With Amazon in the lead, the race is on among retailers to automate stores. What's that mean exactly and is it a good or bad thing? Tom Martin talked with Dan Sheehan, assistant professor of marketing at the University of Kentucky's Gatton College of Business and Economics. He's done lots of research on smart shopping carts, customer-facing technologies and customer engagement during shopping trips.
Question:Let me get your take on the first couple of paragraphs of a recent New York Times article: “To see what it’s like inside stores where sensors and artificial intelligence have replaced cashiers, shoppers have to trek to Amazon Go, the internet retailer’s experimental convenient shop in downtown Seattle. Soon though, more technology-driven businesses like Amazon Go may be coming to us. This is an online retailer telling the brick and mortar folks better ways to do brick and mortar.”
It sounds like major disruption for the retail world. What do you think?
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Answer: I agree. I think a lot of retailers were ready for this and this is just the straw that’s really going to push them to do more. So, it’s going to catalyze a lot of retailers to start to integrate these new fancy technologies in the retail environment.
Q: Pitchbook, the financial data firm, says that venture capitalists in this country put $100 million into retail automation startups in each of the past couple of years and that’s up from $64 million in 2015. Does that tell you that we’re well on the way to seeing big changes in the retail experience?
A: Oh, I think we’re due for it.
Q: Self-checkout kiosks have been pretty common in supermarkets and other stores for years. Kroger is using sensors and predictive analytics tools to know when more cashiers will be needed. What sorts of new automation or artificial intelligence technologies do you anticipate coming to stores in the near term?
A: We’re going to have more self-checkout devices. People won’t have to go to a lane and they’ll be able to check out on their phone or they’ll be able to pick up a handset when they enter the store and so, they’ll never have to see a cashier as they leave the store.
But, it goes further than that. A lot of stores are using this automation to help them keep the aisles stocked to make sure they’re giving consumers what they need. For instance, I’ve heard of other grocery stores that are starting to mount cameras on their carts that will be able to take pictures of all the aisles as customers walk down them and alert them if a box of cereal is out of stock, so they can replace that quickly.
Q: That Amazon Go shop in Seattle has cameras near the ceiling and sensors in the shelves that help automatically tally the cookies and the chips and the sodas or whatever you put into your bag and then your account is charged as you walk out the door, so not much human interaction, if any at all. Is that healthy?
A: It depends on who you ask. Millennials, younger people, are going to love this type of retail experience where it’s in and out and they don’t really see people. But, other generations aren’t really going to respond well to this, so it’s really going to depend on who you ask.
Q: Amazon and other online retailers already know what we buy online and what we watch, now they’re going to know just how we move about in their stores and that seems kind of invasive and a little creepy. Should it feel that way?
A: Well, I agree with you. I think it feels a little bit invasive and I can understand how it might feel creepy. As a researcher, it’s really exciting to understand what drives people to different purchases and how different things they might encounter interact with their later purchase preferences.
So, I can understand consumers being a little apprehensive about Amazon knowing a lot more about our lives, but in a sense they’ll be able to give us a lot more value with that. No longer are we going to be searching around the grocery store for the one item that our wife or husband asked us to pick up. Maybe Amazon or a future retailer can help guide us to that item, they’ll sense what we’re looking for and help us get that. So, my hope is that all of this invasiveness is really going to benefit consumers in the future.
Q: Some of the more traditional retailers are skeptical about whether this sort of automation that’s been tried at Amazon Go can work in large big box stores. The say the technology may not work or be cost effective outside of a space with a small footprint and inventory. What do you think of that?
A: I think that’s a great point. Amazon Go is basically a little bit bigger than a convenient store. Footprint-wise it’s a relatively small store, so all the sensors and all the cameras that are required are somewhat contained.
You go to a Lowe’s environment or Home Depot or Kroger or Walmart, it’s a much bigger footprint. It means it’s going to be much more expensive to try to integrate something like that. So, it might be a little bit more cost prohibitive at some of those stores.
Q: In what other ways do you see emerging technology changing the way a retail store is operated?
A: One of the most fascinating things is how it will change the customer experience. It’s no mystery that the retail industry is suffering from online shopping and a lot more people seem to be turning to that to make their routine purchases. So the better we make a customer experience the more they enjoy their time in the store and this might sort of change that trend to some extent.
People might enjoy going back in the stores using some of these technologies, getting different benefits out of it and that might help retailers.
Q: And any guess on how long it will be before we see the Amazon Go-type technology becoming mainstream?
A: A lot of major retailers have been testing out various different technology for the last two or three years. Some of the articles I’ve read seem to point to the early 2020’s. A lot of it will be determined by Amazon and what happens with Whole Foods and what happens with Amazon Go. If they push it, other retailers are going to push it as well, but I do think a lot of retailers are in this wait and see mode right now where they’re ready to roll things out, but they’d like things to be a little bit more polished before they actually do.
Q: Amazon already has site location people out looking around the country.
A: Correct. Yeah. So, it could be here before we know it.
Tom Martin's Q & A appears every two weeks in the Herald-Leader's Business Monday section. This is an edited version of the interview. To listen to the interview, find the podcast on Kentucky.com. The interview also will air on WEKU-88.9 FM on Mondays at 7:35 a.m. during Morning Edition and at 5:45 p.m. during All Things Considered.