Legacy retailers are starting to get serious about checkout-free technology, bringing new insights into the challenges inherent in replacing decades-old traditional checkout layouts at stores.
In some cases, such as Brazil's Lojas Americanas, the best option may be to start from scratch with brand-new stores, without the baggage of old technology or ingrained shopper behavior. Lojas Americanas has made a strategic investment in Zippin, a checkout-free tech provider, and will work with Zippin to develop checkout-free technology for its stores in Brazil.
"In existing stores you have all of these checkout counters that are already there. In a new store you're starting from a blank slate," said Zippin’s co-founder and CEO, Krishna Motukuri.
The first store — Zippin's first real-world deployment beyond its own lab-style concept store in San Francisco — opened in Rio de Janeiro, with a new store expected to open soon in Sao Paulo.
The initial stores are new Ame Go stores, which vary in size from 250 to 3,000 square feet, and will be in mostly urban centers with high traffic and a "captive" consumer base, meaning they'll have a steady flow of people from nearby financial office and housing complexes.
There's a mix of new stores, retrofitting existing stores, and an Ame Box checkout-free store-within-a-store concept.
"From a technology standpoint there's really no difference," Motukuri said, adding retrofitting existing stores maintains elements of the older model.
While each retrofit has some differences, there's still the work of managing how consumer traffic flow will change as the system of manual or self-checkout is replaced with a mobile experience.
"The main difference is in the customer experience," Motukuri said. "In a 'new' store the consumer is checking in at the entrance and grabbing what they want, and there's no place to checkout, so they're just walking out of the store."
It's one of several companies that are pursuing checkout-free technology, attracted to the data that the model can yield.
And all of these companies are operating in competition with Amazon, which has opened about a dozen
The concept received more attention when
Checkout-free technology is attractive to investors and retailers because it provides a video record of shopping and payments, creating vast potential for incentive marketing, since retailers can see how shoppers are interacting with items. The video also provides another way to provide security from payment fraud.
But so far, the technology's very limited.
Most of the deployments thus far have been in small-scale supermarkets or convenience stores.
The Giant Eagle deployment is starting with smaller stores, though it does plan to add larger footprint stores in the future; and
Lojas, which has a variety of store sizes from convenience store to full-scale supermarkets in its 1,500-location chain, did not comment for this story. Zippin's technology is designed to retrofit existing stores and work in larger stores and non-grocery categories, though Lojas is starting with smaller new stores first. "We are working with them on the methodology to launch the same technology in larger stores," Motukuri said, adding the upfront hardware investment for larger deployments is proportional to the store's size.
The challenges are less about the technology than the merchandising, Motukuri said. "The way these items are displayed will have to evolve."
While checkout-free technology may deploy easier in new stores, it's still vital that the technology can be workable in existing stores, according to Alastair Mitchell, a partner at EQT Ventures, a European VC firm that has invested in Standard Cognition.
"It is absolutely critical that the technology can be retrofitted, since only a tiny percentage of a retailers' estate is new build versus existing stores at any one time," Mitchell said, adding it's particularly true in larger-format grocery stores. "And margins are too thin to have to build new stores or 'stores within a store.' "