The debut of Amazon’s checkout-less convenience store Amazon Go is one of the biggest evolutions in transactional commerce since Ohio saloonkeeper James Ritty patented the cash register in 1879. That’s because Amazon’s so-called “just walk out” technology uses computer vision, sensor fusion and deep learning that allows shoppers to enter with an app, grab items off the shelves and leave without waiting in line to pay a cashier manning Ritty’s 140-year-old invention.
Microsoft is reportedly developing similar technology that has piqued Walmart’s interest, and Chinese ecommerce firm JD.com has opened 20 of what it says will be hundreds of “unmanned convenience stores” called X-Marts. Meanwhile, reports say Amazon Go is expanding beyond Seattle to San Francisco and Chicago.
This new technology is paving the way for retailers to make shopping easier for consumers and inventory management better for retailers. In a statement, JD.com said cameras can recognize customer movement and generate heat maps so retailers can monitor traffic flow, product selection and customer preferences.
“The advantage is convenience to the customer, especially if loyalty, rewards and payment are embedded,” said Joanne Joliet, research director at Gartner. “For the retailer, they can redeploy the cashiers to more value-added, customer-facing tasks, [improve] inventory management and certainly [tap into] the plethora of data on customer behavior, movement and preferences that is an output.”
A rep for computer vision startup Trigo Vision, which recently closed $7 million in seed funding for its automated retail platform, agreed the technology frees up employees to play more interactive roles. She also noted retailers can prevent theft as the platform tracks everything in the store and they can also optimize store real estate with the elimination of checkouts and lines.
X-Mart locations, like Amazon Go, sell drinks, snacks and everyday items. And analysts expect to see the technology scale to additional retail scenarios where convenience is valued—but not, say, those with high-touch customer experiences like those for luxury goods.
“You wouldn’t want to go into Hermès and just walk out,” Joliet said.
Convenience stores and gas stations, on the other hand, are a natural fit for this technology, which Andrew Murphy, managing partner at VC firm Loup Ventures, expects to roll out in the shorter term, followed by groceries.
“I do see a day when grocery stores don’t have cashiers, but we’re a ways away from that,” he added.
And while Joliet said Whole Foods will be trickier to execute because of the size of its physical stores, it, too, would make sense given its relationship with Amazon, as would Amazon retail partners like Kohl’s and Best Buy.
In fact, she said she expects checkout-less technology to follow the same path as self-checkout—which was heavily concentrated in convenience and grocery stores initially—before checkout-free experiences move into sectors like apparel, sporting goods or electronics.
Murphy called self-checkout a “stepping-stone technology” in part because shoppers are essentially doing the job of the cashier whereas checkout-less retail is the ultimate convenience.
“Why scan your items and scan your card if you can take what you want and just walk out?” he asked.
In these scenarios, traditional checkout is replaced by AI-powered and computer-vision-based systems, which require an extensive network of cameras—and they don’t come cheap, Joliet noted. However, she said it’s difficult to provide even a ballpark figure, as implementation cost would vary based on what the retailer already has in place—like apps and payment options—as well as the size of the store, software, hardware and human capital.
“Given the slim margins in grocery and convenience, this could make it challenging to meet the [ROI and internal rate of return (IRR)] hurdles, unless additional benefit is derived from wider use of the technology [like reduction/reallocation of labor or improved planning as a result of the analytics],” she added.
For his part, Murphy sees automated retail as a $50 billion opportunity, based on the cumulative average salary of 3.5 million cashiers in the U.S., and he said it will constitute roughly 30 to 40 percent of the retail market of the future. The bulk, or about 55 percent, will be online shopping, and the remainder will be what he calls empathic retail, or personalized, consultative retail.