Contactless Checkouts – Beyond the WOW

The World has changed – so has Retail

The world around us has changed. These changes are disruptive, and game changing. The New Abnormal has changed the way we live, think, invest, interact, do business, shop, and work.

The pandemic has given us once in a generation opportunity to revisit investment plans in retail and supply chain automation. Retailers who have been early movers in investing in store and, supply chain automation, single view of inventory, robust demand forecasting and replenishment engines have gained most in these unprecedented times.

Our studies have indicated that multichannel retailers’ efforts to replace store colleagues through AI would be met with mild success, although cashier and operational jobs would be disrupted. Our research further suggests that many shoppers prefer to interact with a tablet – wearable device empowered store colleagues, particularly in specialized areas such as home improvement, pharmacies and personal care, where informed colleagues can make a significant impact on shoppers’ purchasing patterns. Our research has further underscored interesting co-relation to Live Streaming Commerce where shoppers’ online carts are integrated with the stores and online shoppers can view the merchandise before checking out the cart.

Contactless Checkouts – Hype or Necessity

When Amazon Go debuted in Seattle in 2018, it was considered a moonshot idea but in the post Covid-19 world, contactless checkouts, touchless backrooms, automated warehouses are areas where CXOs have started taking expedited investment decisions.

Since the time Amazon Go video went viral in 2018, many retailers have dabbled with contactless checkouts, by pursuing bespoke technology like Walmart (who have now paused their experiments), Tesco (tie-up with Tel – Aviv based Trigo), Kroger (with Microsoft), Sainsbury’s (checkout-free store using a smartphone app, WH Smith (in hospitals), and many more. Amazon is now offering “contactless store as a service” model and is positioned as a low – risk, high potential offering that can propel Amazon into what is estimated to be a $50 billion market.

But why has Contactless Checkout technology not witnessed faster adoption by retailers? The technology though disruptive is perceived to certain niggles:

• Reduced Basket Sizes – The pilots have taken off in express formats where shoppers nip in at lunchtime to buy meal deals, thus restricting the basket sizes, and impacting impulse purchases
• Limited Clusters – The pilots have focused on limited clusters like business districts that can witness slow traffic on weekends. Clusters comprising of compact communities, universities, offices, travel transit points, hospitals would prove to be “go to” segment for trialing these stores
• Select Retail Formats – Focus has been on creating new store formats. Rather existing stores can be refreshed to adopt contactless technology
• Pilferage – To prevent shoplifters, there would still be an investment needed in advanced technology to track and alert
• Data Safety – Recognizing the shopper as soon as she walks into the store, either through facial recognition or through her credit card or through her phone would be prone to scrutiny by regulators
• The P Factor – How profitable would these stores be? Retailers across the globe budget $75 to $100 billion per year on Point of Sale transformations. The $50 billion bill that Amazon is charging might sound outrageous but it does not completely deviate from the dollar value that retailers intend to invest in POS transformation

Beyond the pilot – the rubber meets the road

The profound experiences that retailers and technology providers have gained are providing invaluable insights as retailers go beyond the pilot phase.

Would the New Abnormal accelerate investments in contactless checkouts by CXOs? Will it spawn new technology players with deep pockets to venture onto this turf? Will retailers smartly tweak existing Mainbanks, and Self – Checkouts?

These are compelling questions that have pertinent answers:

• Format Selection – Identify which format would drive customer traffic throughout the day / week, and make investments in converting, for example, existing Convenience, Express, no – frills stores into contactless checkout stores, Cooperative stores that cater to senior citizens could be an apt format that simplifies the shopping journey of the most vulnerable shoppers
• Market Segmentation – Convenience and Express stores in business districts (for example, Madison Square Garden, Canary Wharf, Oxford Street) or in University towns, promise to do brisk business
• Technology Model – Decide the technology model of contactless checkouts. Facial recognition with watertight security features, tap & go, scan & go handheld device, using a mobile app, smart RFID tags (with product information and anti-theft protection) on merchandise – carts – scanning belt – integration with digital wallets. The mobile app has an added advantage that gives an endless aisle experience to shoppers for whom the shopping journey could begin much before they would have stepped into the store
• Iterate, Fail, Succeed – The availability of technology and the willingness of technology teams to fail fast and succeed in getting the shopper journey right would be a decisive factor. Few retailers rolled back their contactless checkout pilots when they witnessed diminishing returns. These retailers should now look at the learnings from those experiments, and re- initiate investments with renewed vigour
• Point of Convenience – Blend the contactless checkout with Click & Collect, Curbside Pickup, or as a queue buster. These points of convenience in no time would become a destination for shoppers who prefer non-intrusive, contactless shopping with all the conveniences of proximity, price, product availability, and promotions

The Shoppers are Ready!

In our conversations with analysts and CXOs, implementation of contactless technology in the stores, and the associated cost – benefit discussions are top of the agenda. Retailers clearly want to take that leap of faith. In the post Covid-19 world, shoppers’ safety, and associate wellbeing is a critical driver for implementing automation solutions inside the stores.

In June 2020, when stores started re-opened with “social distancing” regulations in place, contactless experiences inside the store had become a necessity. Shoppers are willing to shop at a store where shelves are replenished by robots, have autonomous vehicles as carts and are able to checkout their cart in a heartbeat.

In August 2020, Amazon announced launch of Amazon Fresh Grocery store in Woodland Hills, CA. Shoppers place their merchandise in the cart, sign in using QR code in the Amazon app, shop, and exit through the Dash Cart lane to seamlessly complete their payment. The cart blends computer vision and smart sensors to identify merchandise in the cart. This promises to be a disruptor.

It’s no longer a question of when should retailers introduce contactless checkouts, but how soon.