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Retailers

What Retailers Can Learn From Amazon Go

New store concept reveals opportunity for grocers to satisfy consumer demand for convenience

More than a year later than intended, Amazon unveiled its ‘Go’ convenience store to the public on Jan. 22 in Seattle, featuring AI-powered technology that eliminates the need for cashiers, shopping carts, long checkout lines and even physical wallets.

Consumer hype around the “Just Walk Out” store concept is undeniable, following reports of shoppers waiting on ironically long lines to enter Amazon Go upon its grand opening, and Amazon’s introduction of its revolutionary technology has triggered speculation surrounding the future of brick-and-mortar retail and what the cashierless concept could mean for employees. But amongst all the buzz, one question is certain: The future is here, and some industry experts believe that could pose more of an opportunity than a threat to grocery retailers.

“The future has arrived, and the shift is going to be focused around convenience, simplicity and enjoyability,” said Casey Gannon, VP of marketing at mobile e-commerce platform provider Shopgate. “The future is about using technology to craft remarkable brand experiences.”

Amazon Go’s use of mobile technology to cater to consumers’ demand for convenience serves as an example for retailers to follow. But conventional retailers’ current store formats and processes won’t allow them to copy Amazon’s model directly.

“From the technology investment to the type of products being sold, to managing the relationship with consumers, most retailers have a long way to go before their processes and infrastructure will allow them to copy what Amazon is doing,” said Michael Jasczyzk, CEO at store service provider GK Software USA. “But like mobile checkout at the Apple Store, fundamental elements of Amazon Go’s model—a disruption in checkout process broadly—will creep into the retail segments that it matches most closely, as retailers step up to compete directly for market share.”

According to market research firm Magid, customers who frequently shop at BJ’s, Trader Joe’s and Sam’s Club are most likely to shop at a concept store like Amazon Go, while 56% of Target shoppers, 54% of Kroger shoppers and 44% of Costco shoppers are interested in using a similar service. Amazon Go’s sensor-based technology that tracks its shoppers has turned retailers’ attention to providing customer-facing, mobile technology that elevates the shopping experience.  

“According to our recent research, 94% of consumers expect the online and in-store experience to be one connected experience and Amazon is providing just that by eliminating the checkout line,” said Tushar Patel, CMO at omnichannel software provider Kibo. “While other retailers may not be ready to offer their consumers a checkout-free experience at this time, savvy retailers can effectively compete against this offering by continuing to connect their digital and physical components and create opportunities for multiple fulfillment offers such as BOPIS as well as mobile coupons while shopping in-store."

Several retailers have already begun to implement competitive, convenient technology practices. Walmart, for instance, is testing a cashier-free store concept, Project Kepler, and Kroger introduced a “Scan, Bag, Go” service to omit the checkout process altogether, and plans to rollout the service to 400 of its 2,700 stores throughout 2018.

“The initial Amazon announcement proved to be a rising tide that has the potential to life all boats,” said Jonathan Reynolds, academic director of the Oxford Institute of Retail Management and associate professor at Saïd Business School, University of Oxford. “In practice, not all boats will be lifted by the Amazon tide. Some are already holed below the new waterline because of a reluctance or inability to innovate or invest: we have to hope that their captains have noticed the rising waters.”

As such, the implication for grocery retailers is clear: utilize new technology to tap consumers’ growing demands for convenience and innovative in-store experiences, or risk getting left behind.

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