Amazon has taken its model of checkout-free shopping from a convenience store to a larger grocery store for the first time.
The first Amazon Go Grocery shop has opened on Seattle’s Pike Street, close to the business’ US head office.
Like the Amazon Go convenience store, the grocery shop uses ‘just walk out shopping’ to enable shoppers to pick up an items from fresh fruits and vegetables to meat, fish, baked goods and ready meals.
Both store formats operate via the Amazon Go app. Shoppers scan a QR code from the app to enter the store in the first place. After that, sensors, computer vision and deep learning combine to detect when products are taken off - or returned to – a shelf. The app stores items in a virtual shopping trolley, and when shoppers leave the store Amazon sends a receipt and charges their Amazon account automatically.
That, says Amazon, means that store staff are freed from the tills and can concentrate on greeting customers, replenishing stock and answering questions. “We’ve simply shifted how our associates spend their time so they can help delivery a great experience for shoppers,” says Amazon in its overview of the new format store.
Amazon now has 26 Amazon Go convenience stores open in the United States. The first opened in 2018, following a trial that started in 2016. Since then a number of UK grocery retailers have innovated with similar formats, from the Co-op offering pay-in-aisle technology, to Tesco’s payment app that shoppers use to scan and pay for items in store, and Sainsbury’s development of SmartShop cashless shopping experiences.
Commenting on today’s news, Tim Reay, head of grocery at Wunderman Thompson Commerce, said: “Amazon’s next step into the disruption of the grocery market has finally materialised, as the ecommerce giant seeks to absorb even more of shoppers’ spend. Ultimately, success will be defined by whether Amazon Go can meet expectations of quick delivery, immediacy and convenience in every step of the buying journey. The ceiling cameras and shelf-weight censors are not simple gimmicks either. Combined with the direct billing system that is connected to shoppers’ Amazon accounts, the system is yet another way to lock customers in and to reinvent the physical grocery shopping experience by removing friction points.”
He said physical food retailing still offered scope for expansion as 40% of consumers said they would never buy their groceries online, but when they do, they are more likely to shop on the site operated by a retailer (27%). “This means,” says Reay, “Amazon has an entirely new market to win over and convince as they start to move into more physical stores. In addition, this move will go further to help Amazon solidify its vital role in customers’ purchasing – it already accounts for 52% of all online shopping in the US, and that’s without a mature online grocery offering.
“Amazon’s physical retailing initiatives give brands another opportunity to work alongside Amazon and take advantage of its innovations. Of course, brands must think about how they retain relationships with their customers and retain equity in their brands.”
Tjeerd Brenninkmeijer, EVP of EMEA at Bloomreach, said: “Amazon keeps challenging the entire retail industry, and the expansion of the cashier-less GO model to a complete grocery store is only taking retail technology one step further. But embracing technology for technology’s sake is not always the right answer. Instead, brands need to ensure they use AI and automation in ways that suit their customers’ needs – and that may mean only using these technologies in the background.
"Amazon’s entire brand is based on being tech-savvy; to retain this image and its customers, it needs to deploy innovative solutions across all its channels on a regular basis. On the other end of the spectrum, Tesco’s and Morrison’s have looked at their own audiences and found out that what their loyal customers want is a local feel. These two models may come across as completely opposed at first glance, but they are really a response to the needs of these brands’ customers, based on data acquired by these brands across both online and offline touchpoints."
Paul Kirkland, director of retail and hospitality at Fujitsu, said: “Amazon’s recent successes have made one thing clear: after dominating the ecommerce landscape, it’s setting its sights on physical grocers next. From acquiring Whole Foods in 2017 to launching Amazon Go convenience stores, the ecommerce giant has been steadily laying the groundwork for its own brick-and-mortar grocery proposition. And this move now takes it one step closer to competing with the likes of Walmart.
“However, while the cashier-less store approach can provide a potentially more seamless shopping experience, it’s imperative that Amazon avoids prioritising speed and efficiency at the expense of a positive and engaging customer experience.
“In order to compete with long-standing grocers, Amazon must place the customer experience at the centre of the store; it is vital in driving footfall and getting brand buy-in from shoppers. One way to achieve this is, for example, is by giving more control to those that know the customer best: store colleagues. By giving individual stores more choice when it comes to stock, store design and logistics, stores can ensure that the customer is at the heart of what they do. By creating positive customer experiences this way, Amazon will be able to help drive footfall, which can in turn help increase sales and awareness.”
Image: Screenshot from Amazon.com