July 17, 2024
Photo by TR on Unsplash
Is Starbucks Paving the Way for Mainstream Walk-Out Cashierless Stores?
Starbucks has just upgraded its two exclusive New York cafes that use Amazon’s Just Walk Out technology. This move enhances the experience for patrons who prefer to use their smartphones when shopping and simplifies the process for staff.
Starbucks teamed up with Amazon to open the first of its two current cashierless stores in NYC in November 2021, located at 59th Street between Park and Lexington Avenues. The companies opened their second Just Walk Out location in July 2022 at 40th Street and 8th Avenue at the foot of The New York Times Building.
According to TechCrunch, Amazon’s Just Walk Out Technology evolved the lounge area to where customers can gain entry by scanning their credit cards, using the Amazon Shopping app’s “In-Store Code,” or by using Amazon One to scan their registered palm at the onsite terminals. Inside, they will find “a small Amazon Go market containing a curated selection of customer favorites from both companies.” Items picked from the shelves are automatically added to their virtual carts, with charges applied after they leave, similar to other locations utilizing Amazon’s Just Walk Out technology.
Now, the first two stores have been upgraded to have “a more intuitive system, making it easier for our Green Apron partners to offer exclusive merchandise and ready to eat/drink items, and for customers to enjoy a seamless smartphone experience,” Jessica Mills, senior director of experience innovation for Starbucks, said in a LinkedIn post. Customers can now “tap” into the Starbucks lounge area and leave with their purchases without waiting in line.
According to Mills, the two stores with Just Walk Out technology serve as “incubators and learning centers, with several programs and insights being scaled across Starbucks.”
However, there are still hurdles ahead. Earlier this year, Amazon announced plans to begin replacing its Just Walk Out technology with Dash Cart in 27 of its 44 Amazon Fresh stores in the U.S. due to customer feedback. Just Walk Out will remain in Amazon Go stores, smaller Amazon Fresh stores in the U.K., and over 130 third-party locations.
According to Amazon, “Customers value Just Walk Out technology because they are usually on a ‘mission driven’ shopping trip, making quick purchases of relatively few items, and can shop just like they would in any other store without standing in line to pay or scanning items at self-checkout. In fact, the response from shoppers to Just Walk Out in small-format stores has been so strong that we will launch more small-format third-party Just Walk Out stores in 2024 than any year prior.”
In comparison, the retailer noted that customers seem to prefer the Amazon Dash Cart — its smart shopping cart — when shopping in bigger grocery stores and making more substantial weekly purchases. The Dash Cart utilizes the same computer vision technology as Just Walk Out, and it allows customers to skip the checkout line. Per Amazon, the cart also “serves as a shopping companion that travels through the store with a customer, helping them locate items with an on-cart screen featuring maps and navigation, and receive personalized shopping experiences, all while tracking their savings and spending in real time.”
Amazon is confident that Just Walk Out technology will thrive in stores with curated selections, allowing customers to quickly grab items and leave. As of April 2024, over 18 million items have been sold in Just Walk Out stores, now present in more than 140 third-party locations across the U.S., UK, Australia, and Canada.
Examples of success include an 85% increase in transactions at Lumen Field and a 56% revenue boost for Market Express at ExCeL London. Just Walk Out also optimizes staffing and allows extended, even 24/7, operation, increased sales, and reduced theft. Amazon is expanding its use in smaller-format stores while improving the technology for larger stores with better algorithms and sensors.
While online chatter has asserted that Amazon uses employees in India to operate the Just Walk Out technology, Amazon claimed that it does not rely on human reviewers for receipt generation. Instead, Amazon’s AI models, continuously improved by annotating synthetic and real shopping data, handle this automatically. Amazon stated that human associates only label and annotate data to enhance the system’s accuracy, similar to other AI technologies.
BrainTrust
Jamie Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Mark Price
Adjunct Professor of AI and Analytics, University of St. Thomas
Michael Zakkour
Founder - 5 New Digital &International Marketing Lead at UNILEVER
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Discussion Questions
How might this trend influence consumer behavior and expectations in traditional retail environments regarding convenience and personalization?
Considering the operational benefits and increased transactions in stores using Just Walk Out technology, what critical factors will determine the scalability and long-term success of this technology across diverse retail sectors and markets?
With Amazon shifting to Dash Cart technology in larger grocery stores, what implications could this have for retail operations and customer engagement in expansive retail formats, and how might it reshape the grocery sector’s competitive landscape?
Poll
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There are two distinct features in these stores. One is the pre-ordering facility on the app for coffee and drinks. This is not new and is something a number of Starbucks stores offer. The idea is a good one, but it causes a lot of issues when lots of orders come in at once and stores can’t cope. The other feature is the just walk-out technology. This only works in a lounge area and is only for products that don’t have to be ordered at the counter. Given the need for a separate area, and lingering questions over the cost and accuracy of just walk out tech, I cannot see this being rolled out to the bulk of the fleet.
The discussion of cashless purchases at Starbucks is a strange one. Starbucks mostly offers customized drinks, which currently must be prepared by staff behind the counter. I am not aware of what percentage of sales comes from the cold case or prepackaged coffee and mugs, but I cannot imagine that it would be a very high percentage in store. It seems to me that for Starbucks, increasing the ease of ordering and improving the customer experience on the app, as well as improving staffing to meet demand peaks would be higher priorities.
The move to self checkout and cashless checkout in other retail, however, represents the dissatisfaction that consumers have with waiting while attempting to check out as quickly as possible. Historically, the cashless checkout at Amazon Go or Amazon Fresh stores has had to deal with excessive shrinkage — consumers who are either stealing items or missing payments due to imperfect technology. There’s no question that this technology is coming, with the improvement of the speed of in-store Internet the introduction of AI and consumers increasing desire for more convenience. It’s just a question of when.
The Seattle superstars’ partnership will shift consumer habits as operations and payments evolve.
More Starbucks customers will order ahead online to personalize their orders and skip the long wait near the baristas.
Just Walk Out’s time savings will motivate more customers to swipe their credit card, smartphone or palm to pay for swift service.
Testing, learning from and quantifying the ROI of JWO will help Amazon scale and sell its proprietary technology to even more retail chains.
The critcal factor limiting this is theft (how many times must this be repeated?) The Starbucks example seems even less intuitive: yes, it might be useful for items that are sitting in the open for ready access, but what percentage of a SB store is that? Most drinks – anything other than a self serve coffee dispenser – require a server, so the advantage, if any, seems small.
Starbucks for years has watched its customer visit behavior morph into two camps, those in a hurry/asap, and those who sit in store, take in the experience. And sometimes a customer switches their visit behavior the next day at the same location depending on motivation. Testing Just Walk Out technology gives Starbucks a chance to measure visit outcome improvements for that same customer, as well as save labor and real estate expense.
While Dash Cart tech may be the grocery store winner, Just Walk Out tech is an effective and successful platform for small venues with high traffic in a hurry. And the tech hardware math pencils out better in those spaces. Lumen Field, Climate Pledge Arena, and several airport locations are proven operating examples of this winning formula with packaged food, fresh food and even alcohol sold in fast fashion, no hassles. The future looks bright for Just Walk Out by Amazon. And Starbucks might yet give it another boost.
For confirmed Starbucks customers who like to pre-order on the app, just-walk-out could be a fairly natural next step. The drink has already been paid for with a remembered credit or debit card, so the idea, I think, is to also grab a breakfast item or pre-made sandwich during the pick-up encounter.
An alternative scenario might bypass the barista altogether, with the customer just stepping into the lounge to grab a food item and a packaged drink, with minimal friction.
I believe Starbucks/Amazon can make the tech function properly. It’s the benefit that I’m less sure about. Are their guests really in that much of a hurry?
Starbucks Mainstream Walk-Out Cashierless Stores are designed to improve the efficiency and convenience of the customer’s buying experience by making the entire transaction quicker and easier.
It is unlikely that cashierless stores will become an integral part of every major retail chain in the near future, but they are becoming increasingly likely not only in Starbucks, but also in other fast food outlets.
Computer vision, sensor fusion, and machine-learning algorithms are used to enable frictionless shopping, which allows consumers to tap into the lounge area and walk out with their purchases without standing in line. How can that be bad?
Early prototypes produced high volumes of customer orders, but associates were not satisfied with the product due to space limitations and the inability to interact with customers. In response to that feedback, the team began a new process and developed Starbucks Pickup.
It is my opinion that the improvements in technology will come relatively quickly, and I do believe that this will be the new future. Db
I have worked with a number of organisations on this type of technology. There are a few things to think about.
- Firstly consumer acceptance – there is an educational or change management perspective from a consumer / end user perspective to get around. It is a huge change. (I have even been in one of these stores accompanied by the team from the retailer, watched a customer come in, pick something up and leave – having to stop myself from saying ‘hey they forgot to pay’.
- These staff free stores are all about footfall – having a high footfall or perhaps a very high footfall at very peak periods – but ultimately where people are very short of time. Examples are transportation hubs like train stations but also sports venues where there is a massive peak in demand just before the start of play and then again during half-time or another intermission.
It could well be that use in sports venues and other high traffic locations could pave the way and act as the consumer ‘change management agent’. At the same time as experience increases and the price of the supporting technology reduces this creates a focus whereby wider use expands.
A great part of Starbucks’ appeal over the decades is it being the “third place” between work and home and as a place to work or hang out. That said times have changed and many customers want to get in and out as fast as possible, which I believe pre-ordering on the APP covers. I am struggling to see how JWO is a benefit here. I see it as causing more problems at scale than it solves.
I’m a huge fan of technology if it can enhance the customer experience. In high traffic, grab-n-go locations like airports, train stations, urban corner spots, Just Walk Out (JWO) has incredible merit and should be tested like crazy. But this doesn’t represent the bulk of Starbucks footprint. The high majority are in slower urban, suburbia areas where drive-thru and Howard Schultz’s vision of ‘third place’ dominate (a place between home and office, a place to meet friends, read or do work in between meetings). In these locations, there is a tremendous need for improved drive-thru technology and execution. I’d advise Starbucks to take a page out of Chick-fil-A’s drive-thru playbook and execute, execute, execute.
This is not a new development, considering the typical Starbucks customer journey has already shifted to a quasi. “Just walk out” operating model with all the pre-orders on their mobile app. The Starbucks customer experiences in most cafes have catered to mobile or drive-up orders, with the cafe dwellers becoming almost an afterthought.
Starbucks has not served as the third place to work or socialize, as their cafes are often overwhelmed with customized mobile orders. The overall in-cafe experience has been underwhelming due to the lack of customer service, a welcoming cafe space, and the volume of customers flowing in and out of Starbucks, creating a chaotic environment that does not encourage people to stay there.
Starbucks already has a version of this, it is called their mobile app. Order on that, go in, pick up your drink and walk out. This takes is to another level and I wonder if this is financially driven (as in lets save the cost of the cashier) or somehow seen as a customer experience enhancer.
I would just keep promoting the app, and I would be surprised to see this expand nation wide.
Don’t know how much more “just walk out” Starbucks can be. Doubt the ability to pick up a cup and a bag of popcorn without having to check out is going to drive any meaningful traffic or sales increase.
It seems we are finally realizing that Amazon technologies are not for Amazon stores but for the world retail environment. Technological progress has always led to customer acceptance, and this will also be the case.
The potential for Amazon as they lead with these technologies is massive. I am sure someone has forecasted it, and I am sure their forecasts will come up short. Imagine Amazon having its technology in over one million retail stores around the world. Imagine that the technology just keeps getting better.
Amazon can’t even make the technology work fully in its own stores…
This makes me wonder how many people are picking up ready-to-eat/drink items because I didn’t think it was that high a number. That said, I have alway been, and will continue to be, a proponent of just walk out tech. So maybe, if this does well, it will be a good proof point for implementing it elsewhere.
Had been appreciative of the Just Walk Out outpost at the Salt Lake City airport back in December. Was in Kansas City last month, however, and the JWO location in the baggage claim there was threadbare of inventory with no footfall. Honestly, a bank of vending machines would have been a more compact use of space, consumed less energy (all those open refrigerated units holding a few bottles of Dasani), and probably yielded higher revenue. Starbucks can’t do away with staff, and shelves in this use case will have to be restocked frequently through the day, so might as well have a cheerful smile suggesting an upsell.
Good god. I hope Starbucks is smarter than this. In fact, it’s concerning that the company seems so obsessed by so many shiny new tech baubles and has forgotten the vast competitive advantage it built with its people.
In fact, I no longer enter Starbucks stores often because they are cold and forbidding – staffed by harried staff unable to balance all the demands foisted onto them by executives. A cynical view of this is that Starbucks has destroyed what makes their stores work – so why not just eliminate people all together?
This is a case of a retail chain which needs, desperately, to return to fundamentals.
I agree Doug, they have lost sight of the basics. And things like mobile ordering are all well and good, but they’ve created massive operational issues which impact customer service, store standards, and staff satisfaction.
Curious to know how many shoppers go to Starbucks only to buy their merchandise or ready-made products. I don’t see Starbucks as a destination for this. Ready-made is well-served by competitors, and their merchandise or coffee products for at-home-use can be ordered online or through other retail channels. A lot of Starbucks shoppers do pick up these products when they’re in the store to order coffee/drinks so we’re talking about asking shoppers to use 2 separate systems. Is the amount of integration required to make the customer UX of two such systems work seamlessly together with a custom loyalty point system justified by the margins implied by the implementation of expensive JWO technology?
This also raises additional questions about what type of store Starbucks is positioning themselves to be. A premium c-store at some point? The shift since the pandemic has seen them downsize their stores to more to-go models but a move away from lifestyle/experiential in-store coffee consumption changes their direct competitors. Aside from captive audience/high traffic locations (e.g. this tech would be great in their airport locations), trying to emulate small-format c-stores/grocery is a potentially commoditizing move.
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There are two distinct features in these stores. One is the pre-ordering facility on the app for coffee and drinks. This is not new and is something a number of Starbucks stores offer. The idea is a good one, but it causes a lot of issues when lots of orders come in at once and stores can’t cope. The other feature is the just walk-out technology. This only works in a lounge area and is only for products that don’t have to be ordered at the counter. Given the need for a separate area, and lingering questions over the cost and accuracy of just walk out tech, I cannot see this being rolled out to the bulk of the fleet.
The discussion of cashless purchases at Starbucks is a strange one. Starbucks mostly offers customized drinks, which currently must be prepared by staff behind the counter. I am not aware of what percentage of sales comes from the cold case or prepackaged coffee and mugs, but I cannot imagine that it would be a very high percentage in store. It seems to me that for Starbucks, increasing the ease of ordering and improving the customer experience on the app, as well as improving staffing to meet demand peaks would be higher priorities.
The move to self checkout and cashless checkout in other retail, however, represents the dissatisfaction that consumers have with waiting while attempting to check out as quickly as possible. Historically, the cashless checkout at Amazon Go or Amazon Fresh stores has had to deal with excessive shrinkage — consumers who are either stealing items or missing payments due to imperfect technology. There’s no question that this technology is coming, with the improvement of the speed of in-store Internet the introduction of AI and consumers increasing desire for more convenience. It’s just a question of when.
The Seattle superstars’ partnership will shift consumer habits as operations and payments evolve.
More Starbucks customers will order ahead online to personalize their orders and skip the long wait near the baristas.
Just Walk Out’s time savings will motivate more customers to swipe their credit card, smartphone or palm to pay for swift service.
Testing, learning from and quantifying the ROI of JWO will help Amazon scale and sell its proprietary technology to even more retail chains.
The critcal factor limiting this is theft (how many times must this be repeated?) The Starbucks example seems even less intuitive: yes, it might be useful for items that are sitting in the open for ready access, but what percentage of a SB store is that? Most drinks – anything other than a self serve coffee dispenser – require a server, so the advantage, if any, seems small.
Starbucks for years has watched its customer visit behavior morph into two camps, those in a hurry/asap, and those who sit in store, take in the experience. And sometimes a customer switches their visit behavior the next day at the same location depending on motivation. Testing Just Walk Out technology gives Starbucks a chance to measure visit outcome improvements for that same customer, as well as save labor and real estate expense.
While Dash Cart tech may be the grocery store winner, Just Walk Out tech is an effective and successful platform for small venues with high traffic in a hurry. And the tech hardware math pencils out better in those spaces. Lumen Field, Climate Pledge Arena, and several airport locations are proven operating examples of this winning formula with packaged food, fresh food and even alcohol sold in fast fashion, no hassles. The future looks bright for Just Walk Out by Amazon. And Starbucks might yet give it another boost.
For confirmed Starbucks customers who like to pre-order on the app, just-walk-out could be a fairly natural next step. The drink has already been paid for with a remembered credit or debit card, so the idea, I think, is to also grab a breakfast item or pre-made sandwich during the pick-up encounter.
An alternative scenario might bypass the barista altogether, with the customer just stepping into the lounge to grab a food item and a packaged drink, with minimal friction.
I believe Starbucks/Amazon can make the tech function properly. It’s the benefit that I’m less sure about. Are their guests really in that much of a hurry?
Starbucks Mainstream Walk-Out Cashierless Stores are designed to improve the efficiency and convenience of the customer’s buying experience by making the entire transaction quicker and easier.
It is unlikely that cashierless stores will become an integral part of every major retail chain in the near future, but they are becoming increasingly likely not only in Starbucks, but also in other fast food outlets.
Computer vision, sensor fusion, and machine-learning algorithms are used to enable frictionless shopping, which allows consumers to tap into the lounge area and walk out with their purchases without standing in line. How can that be bad?
Early prototypes produced high volumes of customer orders, but associates were not satisfied with the product due to space limitations and the inability to interact with customers. In response to that feedback, the team began a new process and developed Starbucks Pickup.
It is my opinion that the improvements in technology will come relatively quickly, and I do believe that this will be the new future. Db
I have worked with a number of organisations on this type of technology. There are a few things to think about.
It could well be that use in sports venues and other high traffic locations could pave the way and act as the consumer ‘change management agent’. At the same time as experience increases and the price of the supporting technology reduces this creates a focus whereby wider use expands.
A great part of Starbucks’ appeal over the decades is it being the “third place” between work and home and as a place to work or hang out. That said times have changed and many customers want to get in and out as fast as possible, which I believe pre-ordering on the APP covers. I am struggling to see how JWO is a benefit here. I see it as causing more problems at scale than it solves.
I’m a huge fan of technology if it can enhance the customer experience. In high traffic, grab-n-go locations like airports, train stations, urban corner spots, Just Walk Out (JWO) has incredible merit and should be tested like crazy. But this doesn’t represent the bulk of Starbucks footprint. The high majority are in slower urban, suburbia areas where drive-thru and Howard Schultz’s vision of ‘third place’ dominate (a place between home and office, a place to meet friends, read or do work in between meetings). In these locations, there is a tremendous need for improved drive-thru technology and execution. I’d advise Starbucks to take a page out of Chick-fil-A’s drive-thru playbook and execute, execute, execute.
This is not a new development, considering the typical Starbucks customer journey has already shifted to a quasi. “Just walk out” operating model with all the pre-orders on their mobile app. The Starbucks customer experiences in most cafes have catered to mobile or drive-up orders, with the cafe dwellers becoming almost an afterthought.
Starbucks has not served as the third place to work or socialize, as their cafes are often overwhelmed with customized mobile orders. The overall in-cafe experience has been underwhelming due to the lack of customer service, a welcoming cafe space, and the volume of customers flowing in and out of Starbucks, creating a chaotic environment that does not encourage people to stay there.
Starbucks already has a version of this, it is called their mobile app. Order on that, go in, pick up your drink and walk out. This takes is to another level and I wonder if this is financially driven (as in lets save the cost of the cashier) or somehow seen as a customer experience enhancer.
I would just keep promoting the app, and I would be surprised to see this expand nation wide.
Don’t know how much more “just walk out” Starbucks can be. Doubt the ability to pick up a cup and a bag of popcorn without having to check out is going to drive any meaningful traffic or sales increase.
It seems we are finally realizing that Amazon technologies are not for Amazon stores but for the world retail environment. Technological progress has always led to customer acceptance, and this will also be the case.
The potential for Amazon as they lead with these technologies is massive. I am sure someone has forecasted it, and I am sure their forecasts will come up short. Imagine Amazon having its technology in over one million retail stores around the world. Imagine that the technology just keeps getting better.
Amazon can’t even make the technology work fully in its own stores…
This makes me wonder how many people are picking up ready-to-eat/drink items because I didn’t think it was that high a number. That said, I have alway been, and will continue to be, a proponent of just walk out tech. So maybe, if this does well, it will be a good proof point for implementing it elsewhere.
Had been appreciative of the Just Walk Out outpost at the Salt Lake City airport back in December. Was in Kansas City last month, however, and the JWO location in the baggage claim there was threadbare of inventory with no footfall. Honestly, a bank of vending machines would have been a more compact use of space, consumed less energy (all those open refrigerated units holding a few bottles of Dasani), and probably yielded higher revenue. Starbucks can’t do away with staff, and shelves in this use case will have to be restocked frequently through the day, so might as well have a cheerful smile suggesting an upsell.
Good god. I hope Starbucks is smarter than this. In fact, it’s concerning that the company seems so obsessed by so many shiny new tech baubles and has forgotten the vast competitive advantage it built with its people.
In fact, I no longer enter Starbucks stores often because they are cold and forbidding – staffed by harried staff unable to balance all the demands foisted onto them by executives. A cynical view of this is that Starbucks has destroyed what makes their stores work – so why not just eliminate people all together?
This is a case of a retail chain which needs, desperately, to return to fundamentals.
I agree Doug, they have lost sight of the basics. And things like mobile ordering are all well and good, but they’ve created massive operational issues which impact customer service, store standards, and staff satisfaction.
Curious to know how many shoppers go to Starbucks only to buy their merchandise or ready-made products. I don’t see Starbucks as a destination for this. Ready-made is well-served by competitors, and their merchandise or coffee products for at-home-use can be ordered online or through other retail channels. A lot of Starbucks shoppers do pick up these products when they’re in the store to order coffee/drinks so we’re talking about asking shoppers to use 2 separate systems. Is the amount of integration required to make the customer UX of two such systems work seamlessly together with a custom loyalty point system justified by the margins implied by the implementation of expensive JWO technology?
This also raises additional questions about what type of store Starbucks is positioning themselves to be. A premium c-store at some point? The shift since the pandemic has seen them downsize their stores to more to-go models but a move away from lifestyle/experiential in-store coffee consumption changes their direct competitors. Aside from captive audience/high traffic locations (e.g. this tech would be great in their airport locations), trying to emulate small-format c-stores/grocery is a potentially commoditizing move.