How will checkout-free technology affect the future retail experience?by
The launch of Tesco's first checkout-free store has led to several other major supermarkets preparing to follow suit. Is checkout-free set to become a ubiquitous reality and how does it affect the future of customer experience in retail?
Tesco’s GetGo store in High Holborn, London may not be the first checkout-free shopping experience to hit the UK, but it is arguably the most significant.
The retailer is the first of the UK's incumbent supermarket chains to test the checkout-free experience with its new ‘GetGo’ system, which allows customers to collect whichever groceries they like and walk straight out of the store, without having to pay a cashier, scan the items, or use a self-service till.
The system works via the Tesco app, which is linked to the customer’s payment card. Shoppers simply scan their app on arrival at the store; a combination of cameras and weight sensors are then used to detect the items that customers have collected and the payment is taken shortly after leaving the store.
Tesco is not alone in its plans to move into checkout-free. Morrisons are currently testing a similar system in its Bradford head office, and Aldi has announced that it is trialling a checkout-free store in Greenwich, London. Amazon - a minor player in the grocery business in the UK but one with major financial clout to expand - has already opened six of its “just walk out” Amazon Fresh stores across London. This following on from a successful rollout in the US, where so far it has opened 25 stores across Seattle, Chicago, New York, and San Francisco.
As a pioneer of check-out free, it is interesting to look at the ways in which Tesco’s system is similar to and differs from that of Amazon’s. Whilst the technology being used is fairly similar - with both using a combination of sensors and cameras to detect the items collected - the crucial difference between the two companies is Tesco’s decision to outsource the technology to an Israeli tech start-up called Trigo.
Not only is this a practical difference - with Amazon creating its own check-out free technology - but a strategic one. Tesco is very much sticking to what it arguably does best - outsourcing the technology aspect so that it can focus on how it can incorporate it into bricks and mortar stores. Amazon, by contrast, is stepping out of its comfort zone as the biggest player in the ecommerce sphere, by deciding to enter the world of physical retail.
Tesco and its fellow supermarket chains may have an immediate advantage over Amazon and fare better in the long-term
It is the latter point that has led some to predict that Tesco’s foray into check-out free stores will be more successful than Amazon’s. Many retail experts have argued that there is something jarring about the idea of Amazon retail stores, particularly to those living outside of London who have never visited one before.
It is for this reason that Tesco and its fellow supermarket chains may have an immediate advantage over Amazon and fare better in the long-term. These companies already have loyal customer bases that they have built up over decades, who will potentially be more forgiving of the inevitable problems that will crop up during the early days. Moreover, the vastly superior experience that traditional supermarkets possess in physical retail, will enable them to incorporate the new technology into their customer experience strategies more smoothly.
A positive experience?
With the time, effort, and money put into acquiring and installing the necessary technology for the operating systems, as well as reconfiguring the layout for checkout-free stores, the question becomes: what are the benefits for these companies?
The company line from both Amazon and Tesco, is that checkout-free shopping technology will speed up the shopping process, and improve customer experience for shoppers. This sentiment is echoed by Oliver Guy, the Senior Director of Industry Solutions at Software AG, who claims that “implementing checkout-free technologies and approaches removes the biggest pain point in retail – queuing to pay.”
It’s hard to argue with either the assertion or the outcome. In a Future of Retail Report conducted by Savoo, speed and convenience was listed as the third most crucial thing that customers want from their shopping experience, with 33% of those surveyed stating that this was important to them.
Tesco’s promise of speed has certainly been reinforced by early reports from users of the check-out free store, where, some teething issues with customers linking payment cards to the app aside, they have been impressed with the speed and ease in which they have been able to complete their shopping.
However, it is important to note that we are still at the very early stages, and this is just one store in a busy city, surrounded by plenty of alternatives. There will be an element of novelty to early users, who will be entering the store knowing what to expect. It will not be possible to gage a more accurate idea of customer satisfaction and experience until more of the stores are opened, and use becomes a necessity rather than a choice.
Data is king
Whilst speed and lack of queuing is the primary benefit for customers, a key aspect for the organisations themselves is undoubtedly the increased access to customer data. For Tesco particularly, the opportunity to get more people using its app and clubcard is a highly attractive proposition, and one which it has already been pushing hard over the past two years, through the introduction of ‘clubcard prices’, which have required shoppers to use clubcards to purchase almost all discounted/special offer items.
Ever since the Cambridge Analytica scandal in 2018, data usage has been a highly controversial and much-discussed topic, not only in the UK, but globally. It is unsurprising then, that the news of supermarkets like Tesco potentially having access to even more customer data has been met with caution as well as optimism.
From a customer experience perspective, gaining customer data allows retailers to gain invaluable insight into what customers buy and how they shop, and allows retailers to help personalise their experience. Vipul Aggarwal, Chief Revenue Officer of BetterCommerce, explains how check-out free technology will enable companies to take this even further:
“For retailers, with such technologies, they can finally upgrade their personalisation for each customer with a better understanding of their buying behaviour across channels. With checkout-free stores, a huge repository of data will be available for retailers to create excellent customer experiences. This will help them promote brand loyalty and improve footfalls in the long-term.”
With checkout-free stores, a huge repository of data will be available for retailers to create excellent customer experiences.
Indeed, many are predicting that collecting behavioural data in-store could be the future of retail customer experience, with real-time rewards based on shoppers' habits as they are happening, rather than the current post-purchase system.
However, there will still be some trepidation involved when it comes to customers parting with their data, and these concerns won’t have been eased by the recent hacking of Tesco’s website, which occurred less than a week after the checkout-free store opening.
It is incidents like this, and the potential for reputational damage that is contestably the biggest risk for Tesco. The more data that it possesses, the more attractive it becomes to cyber attackers, and one major data breach could severely impact on its customer loyalty. As Emma Robertson, CEO at Engine Transformation, succinctly puts it:
“The success of Tesco’s changes will depend on the quality of experience that all this data creates. Handled well it could create rich, personal relationships at scale. Handle it poorly and customers could feel that their data has been abused and turned into spam.”
A further potential customer concern that Tesco will need to be weary of is creating a divide amongst their customers, and isolating older and less tech-savvy shoppers. A survey from a housing charity in 2017 advised that automated checkout machines deterred almost a quarter of older people from shopping, with shoppers advising that they found the reliance on technology “intimidating” and left them feeling “shut out”.
One would assume that the checkout-free system would be even more worrisome for this demographic, with owning a smartphone and accessing an app being a prerequisite. This is a wider issue amongst customer service and CX, with many brands disregarding the over-50 demographic, despite them accounting for over half of the UK population.
A dislike of self-service technology is a long-standing issue across all customer demographics, and Tesco’s latest announcement has resulted in predictable backlash from some customers. Many voiced their refusal to use existing self-service tills due to persistent faults and lack of human interaction, as well as fears of checkout-free tills costing people their jobs. It is the latter that seems to be a particular issue for prospective shoppers, and one that has no doubt been enhanced by the pandemic and subsequent job loss.
Although Tesco was quick to dismiss claims that the new technology will result in job losses, their enthusiasm was not shared by a spokesperson for the shopworker’s union, Udsaw, who voiced “concerns” with the new technology. A point which is supported by a recent ONS study, which predicted that 65% of retail cashiers and checkout operators were at risk of automation.
Despite concerns about automation and data breaches, it looks unlikely that checkout-free stores are going away any time soon. The combination of eliminating queuing and the customer experience possibilities that access to real-time data will enable, means supermarkets will be keen to persist with the new technology.
Though it will be fascinating to see how customers respond to checkout-free as the stores become more prevalent, as well as whether companies are truly able to convert the new access to data into tangible CX improvement, Sachin Jangam, Partner for Retail at Infosys Consulting, believes this may not be for some time yet:
“For now, the main clientele continues to be curious shoppers and tourists. The overall economics of store operations are still in question, given the reduced product range, high rental costs, and significant technology investments required. ‘Just walk out’ will likely remain in a trial period for the next few years, before we start to see mass rollouts.”
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