Shoptalk 2018 highlighted a major development in the smart retail sector last week as AVA Retail revealed more details about its plans to eliminate the physical point of sale in a brick and mortar setting. The company has revealed how its SmoothShop and SmartTrack features will enable the replication of the much-hyped “just walk out” experience already offered by Amazon Go, a model envisaged by many to be the future of in-store retail.
Registered users can unlock up to five pieces of premium content each month.
Log in or register to unlock this Insight.
A New Player Has Joined
Shoptalk 2018 highlighted a major development in the smart retail sector last week as AVA Retail revealed more details about its plans to eliminate the physical point of sale in a brick and mortar setting.The company has revealed how its SmoothShop and SmartTrack features will enable the replication of the much-hyped “just walk out” experience already offered by Amazon Go, a model envisaged by many to be the future of in-store retail.
The combined use of computer vision, artificial intelligence (AI) and sensors to automate the checkout process represents the next step in the evolution of checkout-free shopping, following mobile “scan and go technology,” which has already been tested and deployed by the likes of Walmart, Kroger, and Sainsbury’s.
AVA Retail is also joined by other tech firms (see AiFi, for example) which will soon be competing to help retailers address the primary complaint of their brick and mortar customers: tedious checkout lines.
Coming to a Store Near You?
As well as improving the in-store experience for customers, the automated checkout claims to drive efficiency and cut costs for retailers. Scanning people and products with AI-enabled cameras simultaneously removes the need to tag products and to employ (as many) associates at the point of sale.
As more players emerge offering solutions in checkout-free shopping besides Amazon, technical knowledge and capabilities will spread exponentially. Undoubtedly, we will start to see more grocery retailers assessing how AI-enabled checkouts could work for them and talking to companies that can offer strategic guidance. Already the emerging technology providers in this space are actively highlighting the scalability of “just walk out” checkouts for retailers, from major hypermarkets down to local express stores. Even retailers without billion-dollar research and development (R&D) budgets will soon be able to consider the complete removal of the point of sale, if the marketing hype from these tech players is to be believed.
However, the existence of perceived barriers means that the immediate impact of the AI-enabled automatic checkout remains to be seen. The burden of proving the business case for automated checkouts therefore falls to the new wave of emerging tech players, which will be closely watched by the world of retail from now on.
Concerns exist, in Europe especially, regarding privacy and data protection—a seemingly inevitable consequence of combining computer vision, video surveillance, and mobile payments. While not necessarily a permanent barrier, adhering to tighter regulations and reassuring consumers will add further complexity at the very least. Another problem raised by “just walk out” retail is theft, an issue which has been almost entirely dismissed by Amazon. By publicly playing down these concerns, Amazon certainly believes the benefits to the consumer (and therefore the bottom line) outweigh the risks. However, convincing more risk-averse retailers with tighter budgets to invest heavily in this new model will not be easy. This difficulty is even greater in retail verticals outside of groceries, where the use case is harder to justify.
How Should Retailers Respond?
Any retailer looking to provide a smoother shopping experience needs to perform a ruthless readiness assessment as any existing operational flaws will surely be exposed by the added strain of such a major technological overhaul. Part of the reason the Amazon Go store launched so successfully was because it was built from the ground up and was rigorously tested prior to launch (without fear of any lost sales). Retrofitting an existing store with the required technical infrastructure requires a sturdy logistical base to cope with new operational procedures.
Retailers also face a choice between this Amazon Go-style experience and the pre-existing mobile self-scan model which has been gathering pace in the retail market. This choice may depend largely on any pre-existing investments in checkout-free infrastructure, such as apps and security, and the retail vertical in which the retailer operates. Grocery shopping—characterized by lower margins, repeat visits, and high turnover rate—represents a clear use case for checkout-free shopping. The apparel, home furnishings, and electronics verticals conversely do not present such obvious use cases for either self-scan or AI-enabled checkouts. Stores with multiple offerings under one roof (such as hypermarkets and department stores) may also be unable to adopt due to complexity.
Any retailer will know that when weighing the benefits and the risks, deployment should only be considered if it enables the offering of a better price, product, or experience for the customer. At present, this seems unlikely for the majority of slow-to-react grocery chains, meaning Amazon Go may be alone in the “just walk out” arena for a while to come.
This insight is part of ABI Research’s coverage of the Smart Retail sector. A related report on the use of computer vision in retail is due to be published in 2018.