Analysis: Amazon Go is a juxtaposition of new tech and retail tradition

5th February 2018

It may be like no other store in terms of consumer interaction, but a traditional look and design form part of Amazon Go’s compelling offering. By Ben Sillitoe

Amazon Go was unveiled in Seattle last month, nearly one year behind schedule but still with the same promise to fundamentally change the store shopping experience and remove the need for consumers to queue.

A convenience store with a difference, Amazon’s first own-branded bricks-and-mortar grocery offering sells a variety of food and drink products, and ready-to-go meals prepared by chefs in the store or supplied by local businesses. 

To enter and purchase from the store, visitors need an Amazon account, the Amazon Go app, and a recent-generation iPhone or Android handset. The app is needed to record entry, but shoppers can then browse and choose products as they like before leaving without visiting a checkout – they simply exit through railway station-style gate lanes.

Amazon can monitor who purchases what based on an array of cameras and sensors that links to people’s mobile apps, and it charges the shopper on exit before sending them a digital receipt.

Juxtapositions and ironies  

The irony was not lost on many industry analysts and initial customers that, on the day Amazon Go opened, there was a queue of people lined up outside to enter a store that was created to prevent people from waiting. But that is not the point here. 

Retail futurist and founder of the Retail Prophet consultancy, Doug Stephens, says of Amazon Go’s potential impact: “Queues are a centuries-old convention that the industry has turned a blind eye to. 

“Clearly, we’ve hit a watershed moment where the entire idea of lining up to pay seems suddenly archaic.”  

One noteworthy juxtaposition for such an innovative-thinking tech company comes in relation to its store design. Whereas the likes of Zara’s new temporary, tech-heavy click & collect store in London, and 7Eleven’s unstaffed X store in Taiwan offer a futuristic, computer screen shininess, Amazon Go looks like many shops already in the market. 

Whether by accident or strategy, it is a positive move according to consumer psychologist and founder of the Style Psychology consultancy, Kate Nightingale. 

She says: “It’s all-singing, all-dancing technology, yet it is also quite rustic and basic, and warm and friendly with its wooden and charcoal element. There is lots of great signage and categorisation – it’s welcoming and old fashioned, even though its fully tech-enabled. 

“Maybe they were trying to make people feel more comfortable and give the impression they were entering a standard store, even though they can just walk out. This approach arguably avoids visitors feeling alienated.” 

Visual merchandising 2.0   

Critics of Amazon Go cite the lack of checkout operators it requires as further evidence of machines taking the jobs of people, but staff are on hand at the Seattle site to aid shoppers and arrange merchandise. Amazon Go is also actively recruiting for a range of roles, including in-house chefs and shop floor staff. 

If more stores like Amazon Go open over time, Stephens predicts it will add a new dimension to the role of retail merchandiser.

“Traditionally, visual merchandising has been human centred; that is to say we’ve merchandised to appeal to people,” he explains. 

“Amazon Go is a harbinger of the fact that in the future we’ll need to also merchandise to accommodate machines. Technology-centric considerations will also have to be factored in. Merchandisers will not only have to develop plans and category formats that are visually appealing and logically contiguous but will also have to consider the needs and constraints of technologies like computer vision and RFID as well.” 

Research by the British Retail Consortium and others, as well as the raft of store closures and job cuts announced by some of the largest UK retailers in recent weeks, all indicate that new retail will require fewer employees. Morrisons, B&Q and Marks & Spencer are among the latest big names to cut management role of various levels. 

But in one store, Amazon Go shows the retail workforce is changing by providing both new employment opportunities as well as limiting the need for some traditional shop roles. 

How will the Amazon store influence spread? 

At the National Retail Federation’s Big Show in New York in January, there were a range of technology companies – including Cisco and IBM – exhibiting Amazon-esque solutions that enable speedier shopping. 

Petrol forecourt retailer Shell is the first to put the new IBM self-checkout solution to use in the UK, using RFID sensors – not scanners – to instantly calculate the total cost of an order. Payment is then completed via Bluetooth-enabled mobile apps such as Apple Pay. 

Stephens suggests the Amazon Go concept has made the wider retail industry sit up and think about how they position their stores. “I think just about every retailer, regardless of category, has felt this shot across the bow,” he explains. 

“I believe retailers across categories will be scrambling to understand how such technology could fit into their retail environments. The catch is that it’s entirely possible that Amazon’s technological approach, which was patented in 2015, could have a 20-year lock on this specific method of cashierless checkout. And 20 years in today’s retail environment is an epoch.” 

Nightingale expects that some senior executives will race to try and deliver Amazon-esque stores as a ‘me-too’ policy, but she believes true value for other retailers will come in realising Amazon’s success is due to its customer experience (CX) approach. 

“Because Amazon’s brand is only about delivering what customers need quickly and conveniently, Amazon Go makes sense; but if it was John Lewis, for example, the concept wouldn’t work,” she explains, adding that it ignores hedonic aspects of shopping. 

Amazon Go’s 167 sq m (1,800 sq ft) of retail space, which is open from 7am to 9pm Monday to Friday, has been built to take away pain points from the typical shopping experience such as queuing and in-store delays. For Nightingale, that makes the company more human than many other retailers which prioritise pushing product over CX. 

Keeping its cards close to its chest regarding further roll-outs, Amazon says it is focused on this single store for now, but it clearly has options. Could it introduce the Go format to its newly-acquired Whole Foods store network? Or, in a similar manner to its Amazon Web Services, might it sell the ‘Just Walk Out’ platform to third-party retailers looking to replicate the model in their own stores? 

Stewart Samuel, programme director for grocery intelligence group IGD Canada, visited Amazon Go during its first week and says “there are likely to be further test stores before any decision is made on a wider roll-out”. 

“The amount of technology, and its associated cost, required in each store, is likely to be a challenge, particularly given the relatively low basket spend within a convenience store,” he notes on IGD’s Retail Analysis website. 

“However, as a marketing tool, and helping to raise brand awareness, this store has probably already provided a return on the investment.”