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Comment: Amazon Go highlights the need for in-store digital transformation

It’s the Age of the Customer – and that means the impending end of traditional brick and mortar checkout.  It will be a few years before we see widespread implementation of Amazon Go or other “checkout-less” technologies at traditional brick and mortar stores, but retailers and vendors in the digital store and POS space are now on notice.

Forrester data found one out of six European grocery consumers are interested in performing self-checkout using their mobile devices, but with more retailers offering such capabilities -- and exposing consumers to the convenience of self-checkout -- that number will likely rise. Consumers’ hyper-adoption and willingness to participate in technology-based, in-store shopping experiences prove that retailers will likely need to follow Amazon’s lead to accelerate digital transformation initiatives -- especially if Amazon Go proves to be successful over time. If it does, consumers’ expectations for retail shopping will significantly and quickly rise, and retailers will likely be scrambling to catch up.

This type of digital transformation isn’t completely new, as “checkout-less” shopping has been evolving rapidly all around us for some time already. Think about it: Uber raised customer expectations for hassle-free transactions and is the gold standard for customers now, no matter what they’re buying. Customers essentially get VIP treatment when they use the Starbucks Order Ahead mobile app feature to order, pay and bypass the line entirely to pick up their coffee, while store staff focus on making more coffee, more efficiently.

By contrast, Amazon recognized that retailers and grocers have been merely iterating – not reinventing – the checkout experience. Grocers implemented self-checkout kiosks when consumers realised they could scan items themselves more quickly than the store cashier. Some savvy retailers like warehouse retailer Sam’s Club have implemented “Scan-and-Go” technology, which lets consumers scan items on their mobile app to bypass the checkout line all together. This will allow employee transformation from transactional cashiers instead to concierges who can focus on helping customers find what they need.

Amazon has done to retailers what Netflix did to Blockbuster years ago: They broke the mould, threw it in the garbage, and said, "How can we rethink this experience completely?" This is what innovation looks like. Throughout endless testing, Amazon understands well that brick and mortar commerce is not going away. Known for its seamless online checkout experiences – combined with the emotional, tactile in-store experience – Amazon is creating a powerful one-two punch.

Many are wondering why Amazon is experimenting with grocery, a low-margin, fully-commoditised, crowded market. But for a company like Amazon that thrives on efficiency and high frequency purchases, it makes perfect sense as a strategy for building its brand in the physical space. If anyone thinks Amazon will stop at grocery, they are underestimating its vision for their future in physical retail.

Frictionless commerce is now the objective

We live in the age of the customer, where power has tipped from organisations to empowered individuals who are continuously connected and informed. But equal to their hyper-adoption of tech is their willingness to hyper-abandon brands. They can leave you at any moment, buy anything instantly and have it delivered anywhere. The only way to retain customers and their loyalty is to become customer-obsessed. Customer obsession requires embracing the technologies that can re-make customer experiences, which Amazon continues to prioritise. To keep up, retailers must accelerate digital business initiatives to deliver greater agility and customer value for experiences that deliver convenience, less hassle and save customers time. Providing a seamless commerce experience means transactions occur based on a customer’s previously set parameters without the customer directly having to authorize each transaction.

Seamless commerce removes the buying “friction” for customers. In the not too distant future, customers will expect their refrigerators to reorder milk, their home furnaces to order filters, and their cars to negotiate with utility companies for the cheapest time of day to charge. Similarly, in a physical retail store, consumers will expect sensors to automatically recognise and authenticate them when walking in the door. Retailers will be expected to provide personalised and contextual offers and rewards, and offer redemption and seamless checkout based not only on their shopping history but also who they are overall.

Are your current systems up to the task? 

By Brendan Miller and Brendan Witcher, principal analysts at Forrester