As more brands explore the concept of cashierless stores, Dan Ackers, senior account manager for retail at Cloud Technology Solutions looks at the technological infrastructure needed to make this digital transition a success, and the challenges retailers may need to overcome as a result.
Competition in the retail industry is fierce. Customer loyalty is getting harder to secure and supermarkets need to constantly adapt to remain competitive. Improving convenience has become a key focus for brands in their efforts to appeal to shoppers.
Last year, Aldi trialled ‘Aldi Local’, a smaller convenience-style store that’s a third of the size of its traditional supermarket. Meanwhile Tesco announced a revamp of its Metro shops to accommodate for the rise of convenience shoppers. This is just the tip of the iceberg and many of the UK’s largest retailers are now looking to cashierless stores to help provide customers with a quick in-store experience.
One of the first trials of these – back in 2016 – was by Amazon as it entered the bricks and mortar retail market in the US. Its Amazon Go store is a cashierless model with convenience at its core. Customers ‘tap in’ with their phone upon entry to the store, pick up the items they want and simply walk out without visiting a cashier. The store’s built-in technology monitors what customers have picked up and automatically charges their Amazon account for the products.
Four years on from the launch, Amazon Go now has 18 stores across America, with plans to open as many as 3,000 by 2021. The cashierless concept has piqued the interest of the UK’s largest supermarkets too. Sainsbury’s opened its first checkout-free store in April last year and Tesco announced in October that it had invested in technology that would allow it to do the same.
If these trials are a success, we could see cashierless stores become commonplace across the UK. But what technology will retailers need to make the cashierless model a reality? What opportunities do these technologies present? And are there digital infrastructure barriers that need to be overcome if the model is to become mainstream?
Integration is key
The cashierless store model is interesting because its success relies on the ability to bring together some of the biggest technological developments of the last ten years into one harmonious system. Cloud infrastructure, the internet of things, big data and machine learning are all intrinsic to the cashierless store. And they must work in perfect harmony for the model to deliver the benefits retailers hope it will.
Cashierless stores need to be fitted with state-of-the-art sensors and cameras that cover every square metre of the store to monitor what shoppers are picking up from the shelves and what they’re placing back.
IoT technology will also be vital to ensure each item is automatically scanned once placed into a basket, with that information then accurately and rapidly relayed to the store’s billing system and inventory. A process crucial to allowing stock to be replenished and customers to be billed accurately.
Coupling this data gathered with cloud infrastructure will be majorly beneficial for monitoring stock levels cost-effectively. It will also be essential for stores with multiple premises that want to break down silos and allow data to be analysed centrally. Reviewing the huge amounts of data collected on product sales across shops will also require the use of machine learning technology, which will better allow retailers to identify and react to trends in consumer shopping habits.
Teething problems not repelling retailers
Clearly, the technological apparatus required to create a successfully functioning store is significant. So much so that technology investment could end up being an insurmountable barrier to mainstream adoption of cashierless stores if major brands cannot prove the concept at the trial phase. There are other challenges posed by the cashierless store model too.
For example, Amazon Go stores in the US do not allow entry to customers without funds in the account linked to the device they scan when they first enter the store. This is to ensure that a customer cannot leave the store with products without having the money available to pay for them. However, this system disregards the fact that some shoppers may wish to browse before returning at a later date to purchase goods. This means that for luxury retailers with high-priced goods, this model won’t be suitable.
The removal of tills from stores also means that products placed at checkout to encourage impulse purchases may not sell as well in this format. One potential solution for retailers is to send digital promotions directly to customers through their devices to make up for any shortfall in sales of impulse buying.
However, while challenges do exist, the potential to harness real-time insight and optimise operations remains attractive to retailers.
Gaining real-time insight into demand for products at a granular, minute-by-minute level can help stores anticipate demand and ensure they optimise stock levels. Being able to access data from a range of stores to understand regional variations in demand is another big benefit.
The technology needed to enable a cashierless model can also be used to improve store security. When integrating CCTV cameras with machine learning, the cameras can learn to identify abnormalities in customer behaviour. For example, a camera could identify a shopper dropping a pint of milk on the floor and notify a member of staff to clean the spillage. In more serious cases, the camera could also identify a customer acting suspiciously in store and alert security staff. Cameras may also able to identify a shopper under the age of 18 picking up alcohol.
So, while adopting a cashierless store model might necessitate significant change for retailers, their investment in trialling these systems shows that this is not stopping them exploring the possibility. If retailers can iron out the wrinkles and make the most of the innovative technology available, it might not be long until we see cashierless stores’ full adoption across the UK.
Dan Ackers, senior account manager for retail at Cloud Technology Solutions