Progressive Grocer|November 2019
When the first Amazon Go store opened to the public in January 2018, the concept seemed magical to many. Shoppers can walk into the store; grab whatever they’d like; put it in coat pockets, bags or elsewhere; and simply walk out. All the customers need is an app.
Fast-forward not even two years, and Amazon plans to open 3,000 cashier-less stores, with many other players entering the category in a big way. These tech companies have their sights not only on 2,000- or 3,000-square-foot convenience stores, but also on grocery stores 10 times that size or larger.
Grocery has long tried to solve the friction of the checkout experience. From opening more registers to implementing self-service kiosks, no solutions have yet to fully satisfy both the retailer and the customer.
“The problem has been known for a while that the checkout experience has been steadily becoming more and more frustrating, starting from the time when barcodes were introduced,” says Krishna Motukuri, CEO of San Francisco-based checkout-free technology company Zippin. “As labor costs go up and retailers face intense pressure on their margins, it’s only gotten worse.”
Checkout-free technology could be the answer. In Phononic’s “2019 Store of the Future Report,” nearly nine out of 10 Americans (86 percent) said that mobile apps will allow people to scan groceries as they shop and then pay through an app in the next five years.
“Right now, what we’re seeing in grocery is kind of this transition where experience really matters for the end-user,” says Ahmed Beshry, co-founder of Caper, a Brooklyn, N.Y.-based provider of smart shopping carts. “Unlike 10 years ago, if I’m in a grocery store and the experience is bad, I don’t have to go through the whole painful process of waiting in line.”
As checkout-free continues to inch closer to traditional grocery, these technologies aim to maximize benefits for both the retailer and customer.
“No. 1, there is a new level of acceptance of technology in retail spaces, because grocers are looking to differentiate and create a better shopper experience,” says Andy Radlow, chief marketing officer for Berkeley Calif.-based checkout-free technology company Grabango. “The second thing is that this introduction of technology is heightening competition, and that competition is very bottom-line driven.
“You’re talking about businesses on a legacy basis that are 1 to 3 percent net-profit businesses, but very high-revenue businesses,” Radlow continues. “There implies a tremendous opportunity to increase net profits because there’s revenue there, but they haven’t been able to unlock the profits before the introduction of these new technology opportunities that exist in the space today.”
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