Amazon’s Cashier-less Grocery Stores: Another Big Test (Sort-of) For Brick-And-Mortar

Written by Mike Shapiro | | January 24, 2018

Next week, Amazon plans to open its first cashier-less grocery store in the ground floor of its headquarters building in Seattle. And a lot of people are viewing it as a test of the concept of self-checkout and even of customers’ interest in buying at brick-and-mortar stores.

But the new Amazon store may not be a particularly valid test of either business model. That’s because, unlike traditional grocery stores, it will feature a lot of meal kits and pre-packaged, ready-to-serve prepared foods. In that way, it may look more like the free-standing Snap Kitchen outlets or the grocery section inside Target stores.

And those two retailers are far from hitting their stride with that model: Drive by any Snap Kitchen outlet in your area, and see how many cars are in the parking lot. In Chicago, after a three-and-a-half year run, Snap is closing its five free-standing stores and two kiosks inside Whole Foods Market locations.

And next time you’re in Target, take a look around and see how many customers are buying groceries. Here’s what Forbes had to say in May, 2017 about Target’s grocery business: “Experts believe that Target is facing an “identity crisis” at its grocery segment. The company can choose to be either a private brand destination, a convenience store or a full line grocer (which is likely the most difficult choice). However the company cannot keep its grocery business in limbo for long. Management is focused on the grocery segment and is making progress on procurement and supply chain improvements in addition to working on competitive pricing of its products.”

What about cashier-less sales? Amazon’s new stores are certainly not the first to feature this. Sam’s Club has Scan-And-Go. My grocery chain store has had self-check-out for years, and it’s pretty popular. More recently they decided to try a higher level of “customer convenience” by allowing shoppers to scan-and-bag as they go. There’s a wall of do-it-yourself hand scanners you can opt to use, but hardly anyone does. Apple stores have had their EasyPay self-scanning check-out for years, and it has not been without its hiccups. It’s hard to know what percentage of their store sales are actually on EasyPay, but it’s fair to say some customers would still rather check out with a store employee than take a chance on being labeled a shoplifter because of a technology goof.

Complicating matters further is the fact that Amazon’s technology doesn’t require customers to do anything at all to scan their purchases, but rather automatically scans your whole order as you exit through the designated area. It remains to be seen how comfortable customers can become letting the store’s new technology be the sole decider as to whether they’re signaled as a law-abiding, paying customer or a shoplifter to the the real employees who will be on hand to monitor that sort of thing.

Make no mistake: Anything Amazon does is big news. And the underlying assumption of this experiment seems to be that customers can fall in love all over again with real stores, so long as they don’t have to interact with another human being when making purchases. But Amazon’s new store may end up being more a referendum on pre-packaged foods than a test of cashier-less checkout or proof of the continued viability of brick-and-mortar stores.