As Tesco and Aldi follow Amazon in opening cashierless stores, it’s clear that grocers are convinced they have a part to play. But do consumers feel the same?

Amazon Fresh Entry

When Amazon opened its first Just Walk Out Fresh store in west London earlier in the year, the queues ran out of the door all day, despite the pandemic then being at one of its worst stages. 

While many of the customers were there for the novelty factor, there’s clearly some customer demand for it.  

Since the first Fresh store opened in the UK in March, Amazon has opened a further six Just Walk Out convenience stores around London. 

Since the launch, the UK’s largest grocer Tesco has also opened its first cashierless store trial open to customers from its Express store in High Holborn. Discounter Aldi also announced it was set to launch its first Just Walk Out store in Greenwich later in the year, while Amazon has taken a seventh Fresh site on Chancery Lane, less than 100 yards from Tesco’s pilot store. 

While the technology is relatively new, the US giant has been at the forefront of its development. Amazon’s own proprietary Just Walk Out technology has been in development since 2015, and the giant opened its first cashierless Go format for staff only in Seattle in 2016. 

Tesco meanwhile hasn’t been massively behind. It launched its first cashierless store trial in 2018 with a pilot c-store for staff at its Welwyn Garden City headquarters in partnership with Israeli technology start-up Trigo. 

Sainsbury’s has also dipped its toe in the cashierless store waters, opening up a till-free c-store in Holborn Circus in 2019 that utilised its SmartShop scan and go smartphone app. However, the pilot was canned after just three months, with the grocery giant admitting at the time “not all our customers are ready for totally till-free”.

While the formats are still very much in their nascent stages, analysts at Juniper Research forecast the channel could account for £290bn worth of transactions in the next five years and account for 5% of US grocery store sales.

So is cashierless shopping the next frontier in grocery shopping or is its potential impact overblown?

C-stores and beyond? 

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For the most part, cashierless stores have predominantly been used in convenience store formats in inner-city locations. Amazon opened its first Go store to the public in Seattle in January 2018 and has since opened 27 stores, including a further six in Seattle, seven in Chicago, five in San Francisco and eight in New York City.  US competitors such as Walmart and Albertsons, as well as Canadian chain Aisle 24 are all planning cashierless store launches as well.

Cashierless stores took off in China in 2016, with retailers like Suning.com and Alibaba opening hundreds of such fascias. The Covid-19 pandemic has been an unexpected boon for Just Walk Out technology in the country, as health-conscious consumers wanting to avoid other people and screens opted to visit these stores with greater regularity than pre-pandemic.

Although the Go format, or Fresh as it’s known in the UK, is expanding at pace, it’s clear the format has not taken off as much as Amazon initially expected. Documents leaked to Business Insider in 2016 laid out plans to open some 2,000 stores over the next decade - now at the halfway mark of that timeframe, Amazon has only opened 32 stores globally with its Just Walk Out technology-enabled. 

In June of this year, Amazon opened its first full-sized supermarket in Bellevue, Washington. Although, while the supermarket does have Just Walk Out technology available, the store does still have traditional cashier tills for customers.

Shopfloor Insights founder Bryan Roberts believes Just Walk Out only supermarkets will never catch on for a number of reasons - from grocers losing out on lucrative contracts with suppliers for pallet and off-shelf displays through to the fact that customers will always want choice. 

“If you’re Tesco or Aldi and you have no shelf displays, your sales are down a big chunk”

For Roberts the delicate technology needed to enable Just Walk Out stores to work runs completely counter to the pile-it-high displays paid for by big FMCG brands that make the big supermarket model commercially viable. 

That would really destabilise big shop economics. It’s probably not something Amazon worries about, but if you’re Tesco or Aldi and you have no off-shelf displays, your sales are down a big chunk,” he says.

Roberts also believes that the coronavirus pandemic has changed the metrics for inner-city c-stores. “The best-case scenario for central London is that footfall is down 20% post-pandemic,” he says. “That makes the economics of rolling out more cashierless stores even more challenging”. 

There’s also the issue of the cost of the technology. Each Amazon Fresh store is powered by hundreds of cameras, shelf-mounted pressure sensors and other technology. 

Tesco has partnered with Israeli technology firm Trigo. While its tech is nominally different to Amazon’s, it still uses smart gates operated by a QR code linked to the grocer’s app, an array of cameras to track customer movements in-stores and pressure sensors at the shelf level. 

The cost of the tech

Trigo co-founder and chief executive Michael Gabay won’t disclose how much a single store is to fit out with his company’s technology. However, he says the individual components that make up the tech aren’t too expensive in and of themselves. 

“You can buy a very good camera at a low, low cost of money. So, with the system itself, the return on investment for the retailer is around one year and a half at the moment”. 

Amazon, which began selling its Just Walk Out technology suite to third party retailers in March this year, is looking to slash the installation costs for fitting out cashierless stores by over 75% by 2023. 

Even if the costs for the technology come down, grocers aren’t going to be retrofitting their full c-store estates to Just Walk Out tech. As a source with understanding of Tesco’s thinking on the issue told Retail Week, while the possibilities are interesting the grocer can’t see a time when it would have hundreds of these stores.  

Cashierless store reviews

Amazon Fresh

On March 4, 2021, Retail Week went down to the opening of the first Amazon Fresh store in Ealing, west London. 

Waiting in the snaking queue, there were a number of Amazon employees there to help customers get their QR code set up on their Amazon app. Being both an established Amazon customer, not to mention a fairly tech-literate millennial, I was feeling confident of a truly ‘seamless’ shopping experience. 

Yet, and perhaps this was just down to first-day teething problems, the experience was anything but seamless. The card I’ve had linked to my Amazon account for time immemorial apparently wouldn’t register on the QR code.

I ended up having to stand between the entrance and exit for the best part of 10 minutes uploading new card details before I finally got inside. 

Once in, though, the experience was good. The c-store carried hundreds of SKUs across grocery and food to go through to grab and go coffee, artisanal bread and a selection of products from Morrisons and other partners. Not to mention Amazon’s first-ever own-brand grocery products.

Upon leaving the store, the smart gates glided open. Yet, then came the second snag. In the end, I was never charged for my lunch. 

Tesco GetGo

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After a few less than glowing reviews in the national papers after the grocer’s first checkout-less store opened in Holborn, I went into the Tesco GetGo visit with a bit of trepidation. 

For one thing, I’d only set up my Tesco account that day, and it took 20 minutes of searching for information on the internet before I found how to set up the GetGo function on the app needed to scan to enter and exit the store. 

However, having set that all up at home, this experience truly was seamless. I scanned my phone, the gates opened, I grabbed my food and walked out. By the time I’d walked back to the tube to head home, the app was already displaying what I’d been charged. 

Yet, whereas the Tesco store was truly seamless, it fell down on the range and layout itself. The GetGo shop is basically a Tesco Express with some cameras on the roof and the range is what you’d expect. 

While all the technology worked really well, it just felt a bit drab and uninspired. 

Teched out or checkout?

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In June of this year, Amazon opened its first full-sized supermarket in Bellevue, Washington. While the supermarket does have Just Walk Out technology available, the store also has traditional cashier tills for customers.

Tesco’s initial Welwyn Garden City trial featured both checkout-free and checkout options for customers. The source with understanding says the trial showed a mixture of both formats is possible, but that in urban settings fully checkout-free offers more convenience and speed for office workers looking to grab lunch. 

This hybrid concept may have an appeal to a broader pool of shoppers, it does raise questions about costs.

While it’s something of a myth that cashierless stores don’t require staff, the concept as described by Trigo’s Gabay is designed to reduce staff overheads, thereby offsetting the fitout costs. So to fit out a store both with the technology, as well as a full complement of store staff, would simply add unnecessary overheads to a store.

The hybrid model also did not prove a winner with Sainsbury’s customers. Shoppers wanting a truly seamless shopping experience found scanning items with their phones too clunky, while the store’s location meant it was frequented by tourists who needed staff on hand to help. 

Despite the struggles of its trial store, Sainsbury’s chief executive Simon Roberts says the grocer is still interested in the technology. 

“We’re looking all the time at how customers are shopping differently. We’re testing and trialling and looking at new solutions and platforms,” he says. “We’ve looked at this space before, we’re testing new things all the time and you can expect us to continue to be active in this space”.

However, after the success of Sainsbury’s SmartShop – where customers can either download via the app or using in-store handsets and then scan the products and pay for them without going to a till – Roberts says that technology would likely play some kind of role in any future cashierless store for the grocer. 

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Sainsbury’s travails get to the heart of a broader point, which is that a convenience store needs fundamentally to be convenient.

Regardless of whether it’s Amazon Fresh, Tesco GetGo or Aldi’s ‘Shop & Go’ store, all of these shops will require customers to download an app, set up their account details and then use a QR code to enter.

While this could well be worth the initial hassle for office workers or people living nearby, the vast majority of consumers are unlikely to jump through these hoops - particularly when there are shops nearby which they could simply walk into without any additional processes.

Retail Week understands that the Co-op has also looked at self-scanning technology to improve the frictionless experience in stores, but that a one-store trial has been paused. 

A source with understanding of the convenience store group’s thinking said it would never truly abandon cash in-store, as many customers still use it on a daily basis. 

While purely checkout-free stores are unlikely to ever make up the bulk of a retailer’s store estate, it’s clearly of increased interest to a number of retailers around the world. While the tech itself might still seem a bit gimmicky, the future of the store is only becoming more, not less, frictionless. 

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