Now open to the public, Amazon’s new brick-and-mortar concept store, Amazon Go, aims to amp up the convenience factor in convenience store shopping: The company’s Seattle-based shop and its “just walk out” premise eliminates traditional registers and checkout lines.
Consumers download an app, scan it in on glass turnstile-like entryways, and pick up whatever they need — from beverages to full meal kits — and waltz out of the store. The design of the physical space, festooned with sensors and an array of cameras, and a mix of artificial intelligence and camera vision, allows the e-commerce giant to track who enters, what they took and how much to charge their accounts. There are no baggers or clerks at all, other than the employee who checks ID for alcohol.
“It was, as I like to call it, overtly immersive,” said Brendan Witcher, principal analyst at Forrester. “I know the tech is going on around me, but to the average consumer, it’s completely transparent. There’s absolutely no sense that you’re in a really high-tech store. The only exception would be the log in at the front.”
What may seem like a sudden push to extend the company’s physical retail or grocery ambitions, especially in the wake of its Whole Foods acquisition, is actually neither. Witcher said Amazon has been steadily working on this concept since 2012. He also makes it very clear that the effort is not aimed at the grocery market. “It wouldn’t even work in Whole Foods at this point,” he said. “This is a convenience store play — items that are individually packaged that you can pull off a shelf, that’s very structured in the way it’s built.”
Amazon didn’t respond to a WWD request for information about its technology or future plans in the area, but deferred to its Amazon Go web page.
According to IHL Group analyst Jerry Sheldon, there could be as many as 400 cameras installed to cover the 1,800-square-foot store. Based on that rough estimate, the costs would be prohibitive. “Say those camera units cost, on average, $500 each,” he said. “This amounts to a cost of around $111 per square foot of selling space. If the average Whole Foods store is, say, 38,000 square feet, that is $4.22 million per store just for the hardware, not including the cost of cabling, installation, maintenance, supporting infrastructure, software, cloud services, etc.”
Sheldon noted that, when Amazon was asked about licensing the technology, it was noncommittal — suggesting that the company could be open to conversations. But it’s not their priority, he said.
Witcher doubts that the company would go down that road. “You couldn’t just take this and plop it into a 7-Eleven, Target or Costco,” explained Witcher. “The whole store is digitized, the whole environment. You would literally have to build a brand new store every time for this.”
At this point, Amazon is expected to monitor the test store before rolling out any other locations. And if it does, it will likely stick to high-traffic locations, like select urban areas.
As for others stepping into this bold new world of cashier-less retail, there are tricky details to contend with, said Sheldon. “I can see that you could marry their individual tracking technology with, maybe, a technology like RFID to create a cashier-less experience in an apparel store,” he said. “The technology, as presented, would probably work with minimal tweaking in a drugstore. But camera location seems to be pretty critical, so many retail locations with high ceilings would most likely have to be retrofitted with drop ceilings.” He points out that Wal-Mart is reportedly working on a concept, so he’s very intrigued on how the big-box chain will implement it.
Forrester’s Witcher thinks the takeaway for other retailers goes deeper than the nuts and bolts. It goes back to culture and attitude: “Name me a retailer that has the patience and the will to work on something for five years without a return,” he said. “You know it’s just against the culture and DNA of most retailers to put that level of effort into something, that kind of will and determination to work on something — it has more to do with culture than it has to do with technology.”
“IBM introduced this concept in 2006. We’re here, we are 12 years later, and the only two people that are bothering to work on it are two tech companies,” he noted, referring to both Amazon and Apple, which has also worked on cashier-less transactions in its own Apple Stores. Retailers should “look at yourselves and ask why don’t we have the kind of culture that could build this,” he said. “I think it speaks volumes about the retail industry. It needs to wake up and smell the Amazon.
“It’s not a retail company,” he added. “It’s a company that focuses on consumer behavior and realizes that the way you win customers is by exceeding their expectations and adding value to their lives.”