Skipping the Checkout

By now we have all seen the headlines touting the next retail format poised to take over America—yes, I am referring to Amazon Go.

As I understand it, the premise behind what Amazon is billing as “the future store,” is offering people a quick and easy place to purchase food without the need to wait in line and pay a cashier. When they enter the store customers simply swipe their smartphone at a turnstile kiosk, and Amazon’s artificial intelligence technology and sensors take over from there, tracking their purchases and adding items the virtual cart on their app. Don’t want the item you had already placed in your “cart”? No worries—Amazon’s technology is so advanced it can even remove the item from the cart. As the customer exits through the turnstile, the app adds up everything in the virtual cart and charges it to their Amazon account.

From what I see, Amazon initially plans to sell prepared meals, snacks and basic grocery staples in addition to chef-inspired meal kits. So far, the prototype store in Seattle has only been open to Amazon employees, but plans call for it to open to the public starting sometime in January.

To me, this is an interesting concept for sure. I mean who likes to wait on line to check out? But I could not help but wonder if Amazon Go is merely just a convenience store offering with some high-tech hype surrounding it. Can an 1,800 square-foot-store really pose a serious threat to grocers?

For Keith Anderson, senior vice president of strategy and insights for Profitero, the answer is yes. “It's a huge shot across the bow of brick-and-mortar retailers that not only is Amazon opening grocery stores, it's opening stores with a breakthrough innovation,” says Anderson. While the store will initially offer a mixture of food created and prepared directly by chefs on-site together with those supplied by local artisan kitchens and bakeries, Anderson predicts it will not be long before margin-friendly Amazon Private Label is added into mix.

He and others say this format will most appeal to time-poor commuters and younger shoppers who are more likely to make food and grocery purchases on a daily basis rather than relying on the full basket weekly shop, still favored by most shoppers with families. “This is another example of Amazon removing friction from the shopping process and continuously innovating on price, selection, convenience, and experience,” he says.

Come January, I am guessing I won't be the only watching closely to see what happens.