Amazon introduced Amazon Go in late 2016 through a beta trial with employees for 14 months. Amazon Go delivered an optimized shopping experience to mini market style shopping where customers may go to grab lunch or purchase a few items on their lunch break. With Amazon Go, customers walk into the store, scan phone App and purchase items with no line, no cash register and no waiting. They scan the App on the way out and are automatically charged for items purchased and a receipt is sent to their phone. In January 2018, the Go store was opened to the public. In opening the store to the public, Amazon is optimizing the Go store concept for future expansions.
Amazon is using sensors, machine vision, and deep learning technologies to eliminate lines, registers and cashiers at the Go store. The company has been using artificial intelligence in its online retail business along with IoT. Amazon is also using AI in its chatbot technology used in home assistant Echo. It’s likely that Amazon will extend it’s online ordering through Echo to enable ordering fresh food from the close to 480 Whole Foods stores. Now the industry leaders are looking to defend their market share or being completely pushed out of the industry.

Industry leaders like Kroger were already investing in some technologies like using IoT sensors to eliminate manual temperature monitoring of the grocery freezers. However, the introduction of Amazon Go will cause these companies to reconsider their technology approach. They will have to move from the baby steps to more advanced technological approach presented by Amazon.

Key to these New Supermarkets:

Machine learning (ML) and Internet of Things (IoT) technologies are key enablers for supermarkets of the future. Sensors are used to track items on shelves in the supermarket and cameras are used to track customers and items in the store and initiate a charge for the items. Machine learning is used to process the data in real-time to recognize purchase patterns, track real-time inventory and visits to the store. QR code-like technology on the App checks a customer into and out of the store. While cameras track movements through the store associated with QR code which uniquely identifies each individual and items in the store.
Video cameras with laser arrays are suspended from the ceilings to track people and items in the store. This is the same technology used in self-driving vehicles to detect and identify objects, develop 3D maps of the roadway and signs in real-time.

Issues:

A potential issue could be issue with theft as seen with self-checkout lines in stores. Some stores had such an issue that they eliminated self-checkout lines. However, since these cashier-less stores are equipped with so many cameras which tracks everyone throughout the store, its unlikely that theft should be a common problem. Machine learning technology will be able to identify anomalies associated with theft and verify if theft occurred and by whom.
Cost is also another factor to consider. There will be significant deployment costs to purchase and install the cameras and sensors into existing infrastructure. There is also the cost of developing and training AI models to execute accurately every time. Many supermarkets lack technology expertise and would need to rely on third party vendors to develop, deploy and manage the advanced technologies.

What can Supermarkets do to Evolve?

The companies who fail to evolve will simply get acquired or go out of business as we have all seen across many industries. Some supermarkets have already started the technology journey by deploying some IoT sensors and analyzing customer data for new insights. However, if they wish to survive or thrive against Amazon, they will need to do more than dabble in technology. They will need a comprehensive digitization strategy where they evaluate their entire business for opportunities to analyze, automate, and optimize.

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How AI is Impacting the Grocery Industry (Executive Summary)

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