the first place). The ripple effects of these decisions could create a system that’s far more efficient, far less wasteful, and far more effective at meeting consumer needs than we’ve ever had before.
In the current pandemic, the immediate advantage of a quick, interaction-free grocery shopping excursion is obvious. But the additional benefits of a system that knows when and why a specific consumer picks X over Y could even make services like home delivery better. Consumers have become extremely familiar with the realities of shortages over the past few months, and those who use grocery delivery services know how frequently a substitute is required. With data-powered consumer profiles, the system could eventually predict with a high degree of accuracy what substitute any given customer would want.
And that’s just one small example — the potential for personalized consumer experiences is limitless.
Identifying Challenges
There are challenges to be faced, of course. As with any form of automation, there will be adjustments to how and where we employ people. Retail sales is a large category for youth and unskilled labor, and while new forms of employment emerge (installing and maintaining these systems alone will be a massive undertaking requiring a large workforce), retraining and skills development will need to be considered.
Cashless systems also limit who has access to purchasing, and in many jurisdictions, are illegal as a result. That means measures need to be put in place to ensure access for all, not just for those with credit cards or accounts with the business itself. Whether that’s the creation of temporary IDs for shoppers who will continue to pay with cash or an alternate approach remains to be seen, but the early stage investment underway now is where some of these challenges will be tackled.
Most significantly, these systems are not easy to create or implement. Even with the full force of Amazon’s resources, there are only a handful of Amazon Go stores in operation today. Retail stores aren’t going to switch to this mode overnight. But we will start to see steps toward it in the next couple of years, and as the system proves its worth for early adopters, we’ll start to see rapid adoption after that.
A New Shopping Norm
With Amazon as the market leader, contactless retail is being tested in grocery settings right now, but this technology will undoubtedly be deployed in short order in all retail settings — many more easily than groceries, where weight-scales and individual produce items add a level of complexity that clothing and office supply stores won’t face.
As the implementation kinks are worked out and the advantages of a unified view of customer data become increasingly apparent, contactless shopping will crop up more regularly until eventually it becomes the norm. What it means for consumers is a more convenient, less frustrating, and more fulfilling shopping experience. And for brands, it means better margins, happier customers, and a way to build and grow their businesses with confidence for the long haul.
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