The invention of the supermarket was a while ago, yet it is still the biggest innovation in the food retail industry in decades. Now, digitization is entering the markets and can offer consumers a better shopping experience — and retailers greater efficiency and new sales opportunities.
Karl Wlaschek, the legendary founder of the “cheap stores” and thus, grandfather of the modern supermarket in Austria, would probably be a fan of the “Amazon Go” supermarkets. Just as Wlaschek once made the sales assistants behind the counter superfluous and set up the assortment for customers to pick directly from the deli counter, Amazon is now eliminating the remaining “bottleneck” in the supermarket: the checkout, in front of which traffic jams and resentment build up, especially at peak times.
So far, Amazon Go is only available in the U.S. and, recently, also in the U.K. under the name “Amazon Fresh. There are vague statements about expansion in Germany and other European markets, but no concrete plans. Newspaper readers usually have two things stuck in their minds about Amazon stores: The fact that there is no need for a cash register to pay, and that Amazon is now also active in stationary retail, where the online group took over the Whole Foods chain three years ago.
In fact, cashless checkout is just the tip of the digital iceberg behind this development. It’s made possible by stores packed with digital technology — starting with the shopping cart. At first glance, one notices a tablet-sized display that continuously shows and totals the goods placed in the cart, cashier-style. When a product is taken from the shelf, sensors and cameras in the shopping trolley register this with a bell-like sound. The identification is supported by image recognition, barcodes, a scale in the trolley and further sensors and cameras in the shelf and on the ceiling.
If the product is taken out of the trolley again, it is of course booked back automatically. Customers find it particularly amazing that even fresh goods are recognized, weighed or counted in this way — probably through a combination of image recognition, weight and location in the whole store.
To shop at Amazon Go, customers identify themselves with a mobile app. This connects an Amazon account and thus a stored payment method with the respective shopping cart and offers conveniences such as the view of the digital shopping list on a separate display. The benefit for Amazon is obvious: Offline shopping is seamlessly linked with all the data that Amazon gleans from online purchases. The customer thus becomes completely transparent, not even able to escape when he or she makes a shopping trip to the real world. It’s remarkable that Amazon is only breaking its online dogma (at least for now) when it comes to groceries: after all, this segment of our daily purchases has so far largely eluded online shopping due to complicated logistics and the desire to be able to inspect fresh goods.
The highly digital set-up of Amazon supermarkets currently gives the online retailer a head start of several years. But apps like the Jö customer loyalty program show that grocery retailers have long been on the trail of this development: Users use them to make their shopping behavior transparent for retailers, enabling them to create personalized, special offers. Meanwhile, customer loyalty programs are being linked to a payment function, which opens up further possibilities.
One feature of Amazon stores is relatively easy to implement as an important digitization step: Electronic price tags — ESL (Electronic Shelf Labels) in industry jargon. One of the world’s leading suppliers of this digital equipment has Austrian roots: SES-imagotag emerged from the merger of the French SES with the Styrian Imagotag and is now active in 60 countries around the world. This digitization step has long since arrived at numerous Austrian companies.
The advantages for both customers and retailers are obvious: On the one hand, price information can be securely controlled in connection with the IT of the respective operator, and price changes, promotions and other information can be entered at any time without manual effort. For customers, the sober price information is transformed into mini web pages that can display additional information or a QR code for further information. Thanks to power-saving e-ink technology, ESLs require minimal energy from batteries — often ESLs are already integrated into modern shelving systems.
The past pandemic year has triggered a long-lasting surge in digitization in many areas, such as the home office and online shopping. Stationary retail is under pressure, which traditional supermarkets are also feeling. What would Karl Wlaschek have done to stay one step ahead again? Correct, he would have taken a close look at what his grandson is doing in spirit: Jeff Bezos.