Three Insights on Checkout-free Retail

As cashier-less checkout becomes more prevalent, retailers may benefit from real-time inventory and reduced store footprint.

October 30, 2018

By Frank Beard

It’s easy to see why everyone is talking about checkout-free retail. Lines can be incredibly frustrating—especially at convenience stores. If you’ve visited an Amazon Go location, then you know how great it feels to “just walk out” when you’re ready to leave.

But Amazon is far from the only company developing this technology. Zippin recently made headlines for testing a similar system at its San Francisco concept store. Zippin relies on a smaller number of cameras and, unlike Amazon, has announced intentions to scale its system to other retailers—opening the possibility of retrofitting stores once the technology is available.

To learn more about Zippin and the future implications of checkout-free retail, I spoke with company CEO, Krishna Motukuri. Here are three takeaways from our conversation.

1. One seamless experience. “I believe that in 10 to 15 years, practically every store will be checkout-free,” said Motukuri, “because that’s one aspect of shopping that nobody wants.”

Motukuri describes a future for convenience retailers in which a single, seamless experience exists from the forecourt to the store. Imagine stopping to refuel your car, and you begin by scanning a QR code from an app. Afterward, you walk into the store and grab a few snacks, something to drink or perhaps a made-to-order meal. Every product is added to a digital cart along with your fuel, and you simply walk back to the car and drive away when you’re finished. No lines, no waiting for permission to leave and no friction-filled checkout process.

The same experience also would apply to retailers that operate drive-thru lines since everything comes back to the mobile app. If you order ahead, you could also link the order to the in-store purchase.

“We’re looking to create a single transaction for the customer,” said Motukuri. “Checkout-free means that the customer is checking in rather than checking out.”

2. Whether urban or rural, all retailers will benefit. The success of Amazon Go’s first Seattle store surely was affected by heavy foot traffic from young, tech-savvy consumers. The store is located at the base of the company’s Day 1 office tower—a 521-foot-tall building belonging to a three-tower complex that forms Amazon’s headquarters. Directly next door is Amazon’s new garden employee workspace, Amazon Spheres.

But would the novelty of the checkout-free technology wear off if store was located farther away—or if it existed in a small, rural town?

As it turns out, this may be the wrong question. Motukuri explained that while the largest return from this technology can be had today in urban stores with high volume and low margins, the cost of the hardware and software will drop to a point where it’s affordable for everyone. At that point, implementing it will be a no-brainer—especially since it provides real-time inventory tracking.

“For the first time, a store owner knows exactly what’s on the shelf,” said Motukuri.

Retailers will be able to accurately forecast needs, avoid empty shelves and obtain detailed analytics that previously were unavailable. What path does the shopper take, where do they stop and dwell? Which products tend to be put back down after they’re picked up? Think of it as browser cookies for physical retail.

3. What about large-format stores? Motukuri pointed out that since setup costs are proportionate to the size of the store, an incentive exists for smaller retailers to act more quickly.

However, Zippin has an enhanced concept in which “Zippin boxes” can be deployed at larger formats. Imagine a 50,000 square-foot retailer that places its fastest-moving items inside a 500-square-foot Zippin box. Customers could save time and avoid entering the full store, and companies could use the opportunity to experiment and see how people respond to the technology.

But even large-format stores will utilize the technology eventually. When that happens, Motukuri said, the question becomes, do you really need that big of a store? When this technology is paired with more-efficient inventory management and forecasting, retailers are likely to see higher sales per square foot, which may give them the option to downsize their physical footprint.

Frank Beard is a speaker, writer and industry advocate who serves as an analyst/evangelist for convenience store trends at GasBuddy. Beard regularly contributes to NACS Daily and NACS Magazine. Follow him on Twitter or LinkedIn