The jury's still out on cashierless stores

Are cashierless stores the future of retail? Amazon Go put the retail industry on notice in early 2017 when it opened its first cashierless store to the public. Since then, a host of competitors have emerged.

Exactly how pervasive the concept will become remains uncertain, as demonstrated during a recent panel discussion at the Interactive Customer Experience Summit in Dallas. The panelists, who represented different retail sectors, agreed cashierless technology has a role to play in retail, but they offered different ideas about what that role will be.

While not all agreed freestanding cashierless stores will become pervasive, all agreed self-service retail will continue to expand. Two of the three questioned the future of freestanding cashierless stores, but said their companies have explored self-service kiosks.

Self-service stores aren't new

Panel moderator Elliot Maras, editor of Kiosk Marketplace, said Amazon Go did not invent cashierless retail, as such concepts date back to at least the 1930s. He cited the Automat of the 1950s and 1960s, which featured a wall of cubicles containing prepared food that customers opened by inserting coins. The food was prepared in a kitchen behind the wall and placed in the cubicles. 

"A lot has changed technology wise since the 1960s," Maras said. "The consumer today is far more comfortable with self-service technology than they were at any time in history."

Another change he noted is today's more diverse customer base, requiring retailers to offer a larger assortment of products, which calls for more technology.

"There are far more different products people want when they go shopping," he said. "Artificial intelligence is coming at the right time given the demographics of America."

Amazon has opened 13 Amazon Go stores, Maras noted, and other technology companies have introduced similar concepts. Some technology players operate their own stores like Amazon while others provide automated shopping technology for existing stores. Maras estimated there are at least 20 U.S. companies offering cashierless retail technology. Amazon, for its part, plans to have 3,000 Amazon Go stores in the next two years.

Panelist Ruth Crowley, former vice president of customer experience design at Lowe's, said cashierless retail is competition for all retailers. "This begins to set a new expectation for the customer around convenience," she said. 

At the same time, human engagement is needed, Crowley added. "The customer experience is physical, digital and human," she said.

The customer journey may start online, she said, "but when the customer goes to the store, they have to have access to a human at some point." Research has shown that if a customer interacts with a good customer service employee, sales can increase by up to 200%, she said.

"It doesn't have to be 'either/or,' I think it's 'and,'" she said.

Panelist Brian Anderson, director of technology at Modern Restaurant Concepts, which operates the Lemonade and Modern Market Eatery restaurants, said Amazon Go is not currently competition since his company does not presently offer a "grab and go" service.

Self-service kiosks draw interest

Modern Restaurant Concepts has, however, tested different self-serve kiosks. The company is currently exploring Bluetooth technology that would allow the customer seeing the line to sit down at a table, where the system recognizes their location in the store to deliver the order to.

Elliot Maras discusses self-service with Briton Smetzer. Photo by Jon Cullen.

Briton Smetzer, former vice president of IT operations for Fuzzy's Taco Shop, also does not see the cashierless store as competition. "It is just a different concept," he said. 

Nevertheless, Fuzzy's Taco Shop, like Modern Restaurant Concepts, has experimented with a self-service kiosk. The customers did not use the kiosk, and in retrospect, Smetzer said it was most likely because the cashier was still visible to the customer.

"You can't just add another terminal and hope that it will just take care of itself," he said. 

Trying to present a lot of product options on a self-serve kiosk is difficult, Smetzer said. "It was complex and confusing, so they would give up," he said.

"For us, it was about, can the kiosk help manage two lines at the store? I think we probably should have done two or three (kiosks) and had a designated (kiosk) zone." He said kiosk orders take more time than cashier orders due to the need to learn the process and the complexity of the menu.

Another issue Fuzzy's Taco Shop faced was offering alcohol with the kiosk. In addition the company was also introducing online ordering at the time, which might have compromised its focus on the kiosk.

A new balance is coming

Smetzer compared the hype around Amazon Go to the introduction of e-readers which led some to believe that books would disappear.

"It never happened," he said. "It just found a new balance. It's going to be a new balance between cashierless and cashier environments."

Anderson agreed, saying he expects to see kiosks in Modern Market Eatery in one to two years. He envisions having kiosks that can also function as cash registers to meet the demands of different amounts of store traffic.

Is it the product or the environment?

Crowley said commodity type products will lend themselves to cashierless checkout. "The trick is, how do you go beyond the commodity?" she asked. 

Smetzer pointed out that the type of retail environment is an important factor as much as the type of merchandise. Kiosks sell $300 head phones in airports because it is a grab-and-go environment, he said, 

"The environment is the enabler as much as the actual product itself," Maras agreed. He gave the example of Farmer's Fridge, a vending machine that is designed to offer fresh food in time stressed environments like airports. Consumers don't normally go to vending machines for fresh food, but Farmer's Fridge has succeeded in this space by using new technology to deliver the product in an environment where time is critical factor.

Smetzer further pointed out that kiosks can be helpful for people such as himself that suffer from hearing loss. "I do find myself gravitating towards kiosks because I don't want to deal with the frustration of communication obstacles," he said.

The demand for self service will also differ based on the type of locale, Crowley said. A cashierless store will find more use in a congested city environment but not a rural one, she said.

Retailers must gain customers' trust

Secure payment is another necessity for self-service retail the panelists said.

"I think privacy's a myth," Anderson said, speaking on a personal level. "That information is available to purchase online from a number of different brokers. As an IT professional, we do everything we can to ensure the information we keep about you is stored safely and used for our business purposes only."

Marketing and personal financial information are two different things, he said. "Most of that information (stores gather about customers) is not something that's dangerous," he said. Consumers want to engage with brands from a loyalty perspective, Anderson added, and for brands to best serve customers, personal data is needed.

Most customers will give personal information as long as the retailer does not misuse it, Crowley said, addding the onus is on the retailer to keep the trust.

"Can you implement a cashierless environment that actually enables your guest? That's what it's about," Smetzer said.

Original author: Elliot Maras
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