Three ways Amazon Go’s automation will impact the retail industry
Could “paper or plastic?” become a question of the past? In early December, Amazon opened its checkout-free store concept, Amazon Go, in Seattle. Initially open only to employees, the store is expected to open to the public early this year. With the e-commerce giant’s “just walk out” technology, customers are able to swipe their app when they enter, pick up items they want off the shelves, and exit without cash registers or lines.
But what does this automation mean for the future of the retail industry which employs more than 42 million workers in the U.S. alone? By virtually outsourcing cashiers, Amazon Go has the potential to turn the traditional retail job, a long-time cornerstone of the American economy, on its head.
As technology advances, the need for face-to-face communication in retail sales cannot be ignored. Here are three key points retail owners and employees should keep in mind amidst the rise of Amazon Go’s automation technology:
Retailers will adapt to customer expectations, but change won’t happen overnight.
According to some media reports, Amazon plans to expand its automated grocery concept across 20 major U.S. cities by the end of 2018. But this certainly isn’t the first major tech innovation in the retail industry; self-checkouts have been on the rise for decades, with the first machine built in the 1980s.
But even with 325,000 self-checkout units in stores worldwide, many customers prefer a more hands-on retail experience, especially with large or complex purchases. By embracing self-checkout technology rather than rejecting it years ago, retailers are now able to please both customers who enjoy speed and efficiency and those who prefer the face-to-face experience. Similarly, today’s retailers should adapt to their customers’ changing tech expectations when it comes to “just walk out” technology like Amazon Go but also address the needs of customers who prefer traditional methods and personalized experience.
In addition to cashiers, other employees will still be necessary in checkout-free stores. Shelves will still need to be stocked, inventory will still need to be received, and customers will still have questions for associates; while automation will make some retail processes more efficient, it won’t completely replace the human workforce. In the process of upgrading their tech, retailers can’t ignore their most valuable resource: people.
Quality customer service become even more valuable.
The shift toward checkout automation is indicative of the evolving demands of customers who have more buying power and choice. This innovation stands to improve the in-store experience for customers who prefer efficiency, but for customers who seek a more hands-on, personal sales approach, retailers need to look at how they can better engage their staff to improve the quality of customer service.
Face-to-face service will be a key competitive advantage for traditional retailers and, as automation expands, human interaction could even become a luxury or brand differentiator down the line. Stores who are able to leverage customer service now will be able to embed it as an extension of their brand, giving them the opportunity to leverage this asset later if competitors sacrifice customer service for automation.
Training initiatives will be necessary to boost customer service.
When retailers use customer service as a key differentiator, they need to ensure their employees are informed, up-to-date and know how to sell a specific product offerings and communicate ongoing promotions. Today, it is still especially difficult for chain stores to effectively extend unified training programs to large workforces across numerous locations and execute campaigns. To combat this, chain stores can now implement employee engagement platforms that provide readily accessible communication and training functions across desktop and mobile platforms. Some of these platforms even include gamified learning programs to educate and evaluate employees quickly and efficiently, providing them with product knowledge that will become the store’s competitive edge.
Regardless of whether retailers see Amazon Go as a revolutionary offering, a major threat, or both, they should take note of Amazon’s grab-and-go vanguard technology as the next step in customer experience evolution. As evidenced by automatic cash registers, price scanners and anti-theft security, technology is not the enemy of retail. Rather than running from new developments, retailers can respond by leveraging what may become their key differentiators: informed employees and quality customer service.
Will Eadie is the VP of sales and strategy for WorkJam, an employee engagement platform for the service industry.
Commentary: Downtick in February largely a temporary blip
After solid start to the year, retail is now back in softer growth territory. While the 2.1% rate of overall expansion is not disastrous, it is much lower than the past few quarters and is largely the result of higher gas prices which buoyed sales at gas stations by 15.8%. The pure retail number is more concerning, with the 0.8% increase being the slowest growth recorded since February 2013.
There is, however, some comfort to be taken in the fact that February 2013 is the last month in which growth was so anemic. In that year, the IRS delayed tax filing and refunds due to changes in the tax code. This mirrors this year’s various tax refund delays, something that has affected the amount households have to spend on retail. Back in 2013, retail sales growth bounced back in the months following February; a pattern we expect will be repeated over the coming reporting periods.
The other, albeit, smaller factor that needs to be accounted for is that 2016, the comparison against which this year’s figures are made, was a leap year. This is not accounted for in the non-seasonally adjusted figures and so dampened growth. The February 2013 figures also suffered from this impact as 2012 was a leap year.
Given all this, it is fair to say that the downtick in spending during February is not the result of structural factors or a downswing in consumer sentiment; it is largely a temporary blip. The evidence from our own sentiment tracker, and other indicators such as the labor market numbers, backs up this view: There is nothing to suggest that the consumer economy should be losing this much momentum.
The tax refund dynamic also shows up in where the declines are coming from: discretionary categories have suffered far more than non-discretionary. Electricals, a product category many people indulge in when spending their refunds, has recorded a year-over-year sales decline of almost 10%.
As much as this softening of retail numbers is temporary, it would be imprudent not to recognize that there are some underlying pressures on retail that may take some of the edge of growth over the coming months.
The rise in fuel prices is foremost among these. Although there are now signs that pump prices are moderating and may start to fall as spring approaches, there is no doubt that consumers are paying more to fill up their vehicles – something that puts a dint in the amount they can spend elsewhere.
Discounting levels are another feature of the market which will dampen growth. This is something that has affected apparel players for a time, and it is now starting to impact food retailers in a more significant way. All in all, it points to a year that will see reasonable growth, but one in which margins will be under pressure.
Neil Saunders is managing director of GlobalData Retail.
Christopher & Banks Q4 disappoints; to roll out merchandising changes
Changes are coming to Christopher & Banks Corp.
On the heels of a 7.8% decrease in its fourth quarter sales, the women’s apparel retailer is launching a new merchandising strategy that include a bigger focus on fashion over core items.
Christopher & Banks also will review styles on a weekly basis to identify emerging trends and mark down slower-moving products, said interim president and CEO Joel Waller on the company’s quarterly call with analysts.
The retailer’s net sales fell 10.1% to $85.0 million amid 499 stores, compared to $94.6 million in the year-ago period while operating some 534 stores.
The chain reported a loss of $17.2 million in the quarter, compared to a loss of $37.5 million in the year-ago period.
For the year, Christopher & Banks reported that its loss narrowed to $17.8 million, or 48 cents per share. Revenue was reported as $381.6 million.
“Given that we are making a number of changes in the business over the next several months and that enhancements to the merchandise assortment are not expected to be fully reflected until the third quarter, for the near term we will not be providing sales and EPS guidance,” Waller said in a prepared statement. “Overall, we believe that these strategic initiatives will strengthen our competitive positioning within the retail landscape and will drive improved and more consistent financial performance for our stakeholders over the long term, beginning in the second half of fiscal 2017.”