Everything changed with the arrival of Amazon Go, the internet behemoth’s new model of frictionless, smartphone-centred convenience. Isn’t that what we all have to believe?
In the UK, high-profile convenience retailer the Co-op has joined the queue to offer a similar experience to its shoppers in Manchester. It is trialling “pay-in-aisle” technology built round a smartphone app backed by Mastercard payments technology. Everybody appears to be on the bandwagon, especially in China where payment apps are far more popular than cards.
It’s not just that it takes mere seconds to grab a sandwich and a bottle of wine at the Amazon Go flagship in Seattle, it is the fact that you don’t have to stop or even pause at a till on the way out.
With the company expanding into six more locations, including Los Angeles, it is tempting to fall for all the hype. This promotes the view that the entire world will be doing its in-store shopping through a smartphone app, scanning phones at the entry gate before picking up items, paying with the app and leaving immediately without any further requirement.
The mighty Amazon’s model will run dry in many locations
Yet before we start thinking this must be the future for quick service retail, we must remember just how varied and challenging the real world can be.
Although Amazon Go eliminates queues, most retailers find they offer an opportunity where staff chat with customers and help retain their loyalty, using the time to upsell where appropriate. Coffee shops, for example, display delicious cakes and snacks next to queues, while in the health and beauty sector retailers achieve significant upsell at or near the fixed point-of-sale.
Much has been made of the Amazon Go cashier-less store concept, but in most countries, alcohol and tobacco sales still have to be monitored on the shop floor. Security remains a significant problem too, because many shoplifters do not care if cameras spot them and will carry on regardless. There is also a more fundamental question about the robustness of the technology in more demanding retail locations beyond comfortable business and professional neighbourhoods.
The Co-op and others may be allowing customers to pay with a phone app, but Amazon Go operates on a far more elaborate and vastly more costly mix of technologies including sensor and facial recognition solutions. It is very unlikely that its cost will be offset by increased sales and reduced staffing in most town centres or shopping malls. In terms of spending on traditional point-of-sale infrastructure and services the savings are insignificant.
We must adapt the technology to what customers demand
It is true that whenever Amazon enters a market, competing businesses tend to shrink back in fear. Yet there is no reason for bricks-and-mortar retailers to assume that Amazon Go is going to cut a swathe through every sector. The current model is unlikely to work with fashion or furniture, for example, where the average value of goods is so much higher and the nature of the purchase is entirely different.
Physical stores will continue to evolve by deploying technology in a bold but measured approach that very closely suits their own customers’ habits. In China, for instance, the e-commerce giant Alibaba is behind the expanding chain of Hema cashless supermarkets that are using similar concepts to Amazon Go, but adapted for the Chinese way of life.
In Hema stores, shoppers pay for food with their smartphones, but they can also have a resident chef cook up ingredients they have just bought before they tuck into them on the premises. The stores are also used as hubs, with online orders delivered in 30 minutes.
Tills will still be part of the improved in-store, omni-channel experience
Closer to home we already have excellent examples of retailers who have adapted physical stores to become part of their online success story. Far from ripping out their tills, many are installing the latest high-specification point-of-sale solutions because knowing that doing so gives them a greater range of functions they can blend with what they do online.
Artificial intelligence and voice-activation applications are also full of potential in retail, giving staff and shoppers rapid access to in-store information that does not require a keyboard. Augmented reality using shoppers’ phones has already begun to transform how we buy clothes, make-up, furniture, sport equipment, kitchens and bathrooms in a store. What is essential is that retailers ensure they can achieve full integration of what happens in-store with their online and mobile services. But it does not mean the store is an automated warehouse, devoid of staff or character.
So retailers who take a more considered view and think hard about mobile technology as part of the mix, can use it as a platform for expansion in all directions, giving customers multiple reasons to enter their stores.
It will not be easy to match the vast resources of the Amazon empire, but Amazon Go cannot work in every context. What retailers must do is keep their focus sharply on integrating technology in meaningful ways, so they are not just blindly joining the queue behind Amazon.