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Mapping out the rise in checkout-free shopping
There has been a boom in the number of checkout-free stores globally, but will that growth continue and which retailers are interested?
This year marks two decades since Steven Spielberg’s Minority Report hit cinema screens for the first time.
It’s a film loosely based on Philip K Dick’s novel of the same name, focusing on the concept of crimes being solved before they have taken place using psychic technology – or as the tech industry might describe it, predictive analytics.
Spielberg’s Minority Report may depict a dystopian world, but several futuristic retail-related scenes in the plotline are starting to become a reality – and they are framed as progressive and positive by those deploying them.
One of the concepts in the movie gaining traction in today’s world is that of technology being used to welcome and recognise people as they enter a store.
In the film, a Gap store recognises customers via biometrics as they walk through the door. In today’s reality, we have checkout-free stores using technology to identify, track, and allow customers to pick up, purchase and leave without visiting a till.
And research released in June by RBR, a business intelligence group focusing on retail tech and banking, says this tech is now live in 20 countries, and set to grow significantly.
Stores using computer vision to track customers’ shop visits to create so-called “frictionless” checkout experiences increased threefold during 2021 to more than 250, according to RBR’s Mobile self-scanning & checkout-free study.
The research predicts that use of this technology will grow by more than 90% a year for the foreseeable future, with the number of stores deploying checkout-free technology globally predicted to reach 12,000 by the end of 2027.
Who, what, when?
Computer vision tech combines with artificial intelligence (AI) and weighing-scale technologies to enable this type of shop – with Amazon Fresh, a trailblazer in this space, only requiring consumers to check in and check out with a mobile app. Users’ Amazon accounts are charged accordingly, based on what they take from the shelves.
Other versions of checkout-free shopping involve retailers deploying “smart carts” for larger basket sizes, which have the technology fitted to shopping trolleys.
Ahold Delhaize, REWE and Tesco are among the European grocers experimenting with checkout-free concepts, but RBR’s market analysis shows Amazon has the most checkout-free stores globally. There are 30 in the US and 19 in the UK, and the world’s sixth-largest business – according to Forbes – plans to expand this format globally.
Amazon’s Just Walk Out (JWO) tech can also be utilised by third parties, for a fee.
Travel convenience store chain Hudson, bookseller and prominent travel retail player WHSmith, and Sainsbury’s are among those trialling JWO technology. WHSmith deployed the tech at its shop in New York City’s LaGuardia in February.
Retailers are reluctant to reveal just how many transactions they process using this technology, but a WHSmith interim results announcement in April indicated “early customer and landlord feedback has been very positive” in relation to the LaGuardia shop.
Alan Burt, RBR
Alan Burt, associate at RBR, says the number of checkout-free stores in travel destinations such as airports and train stations have real potential to grow.
“We’d expect more of those going forward,” he says, adding that most of these stores will be in the convenience sector and small-format grocery world.
“It won’t be tailored to every retailer and every type of store. At the moment, it works better in convenience ‘grab and go’ stores – it suits a lunchtime crowd rather than a family getting a full weekly shop.”
Burt cites the various large funding rounds that tech companies operating in this space have experienced of late, saying it is “clearly a growing realm”. Israel-based startup Trigo – which works with Tesco – has raised eight-figure funding in each of the last three years, for example.
“It will be challenging for retailers to scale up this technology quickly and go into large store formats,” he adds.
“Most implementations have been in new stores, which speaks to the ease of putting it in from the start, rather than retro-fitting. Markets already with a history of self-service – the US, western Europe and China – are where we expect to see the biggest growth in checkout-free tech.”
Frictionless tech ecosystem
In addition to Amazon, there is a burgeoning ecosystem of startups helping retailers go checkout-free, according to RBR.
Its research shows that a wide range of suppliers are present in the checkout-free market, with technology from firms such as AiFi and Zippin live in “an ever-increasing number of stores”.
AiFi is fuelling the Carrefour Flash concept in Paris, which opened in November 2021. Consumers visiting what the retailer has dubbed the “Flash 10/10” shop at 1 Avenue Parmentier, in the French capital’s 11th arrondissement, do not have to scan any products.
Customers do not have to take their items out of their bag, and they are free to enter and exit the store without having to pass through a gateway or downloading an app or registering beforehand.
This is made possible by 60 high-definition cameras, almost 2,000 sensors built into the connected shelves, an algorithm for interpreting all the data, and a proprietary tablet payment system. Customers are tracked anonymously as a virtual avatar, allocated to them as soon as they enter the store, and the products they pick are automatically detected and then added to their virtual basket.
A validation process at a kiosk is required before payment and then exit, and an electronic receipt can be sent to the customer triggered by a QR code scan.
On the reason for implementation, Elodie Perthuisot, Carrefour Group's executive director of e-commerce, data & digital transformation, said customers “want to be able enter the store easily, know what they are buying, pay quickly and then leave”.
Jemima Walker, associate analyst at business intelligence group GlobalData, says checkout-free tech can produce a strong return on investment (ROI). In some cases, she notes, it has been proven to reduce theft and prevent stock-out for retailers.
She argues that the data produced by these systems can optimise inventory management. “At the moment, it is nascent but it has the potential to reduce queues, which is what consumers are looking for,” says Walker. “It could be, in the future, people choose checkout-free over a store that doesn’t have this tech.”
Jemima Walker, GlobalData
When Amazon launched its first JWO-operated store in Seattle in January 2020, commentators said the frictionless model would only be the preserve of those with deep pockets because of the complex tech integration required. The fact that Amazon, which was projecting hundreds of these stores opening, has opened only 50 of its own JWO shops suggests that the analysts had a point.
However, Zippin’s recent growth is starting to disprove that theory. The US-based tech business uses AI-powered technology to identify which person has selected a particular item, and whether they put it back on the shelves or walked out with it. And it is being used by retailers in locations with high footfall, such as stadiums and venues where a complex selection of products are located.
Two lanes at basketball franchise Buzz City, based inside the Charlotte Hornets’ Spectrum Center home, and a 4,000ft2 convenience store on a fuel forecourt near St Louis, highlight the variety of Zippin deployments in 2022.
Consumers tap their credit card to enter Zippin stores, before picking up what they need. Further backing for this way of paying came in June when Mastercard announced a strategic partnership with the startup.
Krishna Motukuri, CEO and co-founder of Zippin, says speed of service cannot come at the expense of accuracy, adding: “With each new store launch, Zippin’s AI improves its ability to provide the best experience for both retailers and shoppers.”
And as Computer Weekly reported last year, Tesco GetGo – the UK retailer’s frictionless store concept in High Holborn, London – is being underpinned by Trigo’s tech. Working alongside that partner, a hybrid store containing both self-checkout terminals and checkout-free tech is set to open in London’s Chiswell Street in the coming months.
According to analysts, the idea of hybrid stores has a lot of traction because it mirrors the introduction of self-service machines alongside traditional tills over the past 20 years.
Walker describes such a move as “a good stepping-stone”, citing some people’s concerns about a checkout-free environment, including unwillingness to download apps, data privacy, and potential job losses associated with a switch to frictionless retail.
Get in, get out
But there is general consumer demand for this tech, according to Walker.
In a GlobalData UK consumer views survey of about 1,000 UK adults, 44% said they would use a checkout-free store if it opened near them.
“Considering the tech is nascent and most people haven’t had the opportunity to try it, this is actually a high percentage in relation to how available the tech is,” says Walker, pointing out that it suits Generation Z in particular.
Zippin said in April that it had served more than half a million shoppers in one of the stores it powers, which it said highlighted that consumers want this type of tech when shopping.
It calculates that it has saved consumers more than 83,000 hours accumulatively, based on its own estimates that frictionless retail experiences reduce the average shopping trip by 10 minutes.
A technology, media and telecoms report from GlobalData, published at the end of 2021, noted that the continued prevalence of Covid-19 will fuel the international expansion of checkout-free stores.
Lasting impact of coronavirus
Walkers says the coronavirus has had a lasting impact on how people like to shop. In the US, for example, face masks are still prevalent in public life and many consumers still just want to “get in and out” when shopping to avoid potential infection, she adds.
The GlobalData analyst also predicts that mall operators in the Middle East, such as Majid Al Futtaim, will begin to experiment with the tech in non-food specialist stores.
Nicola Millard, principal innovation partner at BT, adds: “Customers don’t like queuing and the queue can be a hassle, so any technology that potentially could take the queue away is an interesting one.”
But, she says, as with all technology, checkout-free systems must go through the “is it useful, is it usable?” test. Millard argues that some customers won’t like the surveillance element, and others might experience the “hotel mini-bar syndrome” and feel anxiety around whether or not they have been charged for an item.
These worries aside, though, she says there is potential for improving shoppers’ lives. “Talking to retailers in the past, one of the problems with clothing is the trying it on factor and repackaging element, meaning checkout-free tech could be problematic there, but for pre-packaged and uncomplicated purchases, it should work.”
On the 20th anniversary of Minority Report, the retail world is showing that fiction can become reality.