Vending, Micromarkets And Amazon Go. What’s The Difference?

by Paul Schlossberg
Posted On: 10/18/2018

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Micromarkets. In the past few years this new retail model has grown up to become a big winner for our industry. This is a situation where everyone wins. Very briefly, for example (since we are all familiar with the benefits of micromarkets):

(1) Operators win: We can drive higher sales with a smaller investment in fixed assets.

(2) Our clients win: Their employees, visitors or guests have access to a wider array of products in what is a much more attractive and interesting shopping venue.

(3) Our shoppers win: For the reasons cited above in #2 and because they can shop in a space that allows them to make purchase decisions quickly and easily.

We could go on and on about the positive attributes of micromarkets. But this blog is headed in a different direction. We must begin working on the next generation of the stores we deploy. That means micromarkets, vending and OCS too. If we do not, they will be made obsolete by the emerging technologies pioneered in the Amazon Go store and at other new players in that space.

Are you familiar with Amazon Go? Here is how they describe it on their website: “Welcome to Amazon Go and the world’s most advanced shopping technology. No lines, no checkout – just grab and go!” If you’re not well-informed about Amazon Go, click on the link and you’ll see a brief video to help you understand the shopping process.

The first Amazon Go store was launched in Seattle earlier this year.  News reports indicate that as many as six additional locations are planned including in Chicago and San Francisco.  

Is Amazon Go simply an upgraded micromarket? Maybe it is in terms of product selection and payment capabilities. It’s also a vision of what our future might be. Who owns the words “just walk out shopping?” It’s not clear (to me) if that phrase is trademarked or not. But, what is undeniably true is that big retail brands are intensely focused on providing “just walk out shopping” to their customers.

Do you know about the Zippin store in San Francisco? This one was news to me. There was a Wired.com story, on Aug. 20, 2018, “Welcome To Checkout-Free Retail. Don’t Mind All The Cameras.” It noted that “the Zippin store and an Amazon store in Seattle are the only cashier-free stores in America.” Krishna Motukuri, chief executive of Zippin, said, “For the vast amount of retailers, [just walk out shopping is] not available. We expect everyone will want to customize it.” His view sees this shopping mode working at “gas station stores, convenience stores, airports, hotel lobbies.”

Guess what folks? He’s talking about some of the locations we serve. The good news is that our industry has had similar technology available to us for quite a few years. It allows shoppers to select what they want from smart shelves. But, for now, shoppers must deal with payment at the time of the purchase.

You might be thinking, “There’s no bad news here. We have nothing to worry about – right?” Wrong! There is also a lot going on outside the U.S. with significant implications for our business in the relatively near-term future.  

One of the brand names involved is the biggest c-store operator, 7-Eleven. They’ve launched two staff-less experimental stores. One is in Seoul, South Korea, according to Inside Retail Asia.  "Shoppers can pay with the swipe of their hand, thanks to a biometric verification system that scans vein patterns in their palm. A scanner at the self-checkout terminal studies the size, [color] and shape of a shopper’s veins, allowing them to make payments after they have registered…”

7-Eleven Taiwan opened its first unstaffed store, the “X-Store” as reported in Taiwan News. Facial recognition applications ae deployed “…including "Face in," for entry to the store; "Face pay," to make payments; and "Face go," for checkout.”

Did you ever think that you’d see 7-Eleven branded vending machines? On Aug. 22, 2018, hani.co.kr reported about the 7-Eleven Express locations in Incheon, South Korea. A spokesperson was quoted, “We’re testing out 7-Eleven Express, a high-tech vending machine-style convenience store that is fully prepared to service customers’ convenience.” They are testing at four locations. The article mentions that the vending “prices are the same as at a normal 7-Eleven…”

The article indicated that their plans are to move forward with a franchising business model. Only existing franchised store owners will be offered the vending system. Each will be limited to only one “second store.” The company stated that “This model is designed to maximize the profit of our current franchise owners.”

Did you see the news about a college-based convenience store in Singapore?  According to The Strait Times, “The Cheers (convenience store) outlet at Nanyang Polytechnic (NYP) looks like its normal store - with shelves and fridges stocked with food and drinks - except there is no cashier or assistant in sight.” NTUC FairPrice, a chain with 160 locations, is the brand owner. The store will be managed and operated by business school students at NYP.
 
We need to do more than think about just walk out shopping. It’s time to do it in our industry. We are working with much smaller stores in terms of dollar volume and SKU count versus Amazon Go. Wouldn’t it be great if we could offer our shoppers the time-savings of just walk out shopping? This applies equally to vending and micromarkets. And it would matter for OCS too if it is in a paid mode.

For all of our equipment OEMs, peripheral device makers and software/systems providers, the challenge is now yours. How can our industry make the leap? Let’s get our industry ready to offer just walk out shopping in the next two years or less. Since it will be a very challenging process, the time to get started is now.   

So here is that question again: Is Amazon Go simply an upgraded micromarket? If we can figure that out, we will be well on our way to selling more stuff, a lot more stuff...