RDs and everyone else in retail needs to watch Amazon Go

RDs and everyone else in retail needs to watch Amazon Go

December 21, 2016
Phil Lempert
Retail Industry InsightsTrends

By RDBA CEO Phil Lempert

Amazon’s YouTube recent video introducing its Amazon Go convenience store shows that the company has broken conventional supermarket wisdom and that its foray into food is one traditional retailers should fear -- for three reasons.

Reason #1: Amazon knows how to communicate. “Just walk out” says it all! It’s simple, straightforward and easy to understand for shoppers, and clearly underscores the benefits: no lines; no crabby cashiers; no swiping your credit card; no bagging. The grocery industry tends to name and describe complex technologies in a way that confuses (remember "home meal replacement" – I shudder at that one!); Amazon’s language breaks through all that.

Reason #2: the technology itself (new thinking) which uses computer vision, deep-learning algorithms, sensor fusion and machine learning, per the video. Grocery store chains have talked about shoppers being able to bypass the checkout for decades. IBM and others have been pushing for RFID chips (old thinking) to be added to individual packages to allow that to happen once the price of the chip fell below a half a cent; critics have debated the cost and the potential for personal information breeches. Both issues have delayed the technology from becoming mainstream. In fact, 50% of retailers with revenue greater than $1 billion say that mobile technology is moving too fast to keep up, per RSR Research. Shame on them; kudos to Amazon. 

Yes, we have seen ApplePay, wave-and-pay systems, self-checkout, self-scanning with in-store devices and phones, Google Wallet – but none compare to what this Amazon Go technology appears to do. Clearly a next step for Amazon will be to take the consumer preference data collected and then make recommendations and even offer special pricing to individual shoppers. And how we can use this kind of tech to communicate health and wellness messaging and information, not just at Amazon Go, but in every supermarket?

Reason #3: merchandising. I assume the video was shot in the actual store - the displays and layout appears to be on target, especially for the Amazon headquarters neighborhood and potential shoppers. A slow-motion scan of their offerings seems to include the basics you would find in a c-store, but the array of sandwiches, salads, bowls, prepared foods, meal kits, bakery (seemingly made on-site) and even being able to add a “pop” of protein to a meal is the epitome of smart food marketing. I didn't notice any nutritional signage or listings near the products, and must assume that they are on the package.

The store is just open to Amazon employees for now, but I’m hoping to get in there and take a closer look, and taste, before it officially opens - and give our RDBA members a closer look.