How far can cashier-less stores go?

Visiting scholar Jian Wang visits an Amazon Go store as
the Center’s second appraisal of a store without cashiers.

By Jian Wang

(Wang, vice editor-in-chief of the New Media Division of China National Radio, is a visiting scholar at the Center for the Digital Future. Contact Wang at [email protected].)

Microsoft is developing a technology that could eliminate cashiers from stores, according to a report from USA Today. Among retailers that are highly interested, Walmart is the most fervent and is reportedly in talks with Microsoft to install this cashier-free technology at all of its stores. This could initiate a tremendous change in how brick-and-mortar stores operate and how we shop.

Microsoft’s move is considered an intention to compete head-to-head with Amazon in new-concept retailing. After opening the first-ever cashier-less store in America at its home base of Seattle, Jeff Bezos is planning to open as many as 3,000 cashier-less Amazon Go convenience stores by the year 2021, according to a report from Bloomberg. The sparkling and shiny new mini-marts could soon appear on street corners of Chicago, San Francisco, and Los Angeles.

I was in Seattle recently to touch and feel the first Amazon Go and to see with my own eyes how cashier-less shopping could change our lives.  As visiting media and Center director Jeffrey Cole have reported, I thought shopping at Amazon Go was indeed terrific. The store was relatively small, but the shelves were neat. The collection of merchandise was wonderful and the prices were reasonable. There was truly no cashier and no need to take out card or cash. The payment was made automatically and the bill appeared on my cellphone several minutes after I exited the store.

Questions and worries

Although the shopping experience was exciting, some questions and worries still linger. Is the store truly cost-efficient? Is the technology used in Amazon Go mature enough to be carried to bigger stores, such as Amazon’s retail chain Whole Foods? Will Amazon Go become the prototype of future shopping?

Before getting overly excited, we need to examine the concept and reality of cashier-free as well as the cost of the technology it employs.

The beauty of the cashier-less concept is in its technology, which in reality poses problems as well. In Amazon Go, there are dozens, if not hundreds, of sensors and cameras packed on the ceiling. Employing the technology of computer vision and machine learning, these sensors can tell one customer from another even if they stand side-by-side or wear the same clothes.

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Microsoft is developing a technology that could eliminate cashiers from stores, according to a report from USA Today. Among retailers that are highly interested, Walmart is the most fervent and is reportedly in talks with Microsoft to install this cashier-free technology at all of its stores. This could initiate a tremendous change in how brick-and-mortar stores operate and how we shop.

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The sensors can effectively trace shoppers’ movements and what items they pick up or put back down. In a test run last year, three Amazon workers dressed up in Pokemon Pikachu outfits in an attempt to fool the system. The Pikachus grabbed sandwiches, snacks, and drinks, and the system could effectively identify each of them and charge their respective Amazon account. This was very impressive. However, for a mini-mart only 1,800 square feet in size, such a heavy investment of sensors and cameras would be unimaginable.  Technicians are also needed for monitoring the system and they must be ready to repair or change any of the malfunctioned sensors.

Technology requires work

Amazon Go also tracks the weight of the purchased products. Each product on a shelf was weighed beforehand. As a shopper takes an item, the shelf can sense it and the item is added into the virtual shopping cart of the shopper’s Amazon account. In my shopping experience, I intentionally grabbed two yogurts with one hand, and Amazon correctly charged me. The secret here lies in the product weights. However this technology requires huge amount of work before shelving. Even if all products are produced and packaged in a standard manner, for a supermarket like Walmart that carries hundreds of thousands of items, the amount of work would be daunting.

Of course the businesses will save money from not having to pay cashiers, but the savings from going “cashier-free” still needs careful calculation. Many people consider Amazon Go an “employee-less” endeavor, but this is a misconception. In the store I saw at least four employees busy shelving and re-shelving groceries, and this does not even include the chefs and workers preparing food in the adjoining room, and one employee working specifically in the alcoholic beverage section checking IDs. Sometimes a shopper takes an item off the shelf to have a closer look at the label, but then puts it back in the wrong place. Since this happens constantly, employees are needed to frequently reorganize the shelves.

There are other reasons that employees are needed. In the store, my son wanted a sandwich, but he wanted something with a slightly spicy taste. I had to ask an employee if any of the offerings would fit the bill, since no labels on any of the prepacked sandwiches included information about spiciness or lack thereof. For a mini-mart the size of a typical convenience store, having so many employees keeping the store running is not going to save much money, even though it is truly “cashier-free.” In this sense, the true selling point of Amazon Go is not that it lacks human employees, but that it offers a “grab-and-go” experience.

Learning from the lab environment

However, we need to bear in mind that this is the very first cashier-less store in America. It runs like a lab and gives Amazon and other companies an opportunity to observe and learn. Such a test case allows for the collection of data to better understanding shoppers. Before entering the store, an App makes recommendations. This was my first time shopping in Amazon Go, and the shopping items suggested were somewhat general. If I were a frequent visitor, I can imagine that the recommendations would be more tailored to my interests and my needs.

The concept of “cashier-less” is certainly very attractive for supermarket giants such as Walmart. In the midst of shrinking growth, store closures, and layoffs, Walmart announced that it would raise its minimum wage to $11 per hour, offer cash bonuses, and expand parental leave benefits for its employees. As can be imagined, “cashier-less” could well mean “worry less” for Walmart and other retailers. According to The New York Times, there were a little over 3.5 million cashiers in the United States in 2016. Without a doubt, some of these jobs would be in jeopardy when this technology becomes widespread.

For now, two critical questions must to be answered. First, how could the overall cost of the cashier-less store be minimized? Businesses will not pursue a new technology enthusiastically unless it helps them increase revenue. Secondly, how mature and reliable is the technology? And developments are necessary before it can be confidently adopted by not just 1,800 square-foot mini-marts, but by giant supermarkets like those of Walmart. More store footage means more investment in sensors and more pre-selling work. Amazon Go can accommodate fewer than 80 shoppers. But larger supermarkets would require significantly increased work and data collection. Until these issues are resolved, you will probably not be seeing cashier-less stores in your neighborhood.

Although the road lying ahead for Amazon Go and Microsoft is not flat and smooth, a bright future for cashier-less stores is certainly possible. The fresh experience of grab-and-go undoubtedly feels better than waiting in line for check out. As the technology develops and experience accumulates, Amazon and Microsoft may well change the business of retailing for the better.

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See all columns from the Center.

October 26, 2018