Source: Gartner Blog Network On:
Earlier this year an Amazon Fresh store arrived in my West London neighbourhood. I have visited it quite a few times now. I enjoy the Just Walk Out technology but there’s nothing new to be said about the customer experience – so I won’t. I’m rather more intrigued by four areas of potential benefit to the retailer that I hadn’t initially considered.
Space Saving. For any small format store, well positioned for convenience footfall in a major city, one of the biggest costs is rent. Every square meter of space is precious. The Just Walk Out system uses up some space for the entry control gates just inside the doors – but really no more than the conventional electronic tag security arches and shopping basket stands would. What the store doesn’t need of course, is checkouts of any kind. No human or self-service checkouts or queuing space near them, is a big saving of floor area. The tech probably does take up quite a bit of space – but it’s mostly in the ceiling void. One downside may be that the hanging card signage that so many supermarkets use probably isn’t an option – because it would obscure camera views.
Theft and Loss Reduction. I’m guessing here, but I’m fairly confident one of these stores must have a lower rate of customer theft than a comparative conventional store. You electronically ID yourself to gain entry and everything you pick up is recorded. Most small format chain grocery stores in my city use electronic security tags on items like wine and batteries. They also commonly have to employ a human security guard lurking near the door. This is London not Tokyo and sadly, shoplifting is common in my culture. But with the Just Walk Out system, it has to be a lot harder to get away with stealing. One might imagine that the system is imperfect at recording the things customers pickup and that could maybe cost as much as the conventional theft and loss rate. Perhaps Amazon are happy to err on the side of customer service and let us all walk out with a little more than we get charged for? All I can say is that I have not yet experienced anything other than a perfect item list receipt.
Shelf Restocking. I have noticed that the Amazon Fresh store seems to have very well stocked shelves. Almost perfect. I was wondering if they have to employ extra staff to keep it so well replenished. It doesn’t feel like that at all. If anything, I seem to experience fewer aisle clashes with store staff checking shelves. For several decades retailers and technologists have been trying to improve the shelf replenishment process. So much business is lost because the item the customer wants just isn’t there at the moment they want to pick it up. They’ve tried RFID ‘smart shelves’. They’ve tried stock checking robots. Neither has caught on in a big way. But of course the Just Walk Out technology is keeping perfect track of every item lifted from (or returned to) a shelf – via its substantially camera based sensor fusion technology. There is no obvious individual item weight sensor. The shelves look remarkably normal. The shelves are very tidily kept of course – each SKU must be in its allotted location. But it seems to cope even with loose items like individual donuts on a tray shelf. Hey – don’t judge my diet choices 🙂
No loyalty scheme. Many retailers and most supermarkets in the UK are operating some kind of card or app based loyalty scheme that involves collecting rewards and discounts in return for tracked activity. The retailer is gamifying the shopper and exchanging discounts for tying detailed purchase data to individual identity – for analytic insights. Consumers entering the Amazon Fresh store are choosing to give up all that data for free – without a complicated and costly to operate incentive program.
I expect the Just Walk Out technology is expensive and a complex store fit. Perhaps you were wondering why Amazon would bother if the only benefit is the ‘gimmick’ of consumer quick-exit convenience. My take is that there’s likely to be a lot more behind-the-scenes business benefit. Space, theft, replenishment and data are bedrock issues of grocery store management. Maybe Just Walk Out technology has the potential to shift the needle on several of them?