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Amazon Go Gets Going

There have been two major developments with Amazon Go in the past few weeks. First, they opened a “jumbo” sized store (at least for a Go) in Seattle. And, they just announced that they would make the technology available to other retailers and just named their first partner, OTG, an airport focused hospitality group.

The Amazon Go Grocery store opened in the Capitol Hill District of Seattle at the end of February. Unfortunately, Seattle happens to be the current epicenter for Covid-19 so there has been little attention after the opening splash. Why is this store significant?

  • At roughly 10,000 square feet, it is about five times the current footprint for other Amazon Go’s. While not supermarket sized (US markets are roughlt 3-4X larger), it is closer in size to an Aldi or Trader Joe’s. One of the big questions about the technology is whether it can scale up in size and handle a larger footprint. This store certainly represents a giant leap in potentially proving this out.
  • The mix has been expanded. While the original Go’s are essentially convenience stores with grab and go items and a limited selection of groceries, the new store is far more expansive in offer, particularly with the addition of fresh meat and produce. The complications here for tracking also get a lot more difficult. Can they track an organic avocado ($1.49/each) vs. a regular avocado (.49/each)—they sell both or be able to distinguish how many bananas (sold for .19 each) are in a bunch? There are also loose bakery items for sale which could potentially tax the system.
  • Other than that, the same system as for the other Go’s is in place—customers swipe their Go app and enter the store and exit by walking out.

If this is scalable, it potentially offers much broader usage for the technology, which is also available for other retailers to license. The Just Walk Out technology will show up at select CIBO Express Gourmet Markets, with the first set to open at Teminal C at Newark Liberty airport.

This is an interesting place to test this, since OTG has been a leader in creating a seamless experience. Terminal C is fully equipped with self-ordering kiosks for restaurants and self checkouts in the stores. Just Walk Out technology seems to be a natural and logical progression. The one change to the program will be that customers can use a credit card to enable the technology versus a dedicated app. This should make adoption faster and more intuitive, as Rick Blatstein CEO said, “We know time is critical for our guests and we are always looking to use best-in-class technology to create frictionless airport experiences, and really give them their time back. We are working with Amazon to leverage their proven Just Walk Out technology in our CIBO stores – so for us it’s all about offering travelers whatever they want in the easiest and quickest way possible.”

I’ve written a few times about Amazon Go and count myself as a fan. As I’ve discussed, once you get used to not having to wait at checkout, it changes your mindset. This is not dissimilar to TSA precheck or using a toll pass on the expressway. Once you have it, you will never want to go back.

Questions still remain about the scalability and cost of the technology, its accuracy (go scour YouTube to find people working hard to game the system) and ultimately, the societal ramifications of the elimination of clerk oriented jobs customer receptivty to a people free environment. For now, it’s clear that the technology (through Amazon, Standard Cognition and others) will continue to change retail as we know it.

Neil Stern

Neil Stern

nstern@mdretail.com

Neil Z. Stern specializes in strategic planning and the development of new retail concepts. He prides himself on long-standing relationships and repeat engagements with valued clients, many extending over ten years. Neil leads the company’s food retail and due diligence sectors.

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