Supermarket retailer Sainsbury’s announced recently that it was launching a trial store with no checkouts, allowing customers to pay by mobile and walk out – but it has been a long time in the making.
The new store in Holborn has no tills at all, allowing customers to walk around the store scanning products through a mobile app, paying on their phone and walking out of the store without having to visit a checkout.
But Daniel Hills, group digital product manager for Sainsbury’s, told the Retail Expo in London there were a number of hurdles in getting to this point in the trail, such as technical and cultural.
Sainsbury’s is a 150-year-old business, with millions of customers and a host of legacy systems which can make it difficult to implement anything new.
But there’s no denying customer habits are changing. People have become more focused on convenience, as demonstrated by the success of the Amazon Go stores.
Hills said his team took a completely different approach to testing the concept than it previously would have done, and while some parts of the business are extremely agile, others have to mull decisions over for a number of years before anything is developed and released.
“We decided to go through a transformation programme,” he said. “The transformation programme was very much around bringing our digital world closer to our physical world. They were very separate and siloed.”
This programme has already begun, and Hills pointed out several larger stores now have smaller concessions inside them, such as sushi counters, Argos stores, Ben and Jerry’s stands and an Oasis fashion store – or, as he put it, “destination Sainsbury’s” locations.
“We need to be distinctive and create a distinctive shopping experience for our customers,” he said. “We’re trying to create far more of a destination.”
But this further exacerbated problems with checkout, and it became clear the process of actually getting goods out of the door was causing issues for customers.
The brand therefore turned to its customers to find out more about their habits and what they want from a Sainsbury’s visit.
The customer knows best
It started by asking customers where they shopped. “One of the things that became really apparent was loyalty. There isn’t necessarily such a thing as a customer now who only shops in one store,” said Hills. “Retail is hugely competitive and loyalty has waned slightly.”
Customers will go to a different brand based on the customer experience, prices offered by that brand or store location, so his team started to think about “how can we be different, how can we be distinctive and how can we offer a better experience?”
While it had already been made clear that checkout was a bone of contention, Sainsbury’s asked its customers what part of the shopping experience was letting the side down, and the customers said it was the queueing.
“It’s no surprise that queuing was the major issue,” said Hills. “They love your products, they love the location and they love the customer service they receive, but their whole journey is based on that customer checkout … they just focus on the negative.”
While Hills admitted previously the firm would have spent a lot of time and money trying to solve the whole of the checkout process, from queueing to payment to bagging, it decided to focus on just the aspect of leaving the store customers said was a problem, and how to make that “as frictionless as possible”.
Sainsbury’s already has a SmartShop concept involving portable scanners in stores, but there is a different team working on this service and customers still have to queue for the checkout. “We really didn’t want to spend too much time interfering with their road map and messing about with what they’re doing,” he said.
Based on the SmartShop product, Hills’ team had the idea to develop a version of this which could “actually bring the payment into the device”. While it sounded like an easy thing to achieve, he joked: “I don’t think we had any developers or systems architects in the room when we decided on this.”
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In the past, the brand would assess the challenges faced by implementing something and either “not bother” or spend “two years and too much money” on developing something to make the checkout process easier. Instead, Hills’ team decided to “fake it”.
“Why can’t we do as much as we can to put that experience in front of customers, because our customers will tell is if it’s good or not,” he said. “If they disagree, there’s no point in carrying on.”
For the initial trial in 2017 at its Euston Station branch, Hills’ team chose the lunchtime meal deal section of a store as the focus, as it typically requires a fast and convenient experience.
It worked with a payment service provider and Apple Pay, and “hard-coded” a certain amount of products available in the trial into the backend of the app to test both the execution of the journey, and the theory around the types of products customers are most likely to use the service for.
Customers could scan the barcodes of the products they wanted on their phones, check out on their phones and leave the store – any products not included provided a message informing customers the item wasn’t available as part of the trial. Then the team hit a hurdle. “The problem we then had was that we couldn’t really do anything with that payment,” said Hills.
Because of the legacy Sainsbury’s has, all payments made to the supermarket had to be submitted through a physical till to be processed by its backend systems, including financial systems and inventory systems. “We don’t want to use a physical till; that’s’ the whole point of this,” he said.
For the purpose of the initial trial, data about transactions made through the app was collected, saved into a file and entered into a physical till by a team member at the end of each day. “It sounds bonkers, but if we didn’t do that, I wouldn’t be talking to you now and we’d still be chewing over it in a room in a basement,” said Hills.
The learning process
This initial few days of experimentation helped Hills and his team understand more about the customers who took part, as well as how they felt about the payment method and the process, and collected feedback on how the app should look, including what imagery and colours customers were expecting.
“This information was invaluable to us, because that then gave us the comfort, the drive and the ability to go to our stakeholders and those who would fund us to move forward to have all this data customers have,” he said.
Once the wider business was on-board, the next step was to tackle the “literally hundreds” of legacy backend systems standing in the way.
Some of the systems are older than he is. After lots of testing, his team developed a virtual till to process each of the digital payments as if it were one of the physical tills the supermarket has in-store. “It sounds quite easy, but believe me, it was very difficult to do,” said Hills.
In August 2018, Hills and his team launched the SmartShop mobile payment application capability in the supermarket’s Clapham North store. The service ran alongside the traditional till – he was adamant it was not in any way intended to replace the traditional store experience, but rather to “compliment” it.
In December 2018, the service was rolled out to seven more stores across London, and was available to almost every product in store, with exceptions of goods such as alcohol, which requires age verification.
These stores helped the business understand more about the average basket size for the SmartShop shoppers, as well as the types of shoppers who are willing to use it.
“We typically thought this would be one or two items,” said Hills, but during these trials found the average basket size for those using SmartShop is actually bigger than average – mainly because shoppers usually see a queue and rush their shop.
Knowing they will have to queue for longer, shoppers don’t take as much time in the aisle. “Now they’ve got time to browse and be in control of their own time,” he said.
There was also “no right or wrong in terms of the demographic”, said Hills, adding that the age range of those choosing to use the service didn’t skew as young as people might expect.
In April 2019, an Android version of the application was released, and so was the checkoutless store so many media outlets reported on.
Hills said the mobile checkout-only store is an example of testing the concept “to the extreme”. The space has “ripped out the tills and put this feature into a store as the only way to pay”.
The Holborn test store will be an “indicator of appetite” for this sort of service with its customers. Many debate whether or not stores will have checkouts at all in the future – or whether stores will exist at all.
Testing, implementing and rolling out this service in the way it has went against many of the traditional ways of working for Sainsbury’s.
Hills shared his main takeaways from the experience: test with the customers and engage the business early.
“Get it in front of customers quickly, don’t wait for perfection and don’t wait for a gold star,” he said. “Engage with the business. Don’t tell them what you’re going to do: show them what you’re going to do.”