Shop-and-go: Grocers weigh the cost of convenience

It was Amazon that started the ball rolling in January with its “just walk out” shopping experience.

The first Amazon Go store at the company’s headquarters in Seattle teams an app with a complex camera system and machine-learning capabilities so that every time a customer lifts something off the shelf, it’s automatically added to their account and an electronic receipt is sent moments after leaving the store.

Right now, Amazon Go isn’t a full supermarket – it’s more of a convenience store, offering freshly prepared meals, salads and sandwiches, and snacks and drinks for urban dwellers on the go.

The technology appears to be robust – when a New York Times reporter tried to beat the system and steal a product by obscuring it from the cameras he was charged for it, although there were some teething problems for a while, and this store is small.

It remains to be seen what overall benefits shop-and-go technology will hold for retailers, particularly in terms of theft. Already losses through self-service checkouts are estimated to be double standard stock loss.

Developments in artificial intelligence, machine learning, and internet of things technology are on the cusp of being able to combat this through smart checkouts, smart shelves, sensors and automation. Technical innovations will also have an impact on inventory, ensuring that the right level of products are in stock, on demand.

But regardless of latent security concerns, the outlook is that progress towards cashless and checkout-free stores is inevitable. Researchers Juniper estimate that contactless payments will reach more than $US2 trillion ($2.73 trillion) by 2020.

Amazon Go has since expanded out to five stores across the US, and while there’s no official word on this, recent reports suggest there are plans to grow the concept to 3000 stores by 2021, which is serious competition to existing convenience chains.

In Britain, supermarket chain Sainsbury’s announced in August that it was trialling scan, pay and go technology at one of its London stores. Its existing SmartShop app system, which runs across 68 stores, allows customers to scan goods on their smartphones then pay at a designated till point. The latest trial, however, allows customers to pay anywhere for the goods using Apple Pay.

In Australia, last month Woolworths launched a similar trial at one of its Sydney stores with its Scan&Go technology, where customers scan barcodes into their phones as they shop and then tap off at a dedicated checkout, where the payment will be made through a linked debit or credit card.

The companies dipping their toes in the water with this technology insist it won’t lead to job cuts, and emphasise that it’s about improving convenience for customers.

A retail expert from Queensland University of Technology, Professor Gary Mortimer, told The Sydney Morning Herald: “One of the pain points shoppers often talk about is having to line up at the checkouts. This type of technology removes that element of the shopping experience completely and puts the power back into the consumer’s hands.”

Meanwhile in China, Alibaba’s futuristic supermarket chain Hema continues to surge ahead in growth. It already has a network of 64 digitised “new retail” stores, where customers can shop, dine and pay using their mobile phones, with reports that it plans to grow to 1000 stores within five years.

Tesco boss Dave Lewis told The Guardian: “The technology exists to do it, but does the customer behaviour support it? If the margin is 2 to 3 per cent, you don’t need to lose very much to make it unprofitable.”

 

Claire Stewart is a writer and content strategist at SafetyCulture.

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