Grocery and convenience stores without cashiers or checkout lines appear to be an unavoidable eventuality. It’s how those stores ultimately will work that remains the real question. As in so many other cases, Amazon is leading the way, with Amazon Go convenience stores already operational in a few major U.S. cities. But is its approach the optimal one?
A key question is how to determine and register what a shopper wants to purchase, without having a cashier on hand to ring up the products. Amazon uses an app, which shoppers must download and open just to enter the stores. Thus it can identify them and collect payment information in advance. Then in Amazon Go stores themselves, cameras and sensors monitor what people add to their shopping baskets. As they leave, their credit or debit cards get charged automatically for the items they have collected.
Another option would be to use facial recognition software, such that the store would know who each customer was by scanning his or her face. This option may be less likely though, because consumers thus far have rejected such uses of this software, regarding it as overly creepy and intrusive. However, retailers keep looking for alternative options, because getting shoppers to download different apps may be challenging.
Rather than cameras, retailers also might be able to rely on RFID technology, if the tags could be applied to each individual product. In that case, a sensor at the store’s exit would be able to read all the tags, without having to keep track of what a customer picks up during the course of the shopping trip. This option is not available yet, due to the expense of applying RFID tags to each item.
Furthermore, the use of RFID tags would limit the retailers’ ability to gather and exploit information about how shoppers act in stores. By learning which items they pick up and consider, retailers can target promotions precisely. For example, if a shopper picks up two different boxes of cereal and holds them in a way that indicates a comparative consideration, the retailer could facilitate the process by sending additional product information through the app. If another customer picks up and then puts down a product, the retailer might issue a coupon, to encourage purchase.
Yet another consideration involves the payment method. Although many shoppers are happy to have their purchases charged to a card automatically, without requiring them to undergo any explicit purchase effort, others still prefer cash payments. In particular, low income consumers may lack access to traditional banking products like debit cards, and this issue is likely to become especially relevant as the model spreads outside Western, developed markets.
Finally, the location and design of the stores remain to be determined. Some experts predict that Amazon will soon eliminate cashiers from its Whole Foods stores. But its current implementation focuses on small convenience stores. A tiny, recently introduced, 450 square foot version of Amazon Go suggests the company’s seeming interest in inserting retail outlets in existing spaces, such as office buildings or hospitals. Small spaces might make it easier to track consumers’ behaviors, but the benefits of going without cashiers might be more valuable for shoppers visiting vast hypermarkets, who really don’t want to have to stand in line for an extended period.
Discussion Question:
- How do stores without traditional checkout lines record sales?
- How does this technology work?
- What are the advantages and disadvantages of eliminating checkout lines, from the perspectives of the retailer and the consumer?
- How would eliminating checkout lines influence the strategic profit model?
Source: Associated Press, The New York Times, February 8, 2019