We are well into 2018 and we’ve seen our share of stories reinforcing the narrative that large retailers continue to shrink their footprint, (Toys R Us, Foot Locker, Best Buy cell phone stores), while Walmart, Amazon and even several Chinese retailers test larger automation. This new testing is well beyond the adoption of simple tablets at casual dining restaurants like Applebee’s and Chili’s, so we’ll focus on what’s new.
Chinese retailers are testing entire stores automated for the consumer. These experiences range from opening the doors of a locked store with an app on your smart phone (and unlocking it to exit), scanning items with your smart phone, and cameras recording all the items you pick up, put back or place in your shopping cart.
Amazon is testing its Amazon Go concept store in Seattle. This is a convenience store that utilizes the Amazon Go app on your smartphone to enter the doors with hundreds of cameras recording all of your actions. Your receipt is sent a few minutes after you leave and your credit card is charged. A few employees are on hand for initial orientation and for returns.
Walmart is testing an autonomous concept with little known of that, while testing a well publicized inventory scanning robot in about 50 stores nationwide. This scanning robot scans shelves and flags missing and mis-labeled items for human follow-up.
Implications for SMB Retailers
This is an area to keep an eye on, but likely won’t have an immediate impact on you. Here “immediate” is the next 1-3 years. Currently this is being tested with on a small scale in the US, and a larger scale with the tech-savvy Chinese. Only the largest retailers are investing and running experiments. There will be learning and tweaks based upon the successes and failures.
Automation experiments are focused on supermarket and convenience store formats. These store layouts are fairly uniform (width of aisles) and orderly merchandise presentation. Anybody who has braved back-to-school shopping at a discount clothing store sees a marked difference in the level of clutter and chaos as a comparison. Small town hardware stores can also give an illustration of so much stuff packed into a small space (which is why you need the helpful human assistance).
The way some large retailers choose to tie in-store shopping decisions to existing online profile histories may cause concerns with some consumers. While this could be very helpful, the recent backlash and stock price hit for FaceBook over privacy and targeting issues gives us an indication of what might happen if retailers are careless in messaging to users based on what they buy. If in-store purchase histories are hacked and exposed that could lead to a bigger backlash.
As with all technologies, over time the performance improves and the price comes down. This could be a great thing to look at when applied to your retail category and type of merchandise. Hardware based solutions (i.e. robots) will always take longer to optimize versus more software based solutions that can innovate rapidly. Adjust your timeline accordingly. With big retailers paving the way, the vendors will have a good base of learning to educate you to see if it might benefit your store.
Until then, make sure your marketing is automated, cohesive, and up to date.