You may have heard this week that Amazon.com will open a brick-and-mortar grocery store early in 2017 called Amazon Go. If successful, the formerly online-only retailer would corner even more of our shopping dollars by siphoning business from traditional supermarkets and big-box stores.
But why would anyone want their groceries from Amazon, as opposed to Whole Foods, Trader Joes and the like? One reason is because traditional check-out lines will disappear: Amazon’s invisible matrix of technology in the building will allow shoppers to fill their bags and walk out without going through a checkout process or interacting with a cashier. But of course that not only reduces the time needed for shopping; it also removes more human actors from our everyday lives.
Here’s how Amazon Go works: shoppers download an app and swipe their phones when they enter the store. Then they grab their groceries. In a process that has not been disclosed, but that somehow involves computer vision and artificial intelligence, every item put in one’s cart is tracked on the phone. Items returned to the shelf are deleted. When shoppers walk out, their bill is tallied and a digital receipt pops up on their phones. Payments are automatically made through the customer’s Amazon account. This video produced by the company offers visuals that might help you imagine what that will look like.
As Amazon’s hometown, Seattle will host the first store, scheduled to open early 2017. If the concept catches on, it raises serious questions for workers across the retail industry who could also be replaced by this surveillance technology. Obviously, Amazon Go won’t need as many workers as stores that use on cashiers and clerks. What happens if other chains want to save labor costs and remove humans from their stores?
There are other ways that Amazon Go might put competitive pressure on traditional retailers. For one, the store is geared toward fill-in trips (quick errands when shoppers need just a few items – often pre-made meals and basic household goods like toothpaste or toilet paper). This means the space is only 1,800 square feet. In recent years, drug and convenience stores have become big players in covering these kinds of shopping trips – and posed as serious competition to supermarkets in offering those goods. The Amazon Go model could now compete against chains like CVS and 7-Eleven. And in light of the store design featured in Amazon’s video, the space will have the look (and selection) that aims at luring in Whole Foods customers.
The company says it will sell prepared foods made by “on-site chefs,” meaning it will target the dining dollars currently being spent at fast-casual and carryout restaurants. Amazon Go also plans to sell prepackaged meal kits with the ingredients to make a home-cooked dinner for two. That could be competition for the trendy new meal kit start-ups like Blue Apron and HelloFresh.
Amazon’s decision to sell groceries in physical stores would seem to be an acknowledgment of how hard it has proven to sell them on the Internet. Despite the explosive growth of e-commerce, grocery has largely remained an old-school business, with less than 2 percent of sales taking place online.
Major grocers were not surprised by Amazon’s announcement: rumors have been in circulation for over a year that the online giant planned to go brick-and-mortar to capture our food dollars. And the e-commerce company has already crept into this territory in recent years by by opening physical bookstores. In the end, though, it’s not the Krogers, Whole Foods or 7Eleven executives we should be worried about. It’s the millions of American workers who could be replaced through automation and smart technology increasingly creeping out of the internet and into our physical landscape.