Why Covid-Era Retailers Are Choosing Contactless Shopping Over Cashier-less Tech

Retailers are trying to improve customer service, reduce fears - and save money - by enhancing the efficiency of their existing store platforms, which means focusing on online purchasing, store pick up and/or delivery.

Cashierless systems may become more prevalent in the future, but they require a substantial investment up front which most companies are reluctant to do while the economy is still recessionary. JL

Lisa Lacy reports in Ad Week:

Cashierless startups are pitching the technology as the solution retailers need in the pandemic as they seek to provide safer ways to shop. (But) while consumer demand for contact-free experiences is up - 29% of shoppers increased their use of online or mobile payments in stores as of June 2020 - “everything this year suggests brand priorities are about how to facilitate more online purchases with the influx of new customers.”  The emphasis is on changing stores to support more pickup and contactless purchasing. 63% brands acted to change the retail experience, mostly focused on curbside pickup.

Checkout-free technology provider Grabango recently announced its first conversion of a GetGo Café+Market outside Pittsburgh, hailing the now-cashierless convenience store as “a new era of shopping.”

We have, of course, seen similar technology since 2018 from Amazon, which operates 25 checkout-free Amazon Go locations in four U.S. cities, in addition to a new Go-specific grocery concept in Seattle (and another “coming soon” to nearby Redmond, Wash.)

There are some distinctions. While Amazon Go shoppers use an app to enter, Grabango shoppers scan the app as they leave, and the company stresses its ability to retrofit existing stores rather than building from the ground up. But Grabango is hardly the lone competitor against Amazon in cashierless shopping.

In August, autonomous checkout startup Standard Cognition announced plans for a retrofitted Circle K convenience store in Phoenix “with other stores to follow.” Meanwhile, CEO Krishna Motukuri said checkout-free technology provider Zippin has expanded its footprint with a retrofitted store-within-a-store at retailer Azbuka Vkusa in Moscow. And AI and computer vision-based frictionless shopping startup Trigo Vision reportedly has at least one execution up and running at Israeli supermarket Shufersal in Tel Aviv.

Cashierless startups like these are now pitching the technology as the solution beleaguered retailers need in the pandemic as they seek to provide safer ways to shop. And both Grabango and Zippin at least say they’ve seen increased interest from clients as a result.

Analysts, however, say while consumer demand for contact-free experiences is up—Gartner research shows 29% of shoppers increased their use of online or mobile payments in stores as of June 2020—retailers likely have bigger fish to fry now.

“Everything in commerce this year suggests brand priorities are about how to facilitate more online purchases with the influx of new customers,” said Evan Bakker, principal analyst at Gartner.

This is also evident in retailers’ messaging about contactless rather than totally cashierless experiences.

“We did a study of brand homepages in April to see which retailers were communicating [fulfillment-specific] changes,” said Bakker. “By and large, the emphasis is on changing stores to support more pickup and more contactless purchasing.”

In fact, 63% of the brands studied by Gartner had announced fulfillment changes by April, which Bakker said means the majority acted quickly to change the retail experience, mostly focused on curbside pickup.

Mobile payments have been another popular change among retailers.

“Think about it—it’s a lot easier to start accepting Apple Pay than transforming the entire cashier experience,” Bakker said. “Apple Pay has been around for years, but it’s surprising how many have held off on taking mobile payments.”

Sam’s Club, for example, has been promoting its scan-and-go app, which allows customers to tally their purchases as they shop and pay in the app at the end, while Walmart+ members will be able to tap into similar functionality at Walmart, Bakker noted. Walmart also offers digital payment service Walmart Pay at self-service kiosks for a contactless experience.

Scott Compton, senior analyst at Forrester, agreed scan-and-go technology and digital payments, which are also used at retailers like Kroger and Meijer, are cashierless methods worth considering.

“The adoption has not been widespread, but Covid-19 concerns about contactless payments are reported to have shown an increase in this usage,” Compton added. “The scanning technology, [which has been around for a few years], has improved, resulting in less errors, and the scanning interfaces are also being used by retailers to present additional product information to the consumer.”

And so Bakker expects incremental changes like this to be the main focus of reimagined store experiences for the time being. And while cashierless is less of a priority now, retailer focus may shift down the road.

“I think in this day and age, especially as brands’ pocketbooks are in some cases shrinking, the recommendation is never, ‘Hey—go spend more money,’” Bakker said. “It’s building in resiliency into your existing platforms, which is why see we brands using apps to build out more pickup and using websites to quickly reformat stores and pushing incremental updates through existing apps. Bigger ideas are certainly forthcoming, but Covid has really shocked the system and placed a lot of scrutiny on budgets.”

Plus, as Compton observed, the long-term adoption pattern or ROI have not yet been proven for cashierless technology. (However, Bakker noted grocers and big box retailers that were deemed essential and were able to stay open are perhaps in a better position to explore these new technologies now.)

Because going cashierless requires big upgrades, Bakker said the ultimate choice to implement depends on brand objectives. It makes sense for retailers that are more transactional and see frequent repeat orders, but not so much for retailers that use their stores as branding tools.

Compton agreed the use case for increased adoption “is in high-traffic, urban areas where eliminating time in the checkout line makes a real impact for the end consumer.”