The rise of the checkout-free store.

We are fast becoming a cashless society, with technology in the driving seat.

Retailers are going one step further and exploring the idea of the checkout-free store. Checkout-free stores became a reality initially in the US (in 4 cities), with Amazon Go using their ‘Just Walk Out’ technology. This technology relies on cameras and sensors to track what shoppers remove from the shelves, as well as what they place back on shelf. Amazon have since said they are looking to replicate a ‘Just Walk Out’ format at a new store in London.

In the UK, Sainsbury’s was the first supermarket to convert a store into a checkout-free format as a 3 month trial, back in April, conveniently located near their London HQ. Their version of the checkout-free process involves the consumer scanning items, paying using an app and finally scanning a QR code at the exit to confirm they have paid.

Tesco, the largest supermarket chain in the UK, has announced this week that it is developing checkout-free technology in some of its stores that would enable shoppers to fill their baskets and leave without having to spend time queuing for a cashier.

So, not only do you not need cash, you also don’t need to pay via a traditional method at the end of your shopping trip.

Not a queue in sight.
This marks the start of a seismic change for in-store retail. However, a note of caution is essential.

Whilst checkout-free stores are possible (and valued) by many, others do not have access to the technology required or have an inclination to give it a go. These people are at risk of being excluded from the retail in-store environment of the future. (It is important to remember that 22% of the UK population do not own a smartphone. These people should have access to an alternative.)

Using data from our Omnibus survey of 2000 UK adults, we partnered with Retail Week to uncover how people feel about a checkout-free store format, and which sectors are best placed to lead this transformation.

A more seamless customer experience?
We know that retailers are always looking to improve the in-store experience, especially with the increasing lure of the online alternative.

Behavioural science tells us that ‘flow’ is key to encouraging shopping behaviour (and repeat behaviour); humans like tasks to be as easy as possible. We also know that humans find payment psychologically painful (as it is a loss); good ‘flow’ at the payment stage of the customer journey is critical.

Humans favour the familiar over the unknown.

We are hard wired to avoid risk and do what we have always done, even if that means we miss out on novelty. This human tendency is especially pronounced when there is a high cognitive load involved – in this incidence using technology which is unfamiliar. A bias towards the familiar (a checkout store) is a significant barrier that retailers will need to overcome in the first few months and years to roll out checkout-free stores successfully

What do people prefer?
Most people express a preference for a particular type of checkout.

60% say they prefer to use manned checkouts.

We know that more than ever, people are seeking human contact. Manned checkouts provide this comfort. They’re also great for those who are a little afraid of technology.

A checkout app.
Half of smartphone users would consider downloading a checkout free app, mostly for stores they visit regularly. This lends a natural benefit to supermarkets.

We know that people typically visit supermarkets more often than any other store type, so it is unsurprising that this is where they would like to see a checkout-free option available.

Supermarket shopping, unlike other types of shopping, is rarely undertaken for leisure purposes. This means that people are especially likely to be seeking a seamless and quick experience.

The impact on customer behaviour.
“We would like you to imagine that a shop that you regularly visit has removed all checkouts. The only way to pay for your items is via the retailers app, which you will need to download to your smartphone.”

Retailers need to be careful.

51% of shoppers say they would be less likely to visit a regular shop if it went checkout free. This is particularly the case for older shoppers. Our data shows that the older a consumer is, the more likely they are to prefer a manned checkout versus a self-service one. Retailers must take note of this and consider all generations when developing the store of the future.

Our oldest generation should not be forgotten in the bid to build more checkout free stores. Many have good disposable income thanks to generous pension income, and retailers would be unwise to alienate this customer.
The under 25’s are the newest shoppers to the market, with fewer ingrained habits. We see that the majority are open to downloading an app to complete a transaction in-store without a checkout, and are even MORE likely to visit someone if this is available.

They already hold a preference for self-service checkouts, demonstrating their comfort with the technology.

The In-store Experience.
We visited the Sainsbury’s Local at Holborn Circus, and explored the customer experience for ourselves. The format of a small c-store means the removal of the bulky checkout area has released floor space for more retail space. The role of the staff has evolved, from checkout to simply being a point of reference for customers to ask for help.

The process for signing up to the SmartShop app may be a barrier for the first shopping experience, as you need to link not only your bank card, but also, ideally, your nectar card.

We should consider the impact this cashless system has on how people purchase in the store. Do they buy fewer items, or use the store more for one/two item shops? Or is it actually a barrier to purchase amongst some people?

Conclusion.
It will be interesting to see how checkout-free stores evolve. In our visit to Sainsbury’s we noted that a lot of people who entered the store weren’t actually using the app – they were using the one checkout that was manned by staff. Over time this would likely reduce, but given it is an area with high tourist footfall, it is wise to maintain a standard checkout.

I’m not sure I can quite see a future yet where we don’t pay for our goods in a standard transaction at the end of the visit – but time will tell.