100 Years

A century after the checkout stand was invented, Amazon Go could be poised to disrupt the convenience industry.

March 10, 2017

Jeff Lenard is the NACS vice president of strategic industry initiatives. His monthly column in NACS Magazine, “In Context,” tackles industry innovation, healthy food options and retail community involvement. The below column is from the March issue and can also be read on the magazine’s new website, www.NACSMagazine.com.

The news about Amazon Go—an 1,800-square-foot “convenience store” with no checkout lines and presumably faster customer experiences—was cleverly timed for release during the holiday season when lines are at their longest.

Coincidentally, the announcement was made a few weeks after the 100th anniversary of the creation of the checkout stand by grocery chain Piggly Wiggly. The grocery chain’s introduction of self-service shopping disrupted the traditional grocery shopping experience—a customer handed a list to a clerk who collected all of the items and rang up the sale.

This quantum shift in the retail experience led to many other changes. Some could be anticipated— like the rise of branding and promotions and the importance of pricing and merchandising—and some would be more difficult to foresee, like the rise of the superstore decades later.

To anyone who has seen the slick two-minute video announcing Amazon Go, you can’t help but think it’s the future. But, to a certain extent, the future is already here. The 2016 NACS Ideas 2 Go program showcased similar self-checkout concepts in convenience stores in both the United States (Marine Corps Exchange) and the United Kingdom. (Little Waitrose). And a full month before the Amazon Go news, the grocer California Fresh Market announced it was launching a new app to eliminate the checkout line for customers.

Amazon’s technology is certainly a leap beyond what is already on the market, and it has some powerful tools to help grow its concept. Millions of Amazon’s Echo and Dot devices are in consumer’s homes—and could be subtly used to advocate company-specific solutions. There are also intriguing cross-promotional possibilities with Amazon Locker (mailboxes for secure delivery), Amazon Fresh (its grocery experiment) and even Amazon Prime (a VIP package for discounted delivery and multimedia streams). It very much feels like a long-term strategic play—like how Apple introduced iTunes nearly a year before the iPod.

But to me, the biggest innovation is how Amazon has positioned its Amazon Go as a consumer benefit (reduced time spent in lines) rather than a company benefit (reduced labor costs). Wait times at convenience stores are only about a minute or less, but something that feels even faster may attract loyal customers.

We’ve seen it in our industry: When Wawa and others introduced made-to-order food via touchscreen, they found that consumers tended to feel the wait times for food were too long. But by simply changing the process and having customers pay for food while it is being made, wait times felt shorter because customers were doing something besides waiting.

As we’ve seen in retail, it often takes years to experience the full scope of change. More than a decade ago, big boxes such as Walmart and Target aggressively pushed to grab health and beauty care sales (HBC) from drug stores. Drug stores fought back and replaced lost HBC sales with food and beverages, eventually positioning drug stores as more direct competitors to our channel.

There is no question about the real cost of standing in lines. If we could shave 20 seconds per customer off our already short wait times, we would save our 160 million daily customers the equivalent of about 100 years—every single day. And as we all know, a lot of great things can happen in 100 years.

Jeff Lenard is the NACS vice president of strategic industry initiatives. He can be reached at jlenard@nacsonline.com or (703) 518-4272.

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