From self-checkout to cashier-less stores, retailers look to automate stores

Seattle – Beneath a shiny glass skyscraper in the heart of Amazon-land is an experimental 1,800-square-foot store that some see as a blueprint for the future.

"No lines. No checkout," it says on a wall inside Amazon Go, a convenience store that has no cashiers. Instead, you have to scan your phone to enter, and a web of cameras on the ceiling uses computer vision and sensor technology to detect when you take, or return, items from a shelf and electronically charge them to your account minutes after you leave.

It may be many years before the concept goes mainstream, especially since the cost to install such sophisticated technology remains out of reach for retailers like Target and Walmart that don't have the luxury or resources to experiment in the way Amazon does.

But most analysts agree that physical shopping, like manufacturing before it, is heading toward more automation. You can see the transition already with more self-checkout lanes and newer scan-and-go options.

"I've gotten used to checking myself in when I travel to the point where you don't really have to talk to anyone when you go to the airport now," said Matt Marsh, a Minneapolis-based retail leader with Deloitte. "Similarly, I'm pretty confident we'll get to a point where we'll be able to go to a store, scan items and walk out with them. It's just a matter of how long it takes for that technology to be expanded and adopted."

It's another way that Amazon continues to disrupt and push other retailers to innovate. Up until now, retailers were more focused on improving websites and sharpening supply chains. Now, many are turning their attention to improving experiences inside stores, aiming to eliminate potential turnoffs such as long lines and to make physical shopping closer to one-click online shopping.

"Self-checkout and scan-and-go are the steppingstones that will eventually be replaced for much better seamless walkout technology," said Andrew Murphy of Loup Ventures, a technology-focused venture capital firm.

The evolution also makes sense for retailers because cashiers can be deployed to other high-value tasks such as filling online orders for in-store pickup or providing more hands-on customer service. That's an especially important consideration as workers' wages continue to rise. Target, for example, has pledged to raise its minimum wage to $15 an hour by 2020.

Minneapolis-based Target's overall employment — even with the addition of self-checkout lanes and other efficiencies — is 345,000 workers, the highest it's been since 2015 and up from 323,000 a year ago.

Target began testing self-checkout lanes in 2013. It's now a big believer with the machines installed in about 1,500 of its 1,800 stores; the company plans to have them in all stores by the end of next year. It's been improving the software at the self-checkout, too, helping win converts.

"Not all guests love self-checkout," said Juan Galarraga, Target's senior vice president of store operations. "But about a third of our guests currently use self-checkout and absolutely love that option."

In addition to adding more self-checkout lanes, Walmart now has a scan-and-go option in 120 stores, including Elk River, with plans to roll it out more widely this year.

Customers use an app on their phone, or a handheld device provided in the store, to scan items as they place them in their basket and pay for them directly through the app. Before they leave the store, they are directed to an express lane where a worker takes a quick scan of the digital receipt and the items in the cart.

Walmart's sister chain, Sam's Club, offers a similar scan-and-go service in their stores.

In addition to saving time, customers also like scan-and-go because they can keep closer tabs on their spending, Walmart spokeswoman Tiffany Wilson said.

"You are able to see your basket and how it adds up as you're shopping if you're trying to stay within a budget," she said. "And you get more privacy with personal items instead of having to put them all on display at a traditional register."

Chris Walton, a retail consultant who formerly led the "store of the future" effort for Target, sees a lot of promise with scan-and-go technologies. For one, it's cheaper for retailers to roll out chainwide than self-checkout lanes or the Amazon Go-type technology.

"That's the preferred way I would want to shop, especially if I only want a couple of items," he said.

Some retailers have been hesitant to go forward with self-checkout and scan-and-go technology because of concerns it could lead to more theft, said Read Hayes, a research scientist at the University of Florida who heads up the Loss Prevention Research Council, an industry group that works with retailers.

However, many today feel the competitive pressures outweigh the risk. More members have joined his group looking for help in devising and testing different store layouts and other tactics to deter fraud.

Target is among those that have rolled out video monitors above self-checkout lanes. Hayes said his research has found those monitors help keep people honest because they don't feel as anonymous.

"There's no silver bullet," he said. "It doesn't stop it 100 percent, but it does reduce your losses."

Meanwhile, Amazon Go seems to have solved, or at least minimized, the theft issue with its network of cameras and sensors. Many customers and analysts have said they tried and failed to trick the system.

The question for now is whether the Amazon technology is worth the cost long-term.

On a recent afternoon, a few first-time Amazon Go shoppers stood confused near the entrance trying to figure out how to get past the gates that resemble what you might find in a subway station.

A patient employee explained they had to download the "Amazon Go" app and link it to their Amazon account. Once they scanned a code on the app, they could enter the store.

Other more seasoned customers, mostly Amazon employees who work upstairs, zipped in and out, emerging with a bottle of kombucha or a carton of yogurt in a matter of seconds.

"It's cool technology," agreed Sucharita Kodali, an analyst with Forrester. While having faster checkout is nice, she said the bigger pain points for customers are things like out-of-stock items.

"This is not technology that is ready for prime time yet," she said, noting that it hasn't been scaled yet for bigger stores. "It doesn't even reduce the staff in the store right now."

Indeed, the Amazon Go store has a lot of orange-shirted employees stocking shelves, making sandwiches and salads, helping customers and checking IDs in the small liquor section.

Murphy, of Loup Ventures, said an automated model doesn't make sense for all stores, but he sees potential for convenience stores and gas stations. He's hopeful costs will go down — especially as other companies develop other technology — to make it more viable.

"We're made to be on the go, moving forward," he said. "There's something about a green light that we like and a red light we don't like. This is that for retail."

Kavita Kumar • 612-673-4113