There was a time when every retail experience culminated with a customer standing before a cashier. But online retail giant Amazon.com, Inc. is expected to leap from the digital world to the physical world in a big way. Soon, in Amazon “Go” stores, cashiers will be replaced by scanners and cameras. What does this mean for the shopping experience and the retail industry as a whole? As always, the future is hard to pin down. One thing is for sure: Amazon’s impact on the retail industry is sure to be a bold one and also its introduction of technology affecting the retail industry.
Morgan Stanley estimates that Amazon could spend up to $3 billion to open 3,000 cashier-less Go stores by 2021. Amazon has already opened a few in cities such as Chicago and Seattle, where grab-and-go shopping is being tested. But as Amazon continues to expand their brick-and-mortar operations, what happens if the experience resonates with the consumer?
What will happen to the traditional shopping experience?
How “Go” Stores Work
The concept of the Go store is new to the retail industry. Upon entering, customers must scan an app on their smartphones that will let the store know they have arrived. Sensors and cameras track customers as they shop. As they are taken off the shelves, items are added to a virtual shopping cart.
In lieu of cashiers, there’s “just walk-out shopping”. Customer’s Amazon accounts are automatically charged for the goods they took off the shelves.
The stores are a great convenience to the everyday shopper. But critics fear that the technology is Amazon’s attempt to run brick-and-mortar stores with fewer employees. After all, automation can marginalize the human element of the equation.
Amazon claims they are not trying to get rid of in-store employees, but are instead trying to make shopping as convenient as possible for customers. Gianna Puerini, Vice President of Amazon Go, says that the stores still need employees to take deliveries, stock shelves and help customers.
“Go’s tech and offerings furthers Amazon’s efforts to build deeper, more integrated relationships with consumers, with the goals being to increase data capture and understanding of consumer demand and intent and ultimately drive higher/more frequent purchase behavior.” –Brian Nowak, analyst
Anticipating Amazon’s Impact on the Retail Industry
Amazon’s Go stores appear to be a huge convenience for consumers. But other retailers are likely going to find much less convenience in this disruptive innovation. Amazon’s impact on the retail industry could affect chains like Walmart Inc., Kroger, Target Corporation, CVS Health, and Walgreens Boots Alliance. As more and more Go stores open, particularly in larger metropolitan areas, we may see more customers preferring to shop at Amazon’s retail locations because of the ease of transactions.
Amazon is not the first retail store to offer a more convenient checkout. There are other examples of technology affecting the retail industry.
Walmart, Target, and others offer self-checkout kiosks. Meanwhile, Sam’s Club has gone live with their “scan and go service,” which replaces registers with an app that lets customers scan items. The items are added to a virtual cart that can be paid for through the app.
However, no other retailer currently offers the level of convenience that Amazon’s Go stores promise. If these established retailers start losing their business, they may have to implement their own form of “just walk out shopping.” Or at least something similar.
Bold Technology Affecting the Retail Industry
To walk into a Go store is to enter a bubble of constant surveillance. That may not be every consumer’s cup of tea. But the convenience of a deep customer interface may be all the appeal these stores need to succeed.
Amazon already offers the world’s most convenient online retailing service, and soon their Go stores will be offering the most convenient way to shop in the real world.
The question is, will Walmart, Target, Kroger, Ahold Delhaize and the rest still be able to compete with Amazon with their current model? Or are they going to have to make a similar evolutionary jump just to compete? Either way, Amazon’s impact on the retail industry is bold.