The online giant is planning a bricks-and-mortar supermarket that dispenses with checkouts. But will its state-of-the-art technology spook consumers?

Traditional retailers have rushed to join the world of online shopping, but few predicted that online brands would seek to enter the market of bricks-and-mortar stores.

Online retail behemoth Amazon, which sells more than 350 million products online and has been touted by many to become the world’s first company with a trillion-dollar market capitalisation, announced late last year that it will launch retail store Amazon Go, transforming shopping as we know it.

Ready to Go

The pilot Amazon Go grocery outlet in Seattle is powered by Bluetooth, weight sensors, cameras and artificial intelligence algorithms, meaning customers are charged when they pick up an item from the shelf. There are no queues or checkouts – customers simply pick up groceries and walk out of the shop.

“You can expect every grocery store will have some sort of variation of this in five years,” says Utpal Dholakia, Professor of Marketing at Rice University in Texas. “And it will bring a dramatic change in all areas of consumer behaviour.”

Changing how we pay

Amazon’s experimental store is not only going to change the way we shop for our groceries, but how we pay for them too. “Essentially, it is an alternative-payment system,” Dholakia says. “It is doing away with a plastic card, and maybe even one day your smartphone – although right now you’ll need it to activate the shopping trip.”

As with all new technologies, Amazon Go’s greatest challenge will be getting consumers to adopt this new way of shopping and paying for groceries. “The issue is how it impacts consumer behaviour – when you don’t keep tabs, and you pick things up and walk out, people behave more impulsively,” Dholakia says.

“There’s no stop signal like counting out the cash, or looking at the credit card printout. That is the big danger to Amazon Go – if it is not trusted, it will not be adopted.”

Brave new world

Privacy concerns may also present an obstacle to adopting this new way of shopping, with such overt electronic monitoring a new concept to customers.

“From a consumer-welfare perspective, this is potentially highly intrusive technology,” Dholakia says. “From the second you walk in, you are monitored through their cameras and through your device. The whole time, they are compiling evidence of your trip.”

With one of Australia’s traditional supermarkets, Coles, recently attempting to clamp down on theft by restricting the number of items at self-serve checkouts to 12, Dholakia says the new technology offers incentives for stores that mean “we can expect them to do everything to make the transition”.

Yet while the technology is expected to reduce theft – and its cost to retailers – substantially, there is no indication customers will be rewarded for adapting to the new way of shopping. “There is no reason to assume that the savings will be passed on to consumers,” says Dholakia. “In fact, the convenience afforded to them makes it likely that prices will be higher.”
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