Amazon’s announcement of a grocery store without checkout lines caused a series of debates, led squarely on the loss of jobs in the grocery industry. If the Amazon Go format is copied throughout the industry and technology gets better, Clarus Commerce CEO Tom Caporaso said that there could be a ripple effect in other industries looking to cut operational costs.
As originally published on www.geekwire.com.
First there were supermarket shelves. Then barcode scanners, then self-checkout lines, then online shopping. Amazon’s move to take the grocery checkout counter completely out of the loop is the latest disappearing act for the brick-and-mortar retail experience.
But it’s not unexpected: Walmart and Whole Foods also have been working on ways to streamline grocery shopping, using automation and robotics. And the competition could heat up quickly.
“Retailers will be looking to understand what percentage of their current customers are utilizing Amazon, with the thinking that these will be the customers that are most at risk to the Amazon threat,” Matt Sargent, senior vice president for retail at Frank N. Magid Associates, wrote last week in a post that anticipated Amazon’s latest move.
Magid’s research suggests that Amazon shoppers are weighted in favor of the under-44 population, those with kids in the household, those who go to grocery stores more than once a week, and those who make it a point to buy locally. In short, just the kinds of customers that grocery stores want to hang onto.
“The top challenge for brick-and-mortar retailers will likely be the technology itself,” Tom Caporaso, CEO of Clarus Commerce, told GeekWire in an email. “The vast majority of them don’t have the know-how or the resources to create or install it themselves, so they’ll need to rely on outside firms to do all of that. That’ll add costs, although those should drop as the technology becomes more widespread.”
The Amazon Go concept takes advantage of trends that already have been changing retail – including smartphone apps that grant you access to the store, smart carts and smart shelves that keep track of what you buy, and smart real-time inventory management on the back end of the operation.
Over the past year, Amazon has been experimenting with innovative retail concepts – such as its “Dash Button” for reordering household items, and the drive-up grocery store that it’s getting ready to open in Seattle’s Ballard neighborhood. The Amazon Go store at Seventh and Blanchard will add a few new twists, based on the same sort of artificial intelligence and machine vision that’s being put to use in autonomous vehicies.
Experts say advanced automation is already on track to revolutionize the transportation industry, potentially displacing millions of truckersand other drivers for hire. If anything, the stakes are greater for the retail trade sector, which employs more than three times as many Americans as the transportation and warehousing sector (15.3 million vs. 4.6 million in 2014).
Caporaso said it’s too early to predict exactly how Amazon will deal with the potential theft issue. “But allowing people to get in only with the app and having security personnel will solve a lot of those problems,” he said. “I’ll leave that to the security experts. Shoplifting is a problem even without the technology.”
Another Seattle-based company on the retail frontier is Impinj, which focuses on RFID tags and readers for a wide range of applications including automated self-checkout. Larry Arnstein, Impinj’s vice president of business development and solutions, said checkout-free shopping is likely to feel weird at first.
“It’s certainly a new experience,” he told GeekWire. “I think it’ll take people a long time to warm up to that.”
But over the long run, Arnstein said technologies such as Amazon Go’s “Just Walk Out” system and Impinj’s RAIN RFID system will have a huge impact on the entire retail supply chain, including manufacturing, distribution and inventory control. “It doesn’t just solve one problem in the store,” he said.
Amazon’s checkout-less store is currently in private beta testing, open only to company employees, and it’s likely to undergo further tweaks in advance of next year’s official debut. But at least one thing is already clear: The wider trends behind Amazon Go are unstoppable.
“This is just the beginning,” Caporaso said. “Moore’s Law says that computing power doubles every 18 to 24 months, and if that law holds, automation will creep into more and more corners of our life, including shopping, employment and more. Governments will need to start studying the coming technological wave and take steps to ensure that their citizens’ needs will be addressed as employment opportunities fall.”