Over 150 companies are working on automated, human-free, brick-and-mortar retail, using machine vision, IoT, RFID, and more.
Traditional retail is getting an upgrade.
Despite the rise of e-commerce and mobile, the physical channel still plays an important role in consumer experience — and retailers are increasingly leveraging technologies to stay afloat.
Cashier-less technology is one of the latest trends to dominate conversation.
Amazon recently opened its fourth Amazon Go store, which uses a mix of cameras, machine vision, and IoT to track shoppers throughout the store. It then charges them automatically for the items they pick up, eliminating the need for cashiers.
While Amazon Go has grabbed headlines, dozens of other companies are also working on ways to take cashiers out of retail.
These companies use a range of technologies, but share two common purposes: to make brick-and-mortar retail more convenient and to gather shopper data.
In this analysis, we dive into some of the key ideas and technologies used in cashier-free retail, highlight companies leveraging this level of automation, and talk about what’s next.
Why Are retailers are pivoting towards cashier-less retail?
Human-free retail is not a new concept.
Some historians date its existence to over 2,000 years ago: texts from ancient Greece describe a coin-operated machine for dispensing holy water in temples.
Since then, the first modern vending machine was invented, and many retailers — from restaurants to grocers to suppliers of general goods — have experimented with various human-free and self-service concepts — including self-checkout.
In 2013, for example, Walmart began experimenting with self-checkout technology. Using a mobile app, shoppers could scan barcodes on items they wanted to buy. Then, a QR a code would be generated, which shoppers would then scan at a self-checkout till to pay.
Later in 2016, fashion retailer Rebecca Minkoff partnered with startup QueueHop to debut an RFID-powered self-checkout system. Shoppers would use a mobile app to scan products themselves and pay, at which point anti-theft tags on the products would unlock automatically.
Neither of these experiments, however, have seen long-term success or widespread adoption. Walmart has since revisited with iterations, and QueueHop — failing to catch on — is now defunct.
But the concept of streamlining checkout and removing layers in the process is still largely top of mind for retailers, and can provide many benefits.
Unmanned retail can:
- Set up points of sale in new places: As shopping malls struggle and brick-and-mortar foot traffic declines, brands don’t want to wait for shoppers to come to stores. They need to go to shoppers, and cashless retail kiosks can help them do so. Small in size and with no need for staffers, these kiosks can sit in office lobbies, university campuses, transit hubs, and other public spaces. It’s the next generation of vending machines, which were the original unmanned retail setup.
- Reduce overhead costs: Of course, automated checkout reduces the need for human cashiers. Retailers could simply cut staff, or reassign their staff to more hands-on roles helping shoppers. However, the upfront costs may be high for retailers that choose to retrofit existing stores with checkout automation technology.
- Gather shopper data: By pushing offline shoppers to check out via mobile (i.e. using their online account to check out in store), cashless retailers hope to merge shoppers’ online and offline identities. Retailers can then form fuller pictures of shopper interests and habits. Since many human-free retail systems track shoppers continuously in stores, retailers can also better understand how shoppers react to various shelf displays, store layouts, and more.
- Improve the efficiency of inventory management – Once retailers can view the full picture of shoppers’ online and offline activities, they can better localize their inventory. They can see what shoppers in one area tend to buy online, and use that to inform local store merchandising; they can also re-target shoppers online based on in-store purchases. Many retailers focus on these strategies already, and unmanned retail systems further support them.
The technologies Supporting a cashier-less environment
Retailers and startups are using a range of technologies to support cashier-free and human-free retail, including:
- Machine vision: Machine vision, a subset of AI, allows computers to understand images. Cashier-free retailers use machine vision to track shoppers through stores, though the technology can’t identify the shoppers without facial recognition (below). Shoppers still have to scan a code on their phones as they enter the store in order to link their physical presence with their identity. Machine vision also tracks the movement of products through the store.
- Facial recognition: Facial recognition algorithms tie visual data on shoppers to specific shopper identities. With fully functioning facial recognition tools, cameras can match in-store shopper visuals to digital shopper profiles, determining the name and identity of each visitor. Most US players don’t (yet) use facial recognition, but the technology is more developed in China. (For more about China’s facial recognition tech, check out our deep dive here.)
- Shelf sensors: Some unmanned (and traditional) retailers use weight sensors or light sensors on shelves to detect when products are added or removed. These shelves can confirm activity recorded by cameras, adding another point of proof that a shopper picked up or put back a product. These sensors can also automatically alert store staff when products are sold out.
- Barcodes: Mobile apps, that let shoppers scan product barcodes themselves and pay, can support unmanned checkout.
- Quick Response (QR) codes: Many unmanned retail mobile apps make use of QR codes. In some models, particularly in China, a mobile app generates a personalized QR code for the shopper, which the shopper can then scan to enter the store, pay, and exit. In other models, products have QR codes that shoppers can scan to get more information on the product.
- RFID tags: RFID (radio frequency ID) tags can be attached to products to track them through the store. Sensors at store exits can read RFID information to confirm which products a shopper is carrying out. Attaching RFID tags to each product often doesn’t make much sense for low-cost items, which is why Amazon Go and others say that AI observation systems can track products without tags. However, RFID tags could provide extra security for unmanned retailers of higher-priced goods.
Key players to watch
A number of companies are working on cashier-free projects and initiatives. Below, we dive into a few across the public and private space.
Public companies...
