The Breakdown:
As Amazon continues to raise the bar for convenience expectations, a traditional c-store is looking to leap ahead.
7-Eleven announced earlier this month that it is piloting a cashierless concept at its Irving, Texas headquarters.
Currently operating for on-site employees, the 700-square-foot store is an unmanned retail space that offers shoppers beverages, snacks, groceries and over the counter medications.
With the use of their smartphones, employees download the store app, enter the store and shop.
Once ready to go, all a shopper has to do is walk out the door. A detailed receipt then appears in the app automatically after the customer exits.
The store is powered through a proprietary mixture of algorithms and predictive technology that enables the store’s system to separate individual customers and their purchases from others in the store, 7-Eleven said in a statement.
7-Eleven’s unmanned store comes on the heels of other innovation projects, including a mobile checkout feature, which allows customers to scan and pay with their smartphones.
Q: Do you foresee the cashierless format becoming a c-store standard?
The Weigh-In: Tony D’Onofrio and Julia Raymond
Tony D’Onofrio: I do think that is the format that is actually best adapted. Really, all you need to do is look at what Amazon Go is trying to do with continuing to open their store. That is ultimately a convenience store. You also need to look at China. China is actually ahead of Amazon Go. They actually have multi-hundreds of the Bingo Boxes open, which are mobile convenience stores that have a lot of technology inside that you use your smartphone to get in and do all your shopping and activity. And so I do think that format is ideal for this type of technology and evolution. There will be challenges that will need to be worked through in terms of how you deal with a test and how do you increase the security, but all you need to do is walk into an Amazon Go and look into the ceiling to the number of sensors and cameras and computer vision that’s in there. There’s a lot of technology now being applied where it makes it viable.
Tony D’Onofrio: Ultimately, I think there’ll be a mix. I do think you’ll end up with retailers that will do mobile and allow consumers to shop themselves with a mobile device. Nike, for example, is in that space. You also will have much more intensive self-checkout application in stores. Walmart is a perfect example of that. They’re tripling down on the number of self-checkout stations in the stores, and you’re going to have the Amazon Go type stores such as the one that 7-Eleven is looking to open. I think they all have a fit in terms of really driving consumers too much more convenience and being able to check themselves out how they want to check themselves out.
Julia Raymond: All good points and I do want to ask from your opinion, so 7-Eleven saying that this is a proprietary approach that they’re using to track the in-store checkout; do you think that a lot of other convenience chains might take a different approach and purchase the technology from an outside vendor?
Tony D’Onofrio: So I think that’s possible. I have heard from other retailers that Amazon Go, for example, is shopping their technologies to other retailers and will actually like to adopt them. I do think all retailers are trying to find that strategic competitive advantage; how to get ahead of everybody else. So they believe that they have something unique versus someone else and their first [inaudible 00:10:17] is not developed. They’re going to hang onto that type of technology as long as possible. But I do think you’re going to have retailers doing their own thing, follow 7-Eleven You also are going to have retailers that will leverage somebody like an Amazon Go into smaller formats and that’d be just another way for consumers to engage with store brands.
Julia Raymond: And how big of a threat is theft? Because this is technology, 7-Eleven, for the example we’re covering, is testing out their tech and it seems like the items in a convenience store are so small. I mean, think of a Snickers bar. How does that work from the minute someone would potentially try to steal the Snickers bar to the technology notifying the employees?
Tony D’Onofrio: So a lot of that is really based on the amount of computer vision that’s applied or how our sensors are applied. Again, all you need to do is look up into the ceiling and go into an Amazon Go and look up, you’ll see it has a tremendous amount of technology. The other way to handle that is store layout and making sure that there’s clear visibility from the computer vision to where the actual product itself and it’s moving across. And then there’s a lot of our background analytics, big data that goes on just to have stats, what types of transactions. So for example, if you went into an Amazon Go, you wouldn’t get it immediately as you’re walking out the door. It would take a few minutes until it’s analyzed exactly what you’ve done, what you bought, what you put back.
Tony D’Onofrio: There are challenges that are still being worked through. For example, I have heard that if you pick up a product in one area and put it down in another area sometimes that’s a challenge. To me, it’s an emerging technology. The computers are getting much better at the edge to analyze what’s happening. I recently wrote a blog that talked about how the camera is becoming an extremely powerful sensor to analyze what’s happening inside of the store and that to me, that trend will continue and it will get applied into exactly these types of formats, because I think it’s ultimately a balance on how you leverage technology to get to a competitive advantage. And to me, for 7-Eleven, this is actually a good strategy.
Julia Raymond: And would you say in the short term they’re losing money? Because in the future, they might save money by having fewer employees staffed perhaps, but the investment in the cameras and the computer vision and the analytics and the data just seems like a lot. And the potential theft that could happen until the technology reaches a more mature state.
Tony D’Onofrio: Yeah. Ultimately, it’s a balance. I do think you’re going to look at cost and you’re going to balance it to cost, but you’re also going to look to deploy some of those resources and make them, for example, in a Walmart, make those more readily available inside the store itself. So Walmart is testing a concept called Check Out With Me where they’re roaming with iPads or iPhone-type self-checkout devices and helping that consumer checkout in the aisle. So there are ways to redeploy some of the associates with the consumer because ultimately, to me, the best redeployment of associates is to actually create brand ambassadors, and they’re technology-enabled and then to have a conversation with a consumer. So I do think there will be some cost-cutting, but there will also be some redeployment.
This conversation first appeared on the Feb. 24 episode of the Retail Rundown.
