By Andy Troska Amazon’s flagship Amazon Go store in Seattle. Source: Kyle Johnson for The New York Times We have all come to expect some degree of automation in our shopping experience: price-checking scanners at the ends of the aisles; digital price tags that auto-update to reflect sales and price changes; maybe even a self-checkout kiosk that means you can buy your midnight pint of ice cream without ever having to interact with another person — until the kiosk malfunctions, that is. Large chains including Kroger and Walmart and startups like Selfycart have tried their hand at smartphone-based self-checkout solutions that allow you to scan your purchases as you shop. After filling your grocery bag, you present it to a clerk for an audit instead of going through the checkout line. These solutions may increase convenience, but they are not yet widespread. Costovation is innovation that delights customers while reducing costs for businesses Recently, however, retailers have started pushing the boundaries of the automated shopping experience even further. This January, Amazon opened Amazon Go, a convenience store that eliminates not only human cashiers but also the entire checkout process. Customers simply walk into the store, pick what they want, and leave. Hundreds of sensors and cameras in the store track what customers buy and charge the card linked to their Amazon account as they walk out of the store. In China, slightly lower-tech innovations are improving the customer experience while eliminating much of the need for human labor. Shanghai’s BingoBox convenience stores use facial recognition technology to allow customers to enter and leave the store, which remains locked until after the customer completes their payment at a self-checkout kiosk. At E-commerce company Alibaba’s Hema supermarkets, customers scan their purchases using an interactive app on their phones; checkout is as easy as checking in with a clerk at a kiosk and scanning a single QR code to pay. These solutions aim to streamline the shopping process for customers while reducing the need for human labor in a technologically innovative way When you scan a barcode with the Hema supermarket app, it gives you information and suggestions about how to use the product as you add it to your basket. Source: CNN Money Costovation is the word we use at New Markets Advisors to describe an innovation that delights customers while cutting costs (stay tuned for more on this concept and keep an eye out for Stephen Wunker and Jennifer Luo Law’s book on the topic, which will be released in August of this year). Costovation is rooted in identifying one or more specific jobs that customers want to get done and finding a way to help them accomplish those jobs with less. Retail automation solutions are driven by the hypothesis that customers want a faster, more convenient shopping experience, with less waiting (and potentially with less human interaction). As the technology that drives these solutions becomes more and more affordable and ubiquitous, even the complicated, multi-camera setup of stores like Amazon Go and BingoBox will enter the realm of costovations. Free from the need to hire, train, and pay cashiers, retailers will save money. Customers will enjoy a more seamless shopping experience, with little waiting around and low risk of unpleasant interactions with other people; for a while, they will likely also be delighted by the novelty of the shopping experience. But if novelty is the main draw for customers, that may not be the best sign for Amazon and other retailers with similar ambitions. Dave Farber’s recent piece, which looks at the popularity of pink gin and discusses the difference between fads and trends, reminds us that a combination of desirable characteristics is not enough to satisfy customers in the long term. For an innovation to be successful and long-lasting, it must engage with the jobs customers are trying to get done and help them accomplish goals beyond simply acquiring a product or using a service. The excitement of a shopping experience that allows you to simply take what you want and walk away with it may be enough to draw an initial wave of interested customers, but it will not be what keeps them there. Even convenience may not be enough to build a loyal customer base. Although it is true that long waits in the checkout line are a pain point for many customers, their North Star Job (a central, slightly less specific job that can be satisfied by accomplishing a combination of more specific secondary jobs) when they go shopping is rarely to move through the checkout process as quickly as possible. For an innovation to be successful and long-lasting, it must engage with the jobs customers are trying to get done and help them accomplish goals beyond simply acquiring a product or using a service. Customers have a diverse array of more specific, individual jobs when they go shopping: staying within their budget and adhering to their shopping list; making healthy purchase decisions; feeling in control of their purchasing choices; or discovering new ingredients, ideas, or products, just to name a few. Although retail automation solutions like Amazon Go may succeed in alleviating some pain points and helping customers accomplish jobs related to convenience and autonomy, they may create other pain points and undermine their customers’ ability to accomplish other jobs. The large number of cameras required to make image and facial recognition technologies work may make some customers uncomfortable, and the lack of a final tally in the checkout line might make it too easy to make impulse purchases and go over budget. That said, wouldn’t it be great not to have to make sheepish eye contact with the cashier as you sneak just one more candy bar onto the conveyor belt? BingoBox stores in Shanghai are open 24/7 no cashiers required. Source: www.techinasia.com It is of course important to acknowledge that a significant transition towards retail automation would impact the retail ecosystem and experience in far more significant ways than alleviating the feeling of judgement you experience when you go out in your sweatpants to buy a jar of peanut butter and a package of Oreos and nothing else. Although Amazon may claim that automation has not yet cost people their jobs, further advances in retail automation are certain to lead to staff cuts. And if more stores follow the BingoBox model of only allowing entry to paying customers, the status of the store as a semi-public, social space may no longer be guaranteed. The societal impacts of these changes could create new pain points and shift the balance and prioritization of customer jobs, further complicating the future of automated retail.
Only time (and/or some thorough customer research) will tell if removing the checkout process from the shopping experience is a true costovation, not just a fun gimmick that helps retailers save on staffing. For the time being, most retail automation solutions still rely on expensive proprietary technology and seem relatively difficult to scale up from a convenience store to something more substantial. But given the current pace of competition in this space, it seems likely that concerns surrounding economic feasibility and logistics are soon to be a thing of the past. The only thing that will remain then are customer jobs and the concerns that drive them. Comments are closed.
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4/13/2018