Retail

Amazon Go Ushers In A New Era In Retail Technology

Nigel Fenwick
Vice President, Principal Analyst
December 6, 2016

Amazon's new Amazon Go store ushers in a new era in brick and mortar grocery and convenience shopping. In the early 80's, electronic point of sale (POS) dramatically changed the checkout experience in grocery stores, speeding up checkout lines. Today, a checkout without POS is unthinkable unless it's a farm stand on the side of the road … and even here we're likely to see Square hooked up to a smartphone. But even with POS, the checkout has always been the big time waster in any grocery shopping experience. Until this week.

Six years ago, "The Ultimate Grocery Shopping App" described a future in which the grocery shopping experience was radically different from what existed in 2010. This week, Amazon has brought part of that vision to life by opening its first Amazon Go brick and mortar convenience store for Amazon employees in Seattle. A convenience store with no checkout lines … with no checkout.

Gone are the POS systems. Welcome to the era of automatic checkout. Amazon has used new technologies like image recognition and machine learning to go beyond at least some of the experience predicted back in 2010. Instead of shoppers having to scan items into their shopping cart, Amazon uses this advanced technology to track what shoppers pick up and add to their cart and what they put back on the shelf. No scanning, no checkout … just walk out and pay.

Why will this take off? Becuase it gives shoppers back significant time savings and it gives retailers potentially enormous costs savings.

While this technology isn't cheap to deploy at scale, today's POS systems are hardly inexpensive. In fact, removing POS systems from stores can deliver retailers significant savings in technology and labor costs. That's great news for retailers but not good news POS providers or for a labor market where retail checkout jobs are a significant percentage of the jobs that puts food on the table for many struggling families. In the US, retail checkout is the second most common job after retails sales! 3.5m people were employed as cashiers in the USA in 2014. And instead of checkout jobs growing, technology could put an end to the retail checkout at large within a decade.

Retail POS vendors will need to pivot to offer checkout free systems if they want to survive, but that means competing with the large cloud providers that will see a huge market opportunity in offering retailers checkout-free solutions using their cloud resources and rapidly developing machine learning/AI capabilities.

Retail technology is about to shift once again!

Read more about Amazon Go at Amazon.

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