Image Source: 7-Eleven
Is Unattended Retail Where Retailers Want To Be?
New enhanced vending machines, new deployments of Just Walk Out-style technology and other unattended retail setups have been appearing more frequently lately, leading some to say that the space is undergoing a technological boom.
A recent article by Vending Market Watch says retailers should be aware of the latest crop of unattended retail solutions to remain competitive. The report points to several recently developed unattended retail solutions that purport to meet shopper needs in new, and in some cases previously impossible, ways.
The article focuses on a new generation of vending machines that allow customers to scan their payment method on the side of the machine, open the door, select and take the product they want and get automatically charged when they close it. Such machines, some of which use AI to manage inventory, allow operators to stock a much larger array of products than what has traditionally been found in vending units. Some solutions enable operators to stock hot meals or both cold and room-temperature selections in the same machine.
The article also discusses players in the enhanced vending space moving into adjacent categories, like, Amazon Go-style unattended stores, as well as stores that consist of multiple next-gen vending machines, freezers, coolers and cabinets in a single location that customers can shop from without interacting with staff.
Unattended retail was picking up steam in the U.S. before the novel coronavirus pandemic and got a significant boost in popularity starting in March 2020, when customers sought to undertake transactions while limiting face-to-face contact to reduce the risk of COVID-19 infection.
In some spaces where robotic vending was anticipated to gain a foothold, the technology has yet to take off. For instance, Gap has talked about stocking clothing in smart vending machines going back to 2015, but such plans have yet to materialize.
Not all unattended retail concepts have proven popular with customers.
For instance, last year, pick-up-only Starbucks locations with no interaction between barista and customer drew criticism on TikTok.
Both enhanced vending machines and fully unattended stores also raise potential concerns about shrink, an ongoing problem at retail.
Discussion Questions
DISCUSSION QUESTIONS: Is unattended retail still poised to be popular with American consumers? Which unattended retail applications do you expect to gain favor?
Poll
Loading …BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Unattended retailing has a place, but it’s no replacement for a true retail experience. Amazon is closing Amazon Go stores, and progress on ‘just walkout’ technology appears to be stalling. I don’t believe that consumers love unattended retailing, but rather what they want is a friction free experience. From the retailers perspective, unattended retail may have the upside of lowering operating costs from labor savings, but a soleless store experience will not be a winning proposition.
Yes. Friction Free! What could be more friction free than “just walk out”?
A cynic might argue that “just walk out” is more popular than ever…just not in the way retailers intended.
Self serve and unattended retail do little to build brand differentiation or loyalty, however they can be useful when strategically placed, but should be used as part of a larger ecosystem, not as a core offering.
I see Amazon One leap-frogging Just-Walk-out (JWO) as JWO is investment heavy and it has not proven to provide the ideal customer experience as promoted. It will have a place in environments such as stadiums or some convenience applications but the return to in-store shopping post-COVID proves that customers want the experience of interacting with people and environments.
I did find JWO to be convenient and helpful at a couple of Seattle Mariner’s games recently. At a sports event, there is absolutely no value, and likely negative value, in having a human help me get my hotdog, peanuts, and Diet Coke.
This is really segment specific, as one size doesn’t fit all. Grocery, warehouse, C-stores, QSR, and drug segments are all targets, but specialty retailers need more intimacy. Micro Fulfillment Centers (MFCs) have been slow to grow in grocery, but show tremendous promise. This space will grow as people costs skyrocket as the market forces retailers to pay a living wage.Â
IoT connectivity, along with RFID and various other smart tech, have combined to make just about any type of unattended retail possible. It’s all about risk, reward, and putting products everywhere the customer wants them.
As in the past, shopper preferences will shape the store of the future in all its variations. Are vending machines stores? Retailers should think of them as such. Then there’s shrink, actually organized crime. In some countries, thieves outsmart “safe” ATMs by stealing the entire ATM. We should expect the same for vending machines and stay ahead of the thieves’ game.
Too often, people associate unattended retail with just self-checkout. Beyond self-checkout, unattended retail encompasses: online order pickup lockers, sales floor kiosks, price-checker machines, in-store-mode customer apps, etc. When thinking about it holistically, then I would say yes, unattended retail is continuing to gain steam and will have popularity with consumers when implemented strategically and effectively. But they need to be complimentary of the larger store experience that should have knowledgeable and helpful store associates and options for customers to not use these tools as well.
Unattended retail will evolve into a terrific solution for some products in some environments. It will broaden access to products and help to minimize costs. It will work great in an environment of Knowns. For any product or service with a fair amount of Unknowns or potential questions, it will always be a pleasure and a great experience to be able to deal with a human being.
I can see some applications where consumers will embrace contactless commerce, like stadiums and travel retail. I do think there should be some type of offering to the consumer, however, as it is quite apparent that the retailers are saving on staffing and asking the consumer to be their own associate.
Vending machines? No, thank you. What could add more friction to the shopping experience?
Unattended retail? To me, it is the holy grail. Frictionless shopping is ideal for the customer and the retailer. In ten years, this type of shopping will be universal. The cost will drop dramatically. (They always do with technology.) The performance of the technology will be more sophisticated, accurate, and faster.
For unattended retail options, category and context matter.
Grocery’s familiar CPG brands are a better fit for unattended modes than highly personalized apparel.
Long lineups (in airports, sports venues, amusement parks) and a sense of urgency make guests crave time savings.
Retailers seem to be stuck in a circular reference related to making as few humans available to customers as possible while maximizing profit. Does unattended retail mean those retailers aren’t concerned with shortage? Access to merchandise behind lock and key due to high shrink is a concern for others. No sales $ mean no profit $. Every sales channel has it strengths. (Witness the DTC online only businesses that are expanding to physical presence.) Determine what those are and pay to play.
There is a time and place for unattended retail. It’s not a replacement for a retail experience- it’s useful at times but I see theft being an issue in stores with a varied assortment of product. Thieves will figure out a way to outsmart systems and the retailers will have to invest in added security measures to ensure product protection.
Systems will likely do a better job on shrink than in-store associates do now.
Unattended retail provides retailers with the opportunity to expand their geography with a limited product line, without significantly increasing their real estate or staffing costs. This works best for categories where consumers already know exactly what they want, and are attempting to complete the transaction as quickly as they can. The greatest risk of unattended retail is the lack of differentiation. When all you are providing is access to a product and an expedited checkout, your services can easily be replaced by a competitor, and brand differentiation will suffer as a result. Net of everything, unattended retail can help retailers grow but must be done with great planning and caution.
Unattended retail will continue to evolve and mature in the segments where it makes sense. Stadiums and other quick serve verticals are a perfect example of a vertical where there is a dearth of available labor and little need for upsell and minimal expectation for brand loyalty.
It will grow based on consumer expectations/acceptance of new models. Retailers will continue to experiment with new models including lockers for picking up prepared foods in the airport, which probably would have been far from acceptable 10 years ago.
Remember when the Automat was going to be the restaurant of the future? Or, when Amazon walk-out retail was going to threaten grocers across the country? Neither worked out. The reality is, except for a very specific niche of products, customers aren’t willing to use vending, robotic or otherwise. If you had a list of 10 items and were forced to select and pay for each item individually, even seemingly frictionlessly, that experience would have almost everyone running back to their traditional checkout.
Japan, with its endemic labor shortages, have of course embraced vending machines – and the gachapon shops are cute – but convenience stores still have a couple humans working the counter and keeping the shelves stocked at all times. Yes, automated payment kiosks at the checkout counter but always someone making eye contact (if ever so briefly). Automation can help, but retail is all about people.
Unattended retail is in line with vending machines, and there are 5-7 million of these in the US generating over $20B per year, so it’s definitely a lucrative business model. However, traditional retailers won’t be seeing dramatic growth here. The exception will be in where Amazon has placed their dollars- stadiums, events, airports, and fast convenience based or transportation hubs (bus terminals, train stations). Unattended retail is ideal for fast convenience plays across industries, especially food and beverage. Unfortunately, the JWO style stores aren’t yet a viable business model except in these niche plays. The higher margin products combined with automated, immediate fulfillment make unattended retail worth it for those in transit or occupied with a ballgame or concert.
Both enhanced vending machines and fully unattended stores also raise potential concerns about shrink, an ongoing problem at retail
Well, this is now at least entering the conversation…a small, but crucial, step. In answer to the poll, my thoughts are somewhat paradoxical: yes, I think it will be more popular – “prevalent” would be the better word – largely because it’s been virtually nonexistent heretofore; but that’s not to say it will become “popular” (what’s the word for something that has a surge yet never really catches on ? oh yes: “fad”).
Methinks a big problem with all of these is that there doesn’t seem to be any way to fix things if something goes wrong. We’ve all had the experience of getting (from a vending machine) the wrong candy bar, or maybe nothing at all; now imagine the same with a 135.99 purchase. Word of a few such missteps will do much to kill acceptance.l
Unattended retail related to vending machines can continue to grow in the US but likely in niche use cases. Earlier this month I was in Japan for the first time and that opened up my eyes to a few approaches in the form of vending machines. I visited one of the stores from the vending machine retailer, Amusement Cue, and found it interesting and entertaining as it was quite busy!
Two applications could be toys and electronics. A toy vending machine store in areas where there are children or popular vacation areas may be an opportunity. Also, electronics/phone accessory stores could be another niche in high-traffic areas where people may need a charging unit or other electronics. However, it’s going to take time for more formats such as ones relating to apparel or luxury goods to catch on with Americans.
Unattended retail will play a stronger role in many types of retailers going forward, where labor can be saved, where security and thefts are concerns, and where customers want it. Some customers are fine to serve themselves, even prefer it in some cases if they can avoid asking for help or be able to customize their product. Think beverage crafting machines, health and beauty products, expensive items like electronics and related accessories.
This then opens up the door for remaining parts of stores to have remaining employees to be service experts and take care of customers where its needed and most valued.
Walk into a store, pull something off of a shelf and leave without the hassle of the checkout process. Busy American consumers not have to waste time in line, and this creates a frictionless shopping experience that customers are craving for. There are many technologies that are enabling frictionless commerce and there are plenty of examples of how it is provides value to consumers. For example, Uber lets consumers get a ride to wherever they want to go without ever having to pull out their wallet to pay.
Second example is Amazon Go, a brick-and-mortar retail and grocery store powered by Amazon, which allows shoppers to “Grab and Go” without ever having to wait in line to pay for their items. Amazon Go is currently being piloted with three stores. Customers are growing used to this type of stress-free experience, and customer spend their money at the places that understand how they want to shop.
Unattended retail? This is another techno-gimmick whose novelty will eventually wear off. Most grocers strive to operate stores that enjoy shopper loyalty because of first-rate customer service. They will not be a candidate for unattended retail.
Unattended retail i.e. vending machine model is an option based on location, it isn’t a killer solution. There is always a place for service and browsing /cross sell upsell. Vending machine is a point delivery solution, no more, no less.
It all comes down to more options and flexibility to make the customer experience seamless all while aligning to what the brand wants to stand for. There are times in a luxury branded store when I’d love the help of an associate and that clienteling experience. Yet, I don’t want to wait 15 minutes in line to checkout at a store. I also love the convenience of vending machines in airports for those common items that you realize you forgot upon landing. I was recently in the Cleveland airport and thought the Lego vending machine was genius for those family travelers stuck with delays and needing entertainment for their children.
It all comes down to more options and flexibility to make the customer experience seamless all while aligning to what the brand wants to stand for. There are times in a luxury branded store when I’d love the help of an associate and personalized experience. Yet, I don’t want to wait 15 minutes in line to checkout at a store. I also love the convenience of vending machines in airports for those common items that you realize you forgot upon landing. I was recently in the Cleveland airport and thought the Lego vending machine was genius for those family travelers stuck with delays and needing entertainment for their children.
It seems that unattended retail is a good option for retailers that aren’t willing to invest in the people who lead and work in their stores. (Hopefully, the tongue-in-cheek is recognized.) I’m afraid that is too common. On the other hand, retailers who have figured out the value of investing in-store teams are some of the most successful, i.e. Tractor Supply, Wawa, The Container Store, IKEA, Bass Pro/Cabelas, Segmueller
(Europe), Praktiker (Europe), and Aubuchon Hardware. I believe the quest for reducing store labor is effectively driving more customers to e-commerce. Sometimes that is intentional, however, I believe all to often it is just the result of mistaken strategy.
(Disclosure – I work for Microsoft and have had involvement in some unattended retail initiatives. Any opinions here are my own and not those of Microsoft)
Given the pressures on retailers in terms of labour costs/shortages it is not surprising that unattended retail is attaining traction. As costs come down this will potentially become more prevalent. If you look at how self-scan has developed over the past 20+ years it could follow a similar route.
If you want a view of how things could look going forward it is worth looking at Polish retailer Zabka and what they have done with their Nano stores – some great videos on YouTube.