Retailers Race Against Amazon To Automate Stores

A worldwide race to automate stores is underway as retailers foresee the consequences of Amazon Go in Seattle, where sensors and AI have taken the place of cashiers.

The world’s major retailers and small tech start-ups are both motivated by reducing the cost of labor, not to mention eliminating frustrations such as waiting in line. They also want to make sure that Amazon doesn’t gain dominance over the world of physical retail as it has for e-commerce.

The field is crowded with innovations such as robots to help stock shelves, apps that let shoppers ring up items with a phone, and a host of ambitious retail experiments in China.

As online shopping grows, the retail labor force already feels uncertainty about the future. Last year, the World Economic Forum said 30 to 50 percent of the world’s retail jobs could be threatened once the industry fully embraces automated checkouts.

Retailers will be able to gather incredible volumes of data in digitized locations. For example, in an Amazon Go store, cameras see a customer the whole time he or she is in the store.  Before Amazon Go, self-checkout kiosks were common in supermarkets. The grocery chain Kroger used sensors and analytics tools to better predict when more cashiers will be necessary.

As for Amazon Go expansion, the company has posted a job opening for a senior real estate manager who will be given the responsibility of “site selection and acquisition” and touring “potential locations” for new Go stores.

“Unanimously, there was an element of embarrassment because here is an online retailer showing us how to do brick and mortar, and frankly doing it amazingly well,” Martin Hitch, chief business officer of Bossa Nova Robotics, a company that makes inventory management robots for big retailers.

China, a country preoccupied with new tech trends, is home to a number of retailers experimenting enthusiastically with automated shopping. One effort, called Bingo Box, is a chain of over 100 convenience stores without any personnel in a business park in Shanghai. Shoppers gain entry with a code on their phones, and self-checkout items the same way. Once they have paid the proper amount, the store unlocks the exit door. Chinese retailers JD and Alibaba are in the middle of retail experiments as well.

Meanwhile, Walmart, the world’s biggest retailer, is testing Bosa Nova robots in dozens of its locations to take certain time-consuming tasks off the plates of workers. The robots roll up and down the aisles checking for out of stock or mislabeled items, and then send reports to workers, who resolve the issue.

Out of Walmart’s 4,700 American stores, shoppers can scan items at 120 of them, including fresh produce, with the camera on their smartphones. An employee does a spot check of their items when they walk out with a receipt.

However, some retailers are unsure that Amazon Go-style automation will translate to the scale of their stores, and may not be cost effective if it can.

“That’s probably not scalable to a 120,000-square-foot store,” Chris Hjelm, Executive Vice President and CIO at Kroger said. He did say that the camera and sensor network would become standard soon.

“It’s a few years out,” Hjelm said, “before that technology becomes mainstream.”