Remember the Café 80s scene from Back to the Future Part 2, where Marty McFly (Michael J. Fox) tells an image of Ronald Reagan on a TV screen that he just wants a Pepsi, and a bottle of Pepsi Perfect mysteriously appears from inside the table in front of him. Today’s retail may not be that automated yet, but is rapidly evolving to a cashier-less environment – especially by leveraging the power of mobile connectivity.
Tap a button on the Uber app and a car shows up ready to take you to your destination. With a few clicks on your phone, order your favourite caffeinated concoction, and it will be ready at your nearest Starbucks by the time you walk in.
Technology pundits had predicted that mobile payments would be the wave of the future, and will change commercial interactions forever. In reality, mobile payments have struggled to gain ground in the developed world, because it’s just as easy to pay with a card as it is to pay with a phone. (The story, of course is very different in places like China and Kenya, where using the mobile phone to pay has become ubiquitous, since alternative digital payment methods were non-existent).
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It required re-thinking the merchant-customer relationship in the developed world, and removing the focus away from purely payments, and more to the other aspects of customer brand affinity and experience.
Starbucks broke new ground by bundling in-app payment together with loyalty (i.e. free drinks), which led to 15% of U.S. Starbucks sales coming in via mobile. Then in 2015, Starbucks launched the Order & Pay feature which allowed customers to place and pay for orders from their mobile devices, skipping the line when they pick up their beverages in-store. Before long, the percentage of app sales rose to 26% and the Starbucks app now processes more than 10 million transactions a month.
On March 31, Starbucks made it clear that it was not done innovating on the checkout process. Order & Pay became so popular that the lines at the pickup counters became longer than the lines at the cashier’s. In response to the congestion problem, Starbucks recently debuted a test store in Seattle that eliminates the cashier counter and seating. It will only accept orders placed via Order & Pay, and if successful, could serve as a blueprint for locations around the country.
Amazon also saw an opportunity to redefine the merchant-customer shopping experience, using technology and AI smarts, as they made their foray into physical commerce. Amazon Go is testing a concept using mobile check-in, image processing and AI-based decision making. This allowed shoppers to walk into a store, check in with their phone, pick the items they want to buy, and walk out of the store. There are no lines and all payment happens in the cloud.
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Walmart, Sam’s Club, and Kroger’s also offer various “Bag & Go” capabilities, allowing shoppers to scan items with their mobile phones and then walk to a dedicated aisle to complete their purchase and checkout. The line in this aisle is likely to be shorter, as the time to scan items at exit is eliminated.
No cashier: an evolution
The no-cashier approach has evolved over the past decade and there are multiple variations on the theme. Self checkout has been a staple of grocery stores and drug stores for a while. Customers line up, scan and bag their own items, and pay at the register. An associate mans the aisles from a central terminal and assists if something goes wrong.
Then there is the portable scanner model. Scanner devices in the store are connected with a shopper’s account. Customers use these devices to scan items as they put them in their cart and pay for items as they exit. Apple stores use a variation on this approach, with retail associates carrying scanners that enable them to check people out from anywhere in the store.
More recently, mobile self-checkout has emerged. Shoppers can use merchant apps on their own mobile devices to scan items and then pay using their device or a credit card at a dedicated aisle near the exit.
Order ahead or its variant BOPIS (buy online pick up in store) are becoming increasingly popular among consumers pressed for time and not wanting to spend time looking for items in a physical store and then waiting in a line to checkout. Shoppers buy and pay online and go to the store to collect the items, which have already been bagged by associates.
Finally, intelligent self-checkout is the most cutting edge iteration of the cashier-less future. Shoppers check in at the entrance to the store using their mobile device, pick up the items they need, and walk out of the store. Checkout happens automatically, with payments, offers, discounts and coupons applied through a cloud based system directly connected to the shopper’s mobile device.
Better for customers, better for stores
Cashier-less stores are important for a number of reasons. Perhaps the main one is that it reduces operating costs. There is no need for people to man cash registers. Store associates can instead be deployed within the store, assisting Shoppers with finding items and recommending merchandise.
In Starbucks’ case, employees can instead be deployed to make more beverages, thereby increasing the store throughput. In some other cases, the associates can be eliminated completely, though most shoppers visiting a brick and mortar store, still crave human interaction as part of their shopping journey.
Smart inventory and dynamic pricing is another benefit. Real time information on the items that are bought or in demand can be combined with predictive algorithms to not only replenish items throughout the day, but also change pricing multiple times a day as a factor of conditions localised to a store level.
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Furthermore, having no cashiers creates smart opportunities to provide customers with information and up-sell. Using self-scanning/checkout apps, shoppers are given information about the products they scan, as well as options around bundles or related items.
An often overlooked benefit of cashier-less stores is that they enable retailers to reduce their store footprint. Retailers can house certain popular items in the physical store, but carry a much larger inventory online, which can be delivered to a shoppers home from a nearby warehouse.
An omni-channel cart powered by a mobile interface allows the combination of physical, online and virtual goods purchases into a single seamless transaction, ensuring the shopper retains loyalty to the merchant while not worrying about which channel they are getting their goods from. Self-checkout also eliminates the real estate needed for large checkout areas and removes the need for costly cash register hardware and maintenance.
While a lot of progress has been made, there is a lot of room to grow. The checkout experience will continue to evolve over time. In quick service restaurants (QSR), order ahead is becoming more common and most large brands are already investing in technologies that can make it smoother. One of the key areas to disrupt is drive-thru – and there are several car based checkout technologies being proposed for it. Pretty soon, you could be pumping gas, and also buying your burger from the fast food store attached to the gas station, while also scheduling your tire rotation at the service centre next door, all by just a couple of clicks on your phone or the display in your car.
In addition, checkout will evolve with behavioural and visual intelligence. Through combination of visual recognition engines, sensors, and artificial intelligence, retailers will be better able to detect criminal behaviour and take remedial action.
Not only will they just detect, but also predict before a criminal activity could occur. The same systems will be able to track your in-store journey and create contextual alerts that are highly personalised to each Shopper, with a goal to maximise their cart.
So maybe that Café 80s scene from Back to the Future was pretty accurate in depicting what we are experiencing today. Fortunately, instead of staring at an old TV screen with a flaky interface, businesses are instead able to use the raw power of mobile computing in our hands, and the sensory feedback of attractive user interfaces within apps. The cashier-less future isn’t just about avoiding long lines—it’s about creating a far more dynamic, convenient, and compelling shopping experience, whether someone is buying toothpaste, a dress, a car, or that hard to find “Pepsi Perfect.”
Sourced from Ashok Narasimhan, CEO of Omnyway