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Amazon And The Future Of Retail

Amazon has started to move towards bricks and mortar in recent times. Their flagship Go Store, which opened this year in Seattle, may be a sign of things to come, particularly for retailers looking to add more value for their customers

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Much has been written and discussed in the media in recent times about how AI and automation are transforming businesses and the way we work. Nowhere is this more evident than with one of the biggest retail companies currently in the world, Amazon.

Of course, this particular retail giant has been at the forefront of innovation ever since it burst onto the market and the name has become synonymous with global and digital retail. It’s therefore a good place to focus if we want to understand what the future holds and what that means for stores, employees, and consumers themselves.

There’s no doubt that technology has had an impact on everything in retail from stock taking to product distribution. On one side, it’s enabled businesses to operate at much lower running costs once they’ve invested in the right tech. On the other, and more controversially, it’s done away with vast swathes of employees in recent times, something that continues to have a real impact not only on jobs but the social fabric of communities.

Inside Amazon’s Go Store

Amazon has started to move towards bricks and mortar in recent times. Their flagship Go Store, which opened this year in Seattle, may be a sign of things to come, particularly for retailers looking to add more value for their customers.

You need to download the Amazon app for a start before you can get into the store – there are subway style machines blocking the entrance which have to be tackled first. While most of the products here are your standard groceries, it’s the underlying technology that proves to be the most important aspect of the store by a long way.

The app is important. There are no people stood at cashiers desks and no checkout tills. You pick up a bag, the one you will eventually walk out of the store with, and start to shop. If you choose a particular product and remove it from the shelf, Amazon automatically adds it to your online basket. Put it back and the item is removed. Walk out of the shop and you pay. Take a look up and you’ll see an impressive array of cameras, watching you and taking part in your shopping experience. Hidden away there’s also some pretty advanced iBeacon technology going on.

One of the big issues that have come out of this innovation is not whether it’s a good idea but how it may eventually impact on the employment market. If the tech spreads, there would be no need for staff inside a shop, except to stock shelves (and even that might be done by machine). Amazon says they have just put their staff to other uses, helping instore or checking IDs when it comes to products like alcohol. It all seems a little bit half-hearted, to say the least.

What Does It Mean to Customers?

Do customers like this kind of shopping experience? A recent survey discovered that a fifth of shoppers actually think that an app that tracks them while shopping is an invasion of privacy. Despite this, it’s technology that could seriously be considered by many big retailers in the future if it proves successful and cost-effective to implement.

If you’ve ever spent a considerable amount of time standing in a queue waiting to pay for goods, you may well be convinced by the technology already. You walk in, get your products and walk out. It’s as simple as that. The rest is taken care of automatically. Stores like Amazon are hoping that this is going to be the primary consideration when it comes to shopping and that invasion of privacy isn’t going to be an issue. After all, we’ve already gotten used to algorithms that track our online behaviour and make suggestions about products we’d like to buy. We routinely give our details and post intimate content to social media like Twitter and Facebook.

Some industry experts and even a few psychologists have worries that this kind of tech is actually going to make us poorer. We tend to watch our pennies when we see that total mounting up at the checkout whereas payment in a store like Amazon Go spending money happens invisibly. According to marketing Professor Manoj Thomas from Cornell University in the USA:

“If you are paying by credit card you might pause at the checkout and suddenly think, ‘Should I be buying this?’ Or if you are paying cash, that reflection happens at the very beginning. Both will be gone with the Amazon store.”

Amazon can afford to play around with innovative strategies like this. It’s less certain that smaller retailers would see it as cost effective to implement and whether it would bring real long-term savings. A lot would depend on whether consumers themselves like it and whether, one day, they will actually expect it when they head into a store. That may take a while to bed in. Perhaps even decades.  

The Future of Retail

In areas like the USA, they are already talking about the retail apocalypse. People are moving online and stores and large malls are closing down in big numbers. Some see this as a demise of the physical shopping experience. Others point to the fact that retail is undergoing a painful correction but is far from dead. It just needs to provide a viable alternative to bring customers back in. According to Fast Company:

“The more Amazon pushes robot-powered efficiency, the more space there is for warm and individualized service. The more that people interact with Amazon through its AI-based assistant Alexa, the more they will crave the insight and personal connection of fellow humans.”

This might be overly optimistic – after all, moving to greater automation has allowed Amazon to offer lower prices on many products and that’s particularly important for consumers who have seen the power of their wallets shrink over the past decade or so.

But you need to look at the other side of the story as well. Most traditional grocers, for example, still use the standard check outmanned by staff, though many have introduced self-service options. The research to date tends to show that people will tend to gravitate automatically to a check out that has a person at it and only use the self-service if it’s busy.

People do still matter. To bring the same technology in store currently requires people to have a dedicated app on their smartphone – what about those who don’t have phones or simply don’t want to engage with the technology, especially the ageing population? The truth is that similar high tech stores to the one in Seattle may well be a long way off. By then, new tech may also have come in and the rules of the game undoubtedly, almost certainly have changed.

For the moment, the Amazon experiment is a sign that retail is changing but we’ve known that for a long while. With it’s vast array of cameras and iBeacons on the show, the store has created a good deal of local interest. Whether it can be replicated across the rest of the world is another thing entirely. The cashiers and shop store staff remain safe for now – the biggest challenge remains the low cost offers that online can offer compared to bricks and mortar stores.

Perhaps too, we are spending a little too much time working on a ‘frictionless’ shopping experience as big retailers like Amazon like to call it. We are, after all, social creatures and there are still plenty who enjoy the idea of going out to the shop and browsing, talking to staff and getting more out of life than just the next bargain. There is a reason to be reasonably optimistic if you work in retail, despite the recent issues the sector has faced.

 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Kartikey Bhargava

Kartikey Bhargava is the marketing head of a company that specializes in mobile led digital solutions and a part-time food critic.

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