Will Amazon Go transform the future of retail?

Amazon finally opened its long-mooted cashier and till-less store Amazon Go this week, so EG asked Seattle resident and real estate expert Dave Magee to test the experience and what it means for retail. As managing principal of the Cushman & Wakefield office in Seattle, I couldn’t let opening day of the Amazon Go store pass without paying a visit. I downloaded the Amazon Go app to my iPhone before leaving the office and, with a few short clicks, I’d added my Amazon Prime credit card details and was ready to shop. The store is located in one of Amazon’s gorgeous high-rises in the middle of Amazon-ville so, of course, it was clean, modern, brightly lit and attractive. It was moderately crowded, but not too much so, as smiling Amazon employees in bright orange puffy jackets controlled the line at the entrance going in and handed out bright orange “Amazon Go” shopping bags while people waited. Once inside, the novelty – no cashiers – was immediately apparent, but not obvious. You are greeted by a modern version of a subway turnstile. You flash your cell phone, open to the app, and clear, plexiglass doors automatically respond and open, allowing you to enter. While the store is only 1,800 sq ft, I was expecting a greater range of items. I grabbed a locally made sandwich, some potato chips, a cookie and a beverage and headed out through another modern turnstile. If you’re paying attention, what you notice is you don’t notice there are no cashiers. No lines as you wait your turn to pay and leave. There’s nothing obvious about the packaging or the way in which items are packed on the shelves to make you think high-tech sensors are recording every purchase. ‘Significantly efficient’ I tested the system by taking something off the shelf and then putting it back, although I felt pretty dumb after that experiment as you can’t confirm anything has been recorded until you leave and check the receipt you are sent electronically. Otherwise, this was much like any other small grocery experience. You select items off the shelves and put them into your bag – and for this store, a bag is sufficient for shopping – there is no evident need for a shopping cart. But the real news is the implication. It’s provocative. What does it mean to the future of shopping in person? Opening day entry queues from curious shoppers aside, it eliminates any potential for long waits at checkout from the person trying to get the exact change out of their wallet/purse. No “price check” for mis-labelled items. You can’t get in without activating your Amazon Go app, so I don’t suppose “shrinkage” would be a problem. And no cash exchanges hands. All of this probably enhances the shopping experience for customers and makes for greater efficiency for operators. What’s next? If it works in a small grocery store, why not for other retailers? It will impact how you pay and, I would guess, would effect a reduction in employment for retailers who have to hire clerks and shopping helpers to attend to customers making payments. I can’t think of any retail operation that wouldn’t benefit from this technology. It begs the notion that everything from buying gas (until electric cars take over) to buying cars will happen in much the same way. Although, if I’m at a bigger grocery store, I’m still going to need assistance from a shopping clerk to help me find the appropriate aisle for tomato soup and to tell me where I can find the bakery. What I wonder is how much more of a pleasant experience this kind of shopping will generate when, even more efficiently, I can dispense with the whole need to go to the store (clerks or no clerks), simply go online to Amazon Fresh, order my groceries and have them delivered to my door. Time will tell. Dave Magee is managing principal, Washington region, Cushman & Wakefield Automation is a game changer Garrick Brown, vice president, retail research of the Americas at Cushman & Wakefield, says: The forms of automation that Amazon is pioneering with Amazon Go (and that Chinese convenience store retailer BingoBox has already rolled out in China) are just the beginning of a new wave of automation that we are going to see transforming retail over the next decade. While it is doubtful that automation in the retail and restaurant (particularly fast food) worlds will have a major direct impact on real estate fundamentals in the near term, these will be game changers for the industry as a whole. Certainly, the Amazon Go technology already looks like it could easily be applied across the convenience store sector as well as for dollar stores or any number of smaller format retail concepts. But this really is just the beginning. While upscale retail will increasingly embrace big data technology that will allow human sales associates to give a personalised and curated retail experience to shoppers, at the other end of the pricing scale, we will increasingly see the use of robots and automation. This is going to take on the role of many of these lower level customer service interactions, in particular for retail categories where high levels of service are already generally not expected and where existing levels of service are often lacking. We will increasingly see this kind of technology being rolled out at fast food outlets, grocery stores, superstores, discount clothes stores and more over the next decade. Obviously automation will not replace all lower wage service jobs, but this will eliminate many and is a likely major disruptor ahead, particularly for a few key retail sectors. Main image © REX/Shutterstock