Tech competition heats up at the checkout
Supermarkets are increasingly becoming testing grounds for some of the latest technology. Many of us are accustomed to self-checkout kiosks where you can scan, bag and pay for your items without the help of a cashier.
At the Walmart subsidiary Sam’s Club, customers can now use an app to scan and pay for items while in the grocery aisle. Last month, Walmart sued BJ’s Wholesale Club alleging the company infringed on patents for that in-aisle, app-based technology at Sam’s Club (it’s called Scan & Go).
As the checkout technology gets more advanced, it’s getting more competitive. It’s our focus for this week’s Quality Assurance, where we take a closer look at a big tech story.
Don Apgar, merchant practice director at Mercator Advisory Group, joins us to discuss the playing field. The following is an edited transcript of our conversation.
Don Apgar: There are a number of third-party companies that do software specifically for retailers and restaurants and grocery stores. And there are also companies with a lot of resources, you know, the Walmarts of the world, if you will, that have the the resources to do their own software in-house.
Kimberly Adams: Walmart’s system has you scanning things yourself as you drop them in the cart. Could it use a system like Amazon’s, where you literally walk out of the store with your stuff?
Apgar: What [Amazon has] done with Just Walk Out is they employ a tremendous number of cameras and sensors to monitor every movement that happens, in every aspect of the store. The challenge is that there’s so many cameras and sensors that are involved in monitoring the activity in the store to determine who’s buying what, it becomes cost-prohibitive to scale that on a store the size of a Walmart, for example.
Adams: How do they make sure that people aren’t slipping something extra into the cart, or walking out with something that the sensors didn’t pick up?
Apgar: Well, that’s the biggest challenge. And that’s one of the — aside from the cost — one of the big impediments to widespread adoption of this technology. We just did a report on this in the U.K., and retailers have seen 125% increase in inventory shrinkage — or theft, if you will — by implementing just the self-scanning at the checkout. And so everything is a balance. Delivering the better customer experience and building a better customer relationship is worth something, right? And so, an increase in theft and loss is part of what it costs, in addition to the technology.
Adams: What do you see in the future in terms of these legal fights over the technologies?
Apgar: There’s always legal fights in technology. In the recent dispute between Walmart and BJ’s Wholesale, Walmart claims that they had the idea, they patented the idea, and that BJ’s clearly infringed on it. Patents only protect unique ideas for a certain period of time. And then once the patent expires, the the technology or the idea is generally available. Like automatic transmissions in cars, we’ll see the technology become widely adopted over time.
Adams: What do you think we can expect in the future when it comes to the in-store shopping experience and automation?
Apgar: We as consumers are continuing to look for frictionless and convenient experiences when it comes to shopping. One of the things that our research uncovered post-pandemic was that price is always an important consideration when shopping, but the stores that did well through the pandemic were the ones that delivered the customer experiences that customers wanted, in terms of contactless and easy to transact [payments].
Related Links: More insight from Kimberly Adams
Amazon did not directly respond to questions about “inventory shrinkage.” If you’d like to read more on its cashierless technology, Just Walk Out, the company did point us to its frequently asked questions page.
Also, if you’re curious about Walmart’s lawsuit against BJ’s Wholesale Club, here’s a link to CNBC’s coverage, which includes details from the court filings (in which Walmart claims innovations were “simply taken without permission”).
Lastly, here’s a link to some reporting from Grocery Dive laying out both existing checkout technology and technology that’s still in development, like a “computer vision system,” which is basically a kind of box into which you can put multiple items at once to scan for checkout, or a smart shopping cart that tallies up your bill as you put items into it.
The company that makes that cart, by the way, was acquired last year by Instacart.
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