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Thursday, July 18, 2024

Innovation Innovation

By James Pepper

What could be better than spending a mere 60 seconds to grab a drink, a sandwich and a bottle of wine for the evening without having to pay on your way out?
This is the new world of convenience ushered in at that famous Amazon Go store in Seattle. Now anyone can download the Amazon app, scan at the store’s entry gate and pick up what they want without having to reach for the smartphone again before they leave. When convenience is paramount in so many lives, Amazon Go is seen as the future for quick service retail, even if Amazon has not rolled out the technologies on which it depends beyond this one store. The sceptics among us also note that the store still requires staff to authorise alcohol sales and fill shelves.
Although Amazon Go eliminates queues, for most retailers it offers an opportunity. In-store colleagues engage with queuing customers and help retain their loyalty, using the time to upsell where appropriate. Coffee shops, for example, display cakes and other refreshments next to queues, while in the health and beauty sector retailers achieve significant upsell near the fixed point-of-sale.
Staffing cannot be eliminated either, because alcohol and tobacco sales still have to be monitored. Security may emerge as a significant problem too, because aggressive shoplifters do not care if cameras spot them. There is also a question about the robustness of the technology in more demanding retail locations. Amazon Go is not a real-world store at present, being located close to the Amazon Seattle campus where customers are likely to be drawn from a narrow demographic.
Amazon is using costly sensor and facial recognition technology, but can retailers install it when budgets are tight? It is unlikely that its cost will be offset by increased sales and reduced staffing. In terms of spending on traditional point-of-sale infrastructure and services, the savings are insignificant.
It is true that whenever Amazon enters a market, competing businesses tend to shrink back as if threatened with a blow-torch. Yet there is no reason for bricks-and-mortar retailers to assume Amazon Go is a threat. The model is unlikely to work with fashion or furniture, for example, where value of goods is higher and nature of purchase different.
Our physical stores can continue to evolve by deploying technology in a bold but measured approach that suits customers’ habits.
In China, where mass use of smartphone payment apps is a powerful factor, 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 use their phones to pay for food, but can also hand over the ingredients to a resident chef for preparation and consumption on the premises. The stores are also used as hubs, with online orders delivered in 30 minutes.
Closer to home we have excellent examples of retailers who have made physical stores part of their online success story. Far from ripping out tills, many are upgrading to the high-spec point-of-sale solutions to give them a greater range of functions to blend with what they do online. Artificial intelligence and voice-activation applications are full of potential and augmented reality already transforms how we buy clothes, makeup, furniture, sport equipment, kitchens and bathrooms in store.
It will not be easy to match the levels of convenience provided by Amazon Go and its imitators but its models do not work in every context. Retailers must keep their focus sharply on the technology that provides the “omni-channel experience” so stores are not just playing a pointless game of catch-up.

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