How should retailers respond to Amazon Go? 7 experts weigh in

Last month, Amazon’s fully automated grocery and convenience store, Amazon Go, opened in Seattle to widespread coverage — and long lines of local shoppers eager to try the line-free checkout experience. Is this traditional retail’s “Uber moment?”

In other words, will Amazon Go directly change or disrupt traditional retail stores or is this merely the latest development in a long-term evolution of retail shopping? I asked a range of companies and retail experts to weigh in.

The question I asked was, “How can or should traditional retailers respond to Amazon Go?”

Some of these experts felt that Amazon Go would be disruptive, while others counseled retailers to focus on what they do best, only do it better with data and technology. The themes that emerged from the comments below are:

• Shoppers still like to interact with human associates in stores, but store employees need to be used more effectively and better trained.
• Retailers need to do a better job of leveraging their own data for insights and more interesting and personalized customer experiences.
• Retailers need to use technology more effectively across channels and to improve the in-store experience.
• Get rid of checkout lines at all cost.

Jon Carder, CEO of Empyr (online to offline commerce, rewards)

This is similar to how Uber disrupted the taxi industry by removing the friction and creating a better experience. It didn’t kill off all taxi companies, but it captured a big portion of the market. Retail is evolving, so retailers need to figure out if they can create a similar experience in their stores. Not all retail will work like Amazon Go, with a frictionless checkout, but most will. So they need to dive head-first into how they could use cameras, sensors and an app to create a checkout experience that doesn’t require a checkout. The consumer can just grab what they want and walk out — that is what the future of retail looks like.

Next after that is probably augmented reality, so you don’t even need to try on the clothes in a dressing room. The mirror will overlay it on your body for a much faster and frictionless experience. Another example of augmented reality could be customer reviews that appear next to products. It’s all about increasing speed, removing friction and enhancing the experience.

Jon Croy, co-founder and CMO of PointInside (in-store mapping and digital solutions)

The novelty of Amazon Go has caused a stir in the global retail conversation. Some see it as another sign of the impending demise of careers in retail. With Amazon Go, the pendulum has swung far to the side of self-service. It will settle somewhere in the middle where programs like this co-exist within traditional retail. Labor isn’t going away, and wise retailers will continue to invest in their people and the technology to aid associates.

Brent Franson, CEO of Euclid (retail analytics)

Let’s be clear: Amazon Go may offer an interesting retail model, but it’s a niche one. The quick get in/get out, minimal human setup lends itself well to a 7-11 but not a Macy’s. Convenience stores are all about very predictable inventory, regular turnover and all the incentives to move people in and out swiftly. An Amazon Go-like setup would really shine here.

But the rest of retail shouldn’t make a huge pivot in the same direction. Humans are social creatures, and we like social interaction, particularly in places like Nordstrom, Target and Best Buy. Any place where you might need to ask if something’s flattering, where something is, or “why this TV versus that one” needs human staffing. And it’s valued: 67 percent of consumers shop in a store because they like to see, hold and try on products before buying. That’s why smart retailers are investing in people; they understand that in a post-mobile, post-Amazon world, it’s the wise play. Apple, Best Buy, and even Dollar General are great examples of retailers focusing on making that human element really stand out as a positive and central part of the in-store experience.

That said, all retailers should be united in eliminating lines and waiting for people. No one, repeat, no one likes standing in line. And Amazon’s excellence with data is always something to emulate. In fact, in an era where Amazon is the seemingly unassailable powerhouse it is, it wouldn’t hurt for retailers to think about how they too can leverage data to better personalize their outreach based on customer needs and intent. Data cooperatives, where smaller retailers pool and share their data, are one such option that’s starting to pick up real steam.

Ed Burek, director of solutions marketing SiteSpect (website and mobile testing) 

While the rest of the retail world looks to avoid getting “Amazon’d,” Amazon just got “retail’d.” People are constantly looking to integrate the in-store and online shopping experiences, and Amazon Go exemplifies the company’s ability to leverage the more traditional image of brick and mortar, tied with its own reputation for digital innovation.

So, what does this mean for traditional brick-and-mortar retailers? It’s time to differentiate or call it quits. With the e-commerce giant optimizing every second of the customer journey, brands need to get smarter about how they curate a digital customer experience, even if they don’t have an e-commerce offering. In the past, retailers’ biggest differentiator was its in-store service and experience.

If brick and mortars really want to retain their loyal customers, they should look to develop a strategy that plays to their strengths both in stores and online, finding ways to create a personalized shopping experience that meets the needs of their target customers at every touch point. It starts with leveraging customer data not just on product preferences, but shopping behavior to gain deep insight into who their key shoppers are and better understand the new audiences they want to reach.

While traditional retailers may not be able to ever reach the same level of convenience that Amazon offers, they can differentiate their offering to be both anticipatory and tailored — setting themselves apart from the e-commerce giant and rebuilding the brick-and-mortar persona.

Carol Leaman, CEO of Axonify (employee training and learning)

Amazon Go is attempting to provide a completely computerized experience to promote “walk in, walk out” convenience. But many shoppers still appreciate the human factor and personalized, one-to-one interactions with store associates. To stay competitive in our digital world, brick-and-mortar stores must invest in their people — and ensure they have the right training, at the right time, so they can deliver an experience that a digital store just can’t do.

Sam Shawki, CEO and co-founder of MagicCube (digital transactions security)

Amazon is armed with its own strong technologies. The best way for smaller merchants to compete is for them to arm themselves with the latest tech from independent and innovative players. Thankfully, the PCI standards allow for using regular consumer devices as full-fledged point-of-sale systems, which means less investment and no management hassle. Combining this with service levels that aim to please the same way Amazon does can make a small merchant look big.

Joe Daly, COO North America payment processing, Paysafe (online and mobile payments)

Checkout-free shopping has strong, disruptive implications for retailers. It’s no secret that consumers have gravitated towards convenience when it comes to making purchases in-store or online. By removing all unnecessary steps, Amazon Go has made it faster and more convenient to just pick up an item and go, no physical payment required. The lack of friction is the future of the customer experience, including the payment process.

The data from Paysafe’s Lost in Transaction report demonstrates that a fundamental shift to a cashier-less checkout won’t happen overnight. Retailers will need to look at Amazon Go as a long-term industry evolution rather than short-term consumer trend. As only 5 percent of consumers who purchase their groceries in store prefer to pay for them using contactless payments, and 32 percent still prefer to pay with cash, retailers will need to adapt to customer expectations, both traditional and emerging checkout preferences.

This new business model has made it so that there is no longer the need to queue, reducing dropout and increasing margins. While retailers may not be willing to invest in an unproven checkout model, or able to change course and offer their customers a checkout-free experience in the immediate future, savvy merchants will need to evolve alongside this innovation by continuing to streamline the checkout process and enabling customers to easily pay in the ways that suit them best — whether it’s with physical currencies, debit cards or contactless payments.

The consequence for retailers is clear: Find ways to implement new technology to meet consumers’ growing needs for frictionless in-store experiences — or risk getting left behind.

About The Author

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.