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Amazon Go Will Not Kill Retail As We Know It

Via Forbes : Amazon Go Will Not Kill Retail As We Know It

Amazon is a company known for big ideas, and its executives are not afraid to use the market to determine if those ideas will succeed or fail. Where other companies test and refine and beat an idea to death before they even consider whether they will try to take it to market, Amazon goes big, fast, and loud. Some ideas have been a big success, and some have flopped — expensively.

It’s easy for someone from retail to react to its Amazon Go convenience store concept from a place of comfort and familiarity, to say “we’ve always done it this way.” But retail is not an industry where comfort and familiarity are safe places. With the level of consumer behavior change going on, driven in large part by new consumer technology, retailers cannot afford to hold onto sacred cows. The retail store in particular needs to be shaken up in a hard way, and Amazon is doing more than most store-based retailers to try to define what a store should truly be in the future. Whether you feel like it’s destroying retail or merely reshaping its future, Amazon should be commended for taking on the most sacred of retail sacred cows, and forcing the rest of the industry to pay attention.

However, there are a few things that Amazon is trying with Amazon Go that may not sit well with consumers:

Did I actually get charged for that?

If you watch Amazon’s video about the concept, they’re careful to explain that the integrated video and sensor network in the store will keep track of what you take off the shelf and what you put back, and will only charge you for what you take. But the company needs to make sure the lag time is very small between when you take something off the shelf and when it shows up in your checkout basket. In one study I saw of the implementation of shelf-based inventory and cart management, the latency was very large, and it caused confusion among customers – enough confusion that all those people who theoretically would be eliminated as cashiers at Amazon Go may need to simply be staffed as docents to help customers understand and properly use the system.

In the early days of self-checkout, customers were at least as likely to overcharge themselves at the scanners out of fear that something didn’t ring up properly than they were to try to steal anything. In a retailer’s pilot of self-checkout, they found in random audits that customers made more over-charging errors than under-charging. In fact, I still meet people who think if they somehow accidentally walk out with a candy bar they didn’t pay for at a self-checkout station, they will be descended upon by a SWAT team of loss prevention people swarming out of Employee-Only doors and rappelling down from the ceiling to arrest them where they will somehow rot in jail for the rest of their life – because of one candy bar.

That fear, and the fact that decades after self-checkout first arrived on the scene and years after it became ubiquitous in grocers and general merchants, this fear still exists, is another caution about a “driverless store.” People generally are honest, and they want to feel like they’re being honest. And they don’t want to feel like they are being dishonest.

Walking up to a shelf and taking something off and then sticking it into a bag and walking out will feel weird to a lot of people, and it may feel weird for a very long time. We have been so conditioned to have a checkout experience of some kind, to completely skip that will feel uncomfortable to many shoppers. Can it be overcome? Sure, in enough time. But if it continues to feel uncomfortable for long enough, initial interest will surge, but then usage will decline. Not because it’s not convenient, but because it just feels weird, and consumers don’t like to feel weird about buying things.

Help! Anyone? Help!

Finally, a cashier-less store is not an empty store. If you watch the video, Amazon is careful to show employees in orange shirts doing things in the aisles. Sure, there are no cashiers, but that does not mean it is a store devoid of employees. That’s not necessarily a bad thing – cashiering is a mind-numbing job. I’m not sure that stocking shelves is that much better, but shelf-stocking, and inventory receiving, and circulating product with expiration dates, and answering questions, etc. are all activities that need to happen in a store. Right now, in grocery, that last one – answering questions, helping customers – doesn’t happen often enough. Why? Because all that payroll is going to cashiering.

Any of the work that happens in stores can be done by the same kind of employee you would hire to cashier — if retailers are willing to put the effort into training them.

Bottom Line

Amazon Go definitely represents a gauntlet thrown down to store-based retailers. I’ve been saying for years that retailers need to think harder – and more out of the box, pun intended – about the future of the store. If Amazon Go gets them to move, then I think it’s a great addition to the discussion about what’s possible. But just because Amazon is doing it, it doesn’t mean it’s guaranteed to be a success.

Amazon has demonstrated through many initiatives, like Amazon Fresh, that it very much wants to crack the code on grocery. Grocery is a business that has a very important local component – local sourcing, local delivery. And consumer awareness of where their food comes from makes this local component more important than ever. A convenience store, full of fresh items, is the perfect learning laboratory for Amazon to get their arms wrapped around how to master that local component. And they’re doing it in an environment where they are nearly perfectly measuring every interaction, behavior, and transaction within the store. Whether the initiative succeeds or fail, have no doubt that Amazon will learn a lot. The big question is, are other retailers able to keep up?

Nikki Baird is a managing partner at Retail Systems Research, a market intelligence firm focused on trends in retail.

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