Ever since Amazon opened it’s first Amazon Go store in Seattle in December 2016, the press has been full of stories of how ‘grab n go’ shopping will be the future of retail and yet we have seen Sainsbury’s have to roll back from a till free concept in Holborn and re-introduce physical tills. So are consumers more resistant to change than originally thought or is this just a bump in the road?
In China, shoppers have been seemingly much more accepting of an unmanned retail experience with the likes of Auchan and Bingobox offering consumers a 24/7 shopping experience in small convenience formats. With other prominent brands in Asia such as Tmall and Mobymart also trialling fully automated retail offers, it seems the Chinese consumer at least is happy to trade off human interaction for convenience in certain categories.
In Europe, the march towards automation has been much less clear cut. One entrepreneurial Swede decided way back in 2016 that a fully automated convenience store was the only financially viable model to afford a store in his remote village and founded Naraffar.
Local growers in Austria have also piloted an innovative container formats to sell organic, regional produce under the Landspeis brand. However, it’s noticeable that there has been less activity from bigger multinational brands in this space. Auchan has opened a pilot of the aforementioned Minute formats in France, initially to employees and Carrefour is looking to trial a similar format in Brussels but other than that, despite the hype, there have been very few viable formats brought to market.
In the UK, Tesco have partnered with Israeli start-up Trigo Vision to develop a fully automated store and AmazonGo is rumoured to be looking to open it’s first cashierless store in London shortly.
Sainsbury’s proudly announced the first till free grocery store at Holborn Circus back in April. Whilst the press releases were quick to point to the promises of technology ( ‘We know our customers value their time and many want to shop as quickly as possible - technology is key to that’. Said Sainsbury’s CDO Clodagh Moriarty at the time), Sainsbury’s were very open that this was an experiment rather than the start of a new format roll-out.
For many shoppers though it seems like a fully automated experience didn’t fulfil on these promises. Whilst 82% transactions in store were already cashless, it seems shoppers wrestled with some of the basic elements necessary to make this journey a success (e.g. QR codes, signing up to in store WiFi) . Perhaps more tellingly, many shoppers were simply unwilling to accept a purely app-based experience and wanted to pay by cash or card. In the absence of any tills, they simply formed long queues at the Helpdesk and asked to pay there instead.
Whilst some of these technology based issues are undoubtedly teething problems, it seems there are more significant hurdles in the way of complete automation . Firstly, the adoption of mobile payment services lags way behind Asian economies. In China, some 54% of all transactions are made using 3rd party payment services such as WeChat and Alipay according to the latest Ipsos figures (that’s more than cash and card combined). Whilst undoubtedly on the increase, it’s estimated only 24% of users have adopted mobile wallet solutions in the UK.
Secondly and, perhaps more importantly, is the overarching wariness many UK consumers still have towards many self service solutions. As a result some retailers such as Morrisons have swum in completely the opposite direction to the industry tide by removing swathes of self service tills.
Whilst it’s easy to point to slow consumer adoption of technology, it would also be fair to say many retailers only have themselves to blame. Whilst the number of self service tills has mushroomed (From c. 7,000 in 2008 to c. 42,000 in 2015) , it’s questionable whether the experience has matched this growth. In one survey, 93% UK shoppers admitted that they found the experience frustrating and Tensator found that 1 in 3 shoppers had walked out of store without the goods they intended to buy.
Even today, many self service journeys are fragmented and painful with the clear objective to strip out cost rather than deliver a better customer experience. Take High Street stalwart M&S which has seemingly employed a dual track strategy both to remove manned checkouts but also simultaneously to remove bar codes from a wide range of SKU’s. The end result is a self service journey which is like using an ATM when you have to make up a new PIN for every transaction.
By contrast, McDonalds deserves credit for trying to re-imagine the customer journey in a way which not only makes best use of digital technology, it provides a better end to end experience for the diner. Whilst McDonalds is trialling a 100% self serve format (McDonalds To Go) in Fleet street, in most restaurants customers still have the option to order in their time-honoured tradition should the new screens not be for them. In the short term at least, offering choice whilst customers adapt behaviour to changes in the experience feels crucial to any shopper experience.
Sainsbury’s should be applauded for such an open and honest assessment of the performance of their trial. We talk a lot about ‘test and learn’ but it’s rare to see such a high profile brand go public with their learnings and admit they may have pushed too far, too soon. Yet at the same time we should view this as a cautionary tale. In most cases those working in marketing and innovation departments of big brands tend to overstate the technology adoption of the customers whom they serve.
This has led to some ill-judged decisions in other areas of the marketing mix (media buying being one notable example) and we need to ensure that the same costly mistakes are not replicated in the customer experience. ‘Playing the long game’ and offering shoppers choice and guidance alongside a well-designed self service experience will prove far more successful in seeing customers change their habits rather than trying to force them down a poor journey designed with little empathy for the shopper...