Is Cashierless Shopping the Future of Retail?

Though online retail is gaining traction, there is still a place for in-person shopping

People don’t want to say bye to brick-and-mortar stores for a couple of critical reasons: 34 percent say it takes too long to deliver what they bought, and 25 percent are reluctant to pay high shipping fees.

Furthermore, people tend to spend more when buying in person. For example, though 51 percent of Americans surveyed by Entrepreneur prefer to shop online, it is also reported that physical stores sell 10 times more than e-commerce shops, and people spend 64 percent of their shopping money in brick-and-mortar shops, compared with 36 percent online.

And it is only logical as what people tend to buy offline is staples and goods that they spend most on and use daily. To find out what people typically buy in a store, Imprint Plus did a survey of 1,000 people. Here are the findings it revealed:

1) 86 percent of people surveyed prefer to buy food in a physical store so they can check its quality and whether it is fresh. 78 percent of adults regularly shop at grocery stores, and in-store food sales have gone up by $16 billion, while online food sales have only risen by $1.6 billion

2) 60 percent of the surveilled people prefer to buy clothing in stores as people want to try items on before they buy them.

Solving one of the biggest shoppers’ pains – checkout

Therefore, smart powerhouses with ample capacity and deep pockets such as Amazon and Walmart decided to solve one of the biggest shopper’s pains and one of the key reasons why online shopping soared – checkout. To do this, they are investing millions in the necessary hardware, Computer Vision, Deep Learning, and IoT and use the mixture of the latest technologies to make the physical shopping experience as seamless, smooth, and effortless as ever.

And they do it for a good reason. According to new estimates from RBC Capital Markets analysts, Amazon Go stores reap around 50% more revenue than an average convenience store, and according to their estimates, the average Go store makes an estimated $1.5 million a year.

As a result, there are now four Amazon Go stores in Seattle, four – in Chicago, and two – in San Francisco. Furthermore, Amazon plans to roll out 2,000 grocery and convenience stores across the US, and also the retail giant is planning to open an Amazon Go store in London.

Cashierless buying experience is indeed super convenient. For example, you download an Amazon Go app, get all your customer info stored there, use a QR code to get into the store and then you just put some goods in your bags and leave, without a need to wait in lines or even check out for your groceries. And the smart app just knows how much to charge from your account.

Cashierless shopping is about complex technology solutions

To an average buyer, that seems pretty simple and effortless, yet there are extremely complex processes going under the hood. The shop is equipped with multiple cameras and sensors that accompany you throughout all your shopping ‘journey’ and are used to detect you, the products you choose, whether it was you who took the product off the shelf or that guy standing nearby. They also check whether you decided to return the product back on the shelf, coordinate data from multiple sources, collect and process the info, transmit the ultimate results to your app, and do it all in real time.

All this is super costly. For example, the first Go location needed more than 1 million investment in hardware alone. As Morgan Stanley estimates, Amazon would need to spend $3 billion to open 3,000 stores as they plan to.

More and more companies are investing in AI-powered solutions

Amazon and Walmart are the pioneers. Yet now more and more forward-looking retailers that are battling for global dominance are betting on cashierless shopping, investing in pricey technologies and looking for in-demand IoT specialists and Machine Learning experts  (Computer Vision), who are quite thin on the ground ( that’s why businesses often contact AI software development companies to solve this problem).

For example, Ahold Delhaize, a Netherlands-based retailer with 35 supermarket brands all across the globe stated it would use ‘tap-and-go technology in its Albert Heijn stores.

The retailer has Food Lion, Giant Martins, Giant Food, Hannaford, Peapod and Stop & Shop in the United States. It owns 2,100 stores across the USA. Ahold Delhaize began to test the tap-to-go technology in 2017 in the Netherlands and has decided to roll out two checkout-free stores, and some more in the future.

McDonald’s started offering the self-service option about two years ago and is now looking to leverage AI and machine learning to create personalized menus and make customers buy more and pay more. McDonald’s has recently acquired an AI-powered tech startup that prompts buyers to spend more by recommending what they like and are more likely to go for.

Therefore, we can see that AI-powered cashierless shopping is gaining ground all across the globe. And though now it is led mainly by wealthy retail giants such as Amazon and Walmart, in a couple of years when the technology gets cheaper and more accessible, it may well become commonplace.

About the Author

Tetiana Boichenko, marketing manager at N-iX LLC. She’s been working in technology companies for three years writing about emerging technologies like blockchain, AI/Machine Learning and their implication for business, particularly focusing on fintech domain.