STORE OPERATIONS

Retail’s Radically Different Future

AMAZON’S JUST WALK OUT TECHNOLOGY WILL TRANSFORM THE STORE EXPERIENCE IN WAYS THAT ARE ONLY LIMITED BY THE IMAGINATION

By Mark Landini

mazon has changed the future of retailing in varied ways, and the company’s latest invention — Just Walk Out cashierless technology — will cause a rethinking of almost every aspect of grocery store operations. It’s an exceptionally clever advance, one that looks simple to outsiders and will likely be refined before our very eyes. I think they’re still in “day one” of development, to use a frequent phrase those at Amazon use to stay future-focused. Just Walk Out will lead to a transformation of retail environments and properties, too. And the race is on to understand the implications. First, consider what’s behind this set of technologies that allows customers to avoid checkout lines forever. Instead, they enter supermarkets with a card, find

The Just Walk Out technology pioneered by Amazon stands to change retail settings fundamentally and forever.

Key Takeaways

Amazon won’t do anything that doesn’t benefit customers. Just Walk Out technology is expensive, but it's also a gold mine of customer data. Going cashierless gives retailers back as much as 12% more floor space (and earning potential).

what they need and just make for the exit.

Credit Amazon’s relentless focus on the customer for this radical innovation. Say what you like, but the company won’t do anything that doesn’t benefit customers. This includes everything at its testbed Amazon Go, where the company has had years of experience with this special combination of remote detection and virtual carts. In this way, Amazon rises above the criticism.

Second, ask this simple question: Why has Amazon decided to offer every grocer and retailer in the world this same capability? Just Walk Out helps everyone, rather than deflecting labor back to the customer. It’s a bold move.

Critics counter that Just Walk Out is expensive. On top of that, retail executives are asking each other — on social media, of course — “Who will own our data?” Cost concerns are miniscule when compared with potential customer preference across a year of purchasing at a few stores. On the data side, well, it’s a gold mine.

Third, turn to the ways Just Walk Out stands to change retail settings fundamentally and forever. Stores can be much more interesting. Point of sale (POS) evaporates, along with associated customer anxiety. With no checkout areas, supermarkets will have 8% to 12% more floor space, based on studies by Landini Associates. For some grocery executives, that means a comparable increase in earnings potential.

Store Design Changes Forever

Another promising change in store design: If you can just walk out, you can just walk in, too. Moreover, store layout is freed from the longstanding model of controlled shopper flow through the checkout corral. In short, why not have various entrance areas based on customer preference and need? Parking lots change. They could wrap completely around store locations, offering more customers premium spots and a shorter walk to the door.

This is just a start. Inside, think about customer preference as a driver for store planning. There are so many opportunities that as a retail designer, it’s dizzying to decide where to begin. Along with entrance location, the Just Walk Out kiosks may become a central organizing feature of better store departments and customer-facing teams. Completely reinventing their layouts, operators and developers of shopping centers can rebuild retail models based on optimizing cost and potential worth.

Just Walk Out also benefits the customer-facing workforce. Eliminating checkouts makes workers more enthusiastic and proactive. Sales grow in other ways, too: As precedent, witness the sales success following the introduction of kiosk ordering systems at McDonald’s. Reduced POS pressure felt by customers helped lead to an increase in revenues.

Real-Time Business Benefits

Now look at real-time accounting and replenishment. The potential with Just Walk Out technology is astounding. There are savings in supply chain from the availability of live data, which savvy operators will begin implementing immediately. Think of Walmart, for example: It didn’t begin to concentrate its technology this way on a whim.

This also leads us back to our gold mine: customized information capture. The greatest value found in the adoption of this disruptive technology is in the ways that retailers will deploy and monetize the data. It provides food for thought in everything from marketing to supply chain to product R&D, and more.

Beyond store design and planning, the grocer of the future is also responsive and interactive. Promotional engagement at the most personal level is possible: “Welcome back! Here’s a list of your purchases from last week. Could we bag the same order for you now?” The store could also invite customers to try new product samples, chat with the gluten-free specialist or see the latest entrants in a favorite department — all while the store fulfillment bots pack up the bags and deliver to car or home.

Let’s face it: Setup costs may be very high for Just Walk Out, on par with other major business decisions for grocers today. And yes, there remains the issue of data sharing. Yet these downsides pale in comparison to the customer benefit.

That’s the genius behind Just Walk Out and so many other Amazon innovations. Their DNA closely matches the customer’s, allowing Jeff Bezos to continue “Reinventing Normal” as our design team at Landini Associates asks, “if it’s not going to rock the shopper’s world, why bother?”

With no checkout areas, supermarkets will have 8% to 12% more floor space, based on studies by Landini Associates. For some grocery executives, that means a comparable increase in earnings potential.”

Mark Landini, Landini Associates

Mark Landini is creative director of Landini

Associates, a global design and brand consultancy based in Sydney, Australia.

Since 1993, Landini Associates has created and evolved retail brands, including McDonald's, T2, Aldi, Glassons, Sass & Bide, Jurlique, and Coles. The firm’s new Aldi Corner Store debuted in July.

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