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Amazon Go – Time to Panic?

Bridget Johns
Bridget Johns
Head of Marketing and Customer Experience

Retailers across all segments are wondering, “What does Amazon Go mean to me and my shoppers?” It means it’s time to act on removing the most painful points of friction for shoppers of your brand.

Well, that didn’t take long.

Within hours of last Monday morning’s press cycle, RetailNext’s customers were asking me, “What does Amazon Go mean for the rest of retail?” There is no doubt it’s an exciting time to be in the business of delivering technologies that move the needle on physical store shopper experiences and, in my view, this announcement fast forwards the need to make the investments that drive a new kind of retail. But should every retailer be thinking about a cookie cutter approach to what Amazon is doing? Probably not. Should retailers be panicking? Maybe.

 

An Amazon employee is pictured outside the Amazon Go brick-and-mortar grocery store without lines or checkout counters, in Seattle Washington, U.S. December 5, 2016. Photo by Jason Redmond/REUTERS

Photo by Jason Redmond/REUTERS

True to its character, Amazon has done a very smart thing, choosing, as it did with books over 20 years ago, a category ripe for disruption.

Americans buy groceries pretty much the same way they have for the past 100 years, and there isn’t much that has changed about the physical grocery store environment. You still have to go all the way to the back for milk, you still find fresh food and serviced areas on the outer perimeter and you still have to wait in line on a Saturday afternoon … even if you are buying just a single carton of milk. The biggest disruption that has stuck to date in the grocery space has been the self-checkout, and even that is fraught with friction.

As we know, with all of these technologies, the devil is in the details. The notion of a check-out free grocery store has been around for ages, but the technology hasn’t really been available until now – and it’s still an open question whether those technologies are ready for prime time. If you employ self-scanning, for example, you still need to have a compliance check, which requires a person ensuring no mistakes were incurred in scanning – so, only marginally easier than self-checkout. But, with the advancements in IoT and other sensor technologies, the ability to create a technology-powered experience eliminating one of the biggest points of friction from the shopper experience is closer and closer to reality.

The ability to measure in parallel product movement – with RFID, for example – and human movement – through video analytics – opens a whole host of opportunities to service customers in new ways.  Both technologies have come a long way.

With video, retailers measure very precise movements of customers through large environments, and RetailNext’s Aurora all-in-one sensor further moved the needle on this technology earlier this year. With stereo cameras, retailers measure very precise tracks with high degrees of accuracy and an ability to segment tracks by age, gender, employee vs customer, etc. provides a tremendous amount of information about what is happening in-store.

The advancements in RFID reader technology, particularly with new fixed readers being brought to market by companies such as Intel and Impinj, gives a very good view of where all tagged product is at all times. Intel goes a step further and embeds video into its Retail Sensor Platform product to give, for the first time, the ability to bring shopper and product movement together in one place at the same time. Software like RetailNext’s SaaS platform then takes all of those tracks and gives insights into what is happening within a store, and from that data retailers like Amazon can get really creative about what that means from a customer facing application perspective.

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Amazon chose to tackle grocery and to eliminate the checkouts, but this is probably not the path that all of retail will take. While it lends itself to the somewhat soul crushing experience of grocery shopping, other categories like apparel will need to evolve in other ways. Smart fitting rooms are already becoming a must-have for many of our customers, and I believe there is still a tremendous amount of opportunity to further evolve and better that experience. And, as I think about different categories of retail, each has their own unique challenges and opportunities to evolve. While the go-forward strategies won’t all look like Amazon Go, lets all hope they look different in five years than they do today.

So, what are we telling our customers who are asking “What does Amazon Go mean to me?” Below are eight top tips to help focus the conversation.

  1. Don’t Panic. Amazon isn’t going to build thousands of stores overnight, and until real shoppers pressure test the experience, it’s hard to know exactly what the impact will be. There are other unknowns like accuracy and compliance that will need to be well-vetted. It’s one thing to inadvertently give away an occasional can of soup, but it’s more damaging to charge for a can of soup that isn’t in the basket. Moreover, other categories have more potential for real customer dissatisfaction and inventory shrink issues if the product and the charges don’t line up perfectly.
  2. Panic. Amazon has a proven ability to change how we consume products. Remember, they started with one simple thing – and not only did they disrupt how we buy books, they changed how we consume the written word altogether. That’s big.
  3. Make a plan. If you aren’t thinking about how you collect, analyze and action data in your stores, you are definitely behind. But, the good news is we are about to start a whole new retail cycle. Be ready to create some of your own magic in Holiday 2017.
  4. Focus. Start with your shoppers’ biggest pain points and work from there. Don’t try to boil the ocean, but do try to remove some of those points of friction from their experience.
  5. Be bold. Yes, I know, I just said to make a plan and focus. But, part of that plan should be to go way outside of the box. Will all of the technology work? Probably not, but you will learn a tremendous amount and you may even find a big, disruptive idea of your own.
  6. Engage. Bring your business partners into the conversation and try to find ways to leverage data and information across silos – or better yet, tear those silos down.
  7. Educate yourself. Understand some of the in’s and out’s of the technologies available – even if you aren’t a “technology person.” When I started working at RetailNext, I had no clue what technology could do. But, I did know the problems retailers needed to solve. Now that I understand both to a certain degree, it’s so much easier to think about how to solve the problems of today.
  8. Go shopping. I can’t tell you how many times I talk to retailers who admit they spend almost no time in stores other than their own. Learn from the digitally native or otherwise innovative brands or that are all disrupting in their own way – Warby Parker, Lolli & Pops, Rent the Runway, etc. are all great places to start.

If you’d like to continue this conversation, or start a new one, please stop by and visit us at the NRF Big Show on January 15-17 in New York City. We will be there in booth 3353, and hope you will be too!

Join the #retail, #inspiringretail and #SmartStore conversations on Twitter @bridgetjohns & @RetailNext, as well as at www.facebook.com/retailnext.

 

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