The impact of Amazon Go has shaken up retail with its cashier-less checkout concept. This has led many to question whether this spells the beginning of the end for traditional, manned checkouts. I would contend, no.
It is always best to take a pragmatic view when looking to predict what impact technologies like those that enable Amazon Go’s Just Walk Out checkout-less shopping experience is likely to have on the wider industry.
The cashier-less checkout concept is similar in this way to mobile wallet payments, in that retailers will need to understand the role such cutting-edge tech has to play in matching different speeds of consumer adoption.
Consider how the use of mobile wallets like Apple Pay has grown with increasing smartphone penetration. Yet cash remains the most frequently used retail payment instrument and will remain so in the near to midterm.
Just as contactless card and mobile wallet payments are currently limited in their scope by the current, EMV-imposed £30 transaction cap, so Amazon Go’s Just Walk Out Technology faces some limitations too.
There are the numbers of consumers ready, willing and smartphone-enabled to “Just Walk Out” with their shopping, avoiding any sort of checkout process altogether, and the store format it is applied to convenience.
Convenience is currently the only scenario where the sophisticated, “computer vision” video infrastructure and AI-based tracking software powering the Just Walk Out experience can deliver requisite margin and ROI.
Predictably, the competition is playing catch-up, developing rival checkout-less technologies like Microsoft, or trialling mobile scan and pay self-checkout systems, like MediaMarktSaturn in its consumer electronics stores.
But few tech vendors, let alone retailers, can match Amazon’s R&D spending, which outstripped that of any other US firm last year. Nor can they afford pricey store tech that costs more than the cashiers it can replace.
While Amazon has the cash to experiment in physical retail, with its Books, 4-Star and Go stores, not many retailers can finance the retro-fitting of such technology into large, mature and diverse store estates.
Even less can afford to turn away any potential customers but those with a compatible smartphone and electronic banking who have downloaded and registered with the Amazon Go app.
But, in keeping pace with Amazon, some of the Go checkout-less features are definitely worth emulating. The first is that every customer must identify themselves to gain entry store. This ties them back to their online ID.
Second, Amazon Go tracks and charges for every item removed the shelf and taken from the store, ostensibly eliminating shrink from customer theft. Again though, this kind of capability cannot be applied to every store.
Yet, it is these advantages that are likely to spur more than just convenience and grocery retailers to accelerate their mobile scan and pay developments, as opposed to Go, which only requires a mobile on entry.
Retailers are keen to eliminate queues, speed transaction throughput and gain visibility of the online-to-offline shopping journey, to compete with e-commerce. They also have to contend with rising labour overheads.
So, by offering a convenience shopping experience that dispenses with the need to visit a checkout, let alone one that is manned by a cashier, Amazon has called time on the need for the traditional, manned point of sale.
However, pronouncing the death of traditional manned checkouts is premature; until the advantages of deploying cashier-less checkout outweighs the costs, in terms of both Capex and addressable customer bases.
Amazon: How the World’s Most Relentless Retailer will Continue to Revolutionize Commerce by Miya Knights and Natalie Berg, and published by Kogan Page, will be available on 3 January 2018.