Date Published: May 2018 (2 Min Read)

The profound impact of e-commerce on the High Street has been well documented. Each year it has eroded the sales of incumbent high street retailers and forced them to invest in their own online presence. Amazon, arguably one of the most disruptive players in e-commerce, is looking to take this one step further.

In February Amazon started trialling Amazon Go, a real-world convenience store that uses their patented “Just Walk Out” technology, a combination of infrared cameras, computer vision, sensor fusion (we don’t know what this means either!) and Artificial Intelligence (AI), to allow shoppers to walk in, swipe their phone, pick up the items they want and leave. No hassle, and more importantly, no checkouts. The store automatically adds items to your e-basket as you add them to your physical basket, and when you leave through the barriers, your Amazon account is billed for the cost of your shopping.

What makes this so compelling is that Amazon may have eliminated one of the tedious elements of the customer experience in a shop – the checkout queue. Amazon is once again forcing the retail competition to re-evaluate how it interacts with its customers and how they it can enhance the customer’s shopping experience.

Other juggernauts of the tech world are sitting up and taking notice. Reuters have reported that Microsoft is developing a system to rival that of Amazon Go, and it has been working closely with Walmart (the world’s biggest retailer) on its own AI driven initiative.

But the billion dollar question is: “Is this just one big gimmick, or are we transitioning into another new consumer experience which bridges traditional shopping and e-commerce?” While it is early days, there are several interesting themes to investigate when you delve slightly deeper.

By taking a step into physical retail, Amazon has shown the first signs of how it intends to bridge the gap between consumers’ experience of online and offline purchases. Monitoring both sets of browsing and buying patterns, Amazon may be able to enhance any individual’s personal shopping experience in both physical and online environments. Through offering more personalised recommendations online, and by helping navigate shoppers to the right location offline, and removing the check-out queue, the social activity of shopping may also be enhanced, and the drudgery of the weekly family shop reduced.

The development of an increasingly friction-less consumer experience in a shop is likely to have significant consequences for retailers. One could argue that consumers are not accustomed to this now, but actually they are online, and their attention spans are waning dramatically. If an online checkout experience is not seamless, then the shadow of the Amazon’s “OneClick Purchase” threatens.

In the physical world, Android and Apple Pay have given us the ability to rid ourselves of the tedious requirement of carrying a wallet, choosing a payment card and tapping said card against the card reader. Now all you need is your smart phone and a fingerprint.

All it takes is for a disruptive technology to come along and rid us all of something we did not realise we found tiresome for behaviour to change, for a new normal to emerge and for consumers to lose patience with those who fall behind.

We remain wary of investing in traditional retailers, and in property companies which specialise in retail space.

Article written by
James Crarer