The Future of Retail?
During a recent trip to Seattle (to attend the ACG conference of course), I happened to find myself in front of the Amazon Go store. For those who aren’t on the bleeding edge, Amazon Go is a new retail concept where the shopper engages an app, enters the store, picks up whatever they want, and walks out . . . no check-out, no scanning, no cashiers, just lots of big brother cameras and highly accurate RFID and location technology. So far, Amazon has invested millions in its first Seattle location, and they intend to open several more stores this year, likely in San Francisco, Chicago and Los Angeles.
As a shopping experience, it feels more like a shop-lifting experience. I was nervous walking out the door with a sweet new coffee mug in hand, but then a friendly email from Amazon landed in my inbox a few minutes later telling me how much my Amazon account had just been charged. The assortment is interesting – Amazon calls it an ‘urban market,’ which felt more like an upscale, new age 7-11 to me – with lots of food and beverages, from snacks to millennial-friendly, ready-to-eat meals. The experience is cool and seamless – apparently the technology actually works. The novelty of not having to wait in a line or even scan your items is striking and compelling, not too dissimilar from exiting an uber ‘without paying’ (at least in the traditional sense!).
The first Amazon Go location is approximately 1,800 square feet – again similar to a 7-11 but without the Slurpee machines. It also happens to be located right near a couple of Amazon’s large towers, so thousands of true believers walk by this store every day. I suspect the concept will be a home run in other cities with large, tech-savvy populations. As long as the prices are reasonable, there’s no reason why consumers won’t absolutely love it. Regarding prices, based on my cursory walk-through you know you’re not in Dollar General (or 7-11 for that matter), but the prices didn’t feel egregious either. I didn’t see any overt Whole Foods branding, but there were plenty of 365 house-branded items on the shelves. Let your mind run wild with the Whole Foods angles. . .
What does this mean for every other brick & mortar retailer? Watch out. Amazon will have a huge head start on the incumbents, and they can effectively subsidize new store construction by increasing the cost and number of annual Amazon Prime memberships. The learning curve is steep and expensive with bottoms-up redesign and technological refit of Walmart or Kroger’s installed base of stores a massive undertaking to contemplate. There remains the question as to whether the purchasing public will fully embrace a ‘no touch’ shopping experience with limited or no contact with employees. Consumers will always look for suggestions, help with returns, and directions where to find products in the store. But, for my part, I enjoyed the smooth experience. If you have the opportunity, go check out a Go store whenever you get a chance.