Cashierless Stores Make Inroads in U.S.

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U.S. retailers large and small are pressing ahead with testing the use of artificial intelligence to track what products shoppers pick up and to automatically bill their accounts when they walk out the door, eliminating the need for checkout lines.

The concept got a push from Amazon Go stores, which Amazon.com Inc. launched in early 2018; there are now 15 stores, with two opening last week, in New York and San Francisco. Amazon Go relies on hundreds of cameras and sensors in each store to identify products that customers take off the shelves. Shoppers typically scan a code to enter the stores.

Recent AI adopters include Sam’s Club Inc., the warehouse retailer owned by Walmart Inc., and Giant Eagle Inc., a regional chain of grocery and convenience stores. Giant Eagle said last month that it would test a technology similar to Amazon Go’s at a convenience store in Pittsburgh, where it is based. Several companies that sell cashierless technology—including Standard Cognition Inc. and Vcognition Technologies Inc., which does business as Zippin—said they are working with U.S. customers but declined to give details.

Sam’s Club plans to offer AI-powered cashierless shopping later this month at a 32,000-square-foot store in Dallas, a quarter of the size of its average store.

Currently, customers shop at the store by scanning barcodes on the products, an older cashierless-checkout technology. Once the AI system is in place, customers will use their smartphone cameras to scan the product itself. The cloud-based system, which uses computer vision and machine learning, recognizes products by matching them to a database of stored images. This is different from Amazon Go, where cameras installed in the stores do the work of scanning the products.

Customers at the Sam’s Club store can’t pay using cash at the register, as they can in certain Amazon Go stores.

A global survey of about 400 retailers conducted in June by research and advisory firm International Data Corp. found that 28% are testing or piloting cashierless systems, said Leslie Hand, vice president of IDC’s Retail Insights division. Ms. Hand said she knows of nearly 100 companies world-wide that are trying out the systems, adding she can’t discuss the details because of nondisclosure agreements.

“It’s awoken that fire for retailers to understand that really this is the future of retail and they need to invest in it,” Ms. Hand said.

Cashierless technology is being tested by U.K.-based Tesco PLC and France-based Carrefour SA . Tesco has said its method costs a tenth of systems used by its competitors, partly because it uses only cameras, not sensors. 

Not every type of store is suited for cashierless technology. Walmart tried out a cashierless system based on scanning barcodes for about six months in more than 100 stores but discontinued it in April 2018. The technology proved impractical for pricing produce and other items that had to be taken to a cashier to be weighed, causing delays, a spokesman said.

Theft is also a concern. Manual scanning operates on an honor system and some customers don’t scan every item, often requiring stores to validate purchases, said Richard Crone, chief executive of Crone Consulting LLC, an advisory firm focused on retail, convenience and restaurant businesses. In the Sam’s Club trial, for example, an employee checks customer purchases as shoppers exit, though the clerk samples just one product per customer to see if it’s listed on the electronic receipt.

Still, the potential benefits include speed and convenience. Even small companies are testing the waters.

Choice Market Holdings LLC, which operates a Denver convenience store focused on fresh food, plans to open another location next month and is developing three others. It plans to introduce a cashierless system, using in-store cameras and sensors, in two of the planned stores next year, said Mike Fogarty, Choice Market’s founder and CEO.

The company is considering technology providers including AVA retail Inc. for the project.
“This technology will allow us to extend our hours with little to no labor, which leads to more transactions,” Mr. Fogarty said.

AVA retail CEO Atul Hirpara said his company’s system virtually eliminates retail fraud such as price-tag switching, shoplifting and “sweethearting” by checkout clerks who deliberately don’t charge a customer for a purchase.
Mr. Hirpara said planning, installing and deploying a typical system costs between $300,000 and $400,000 but the price could rise to $800,000 for a 2,000-square-foot store. Annual maintenance and service costs between $25,000 and $45,000, he said. He said the error rate is one or two per 1,000 purchases.

Mr. Fogarty said Choice Market expects its costs would be at the lower end of AVA’s estimates because the stores won’t be retrofitted but rather built with the technology integrated into the design.

Amazon Go’s, AVA’s and other cashierless systems don’t use facial recognition to identify customers. Instead, the systems track customers’ movements in the store and link to their online accounts. Sensors installed on store shelves augment the computer-vision systems by providing data on the weight of items lifted from shelves to help the AI count the number of items purchased.

Corrections & Amplifications
The Sam’s Club cashierless test store in Dallas doesn’t accept cash payments. An earlier version of this article said it would accept cash. Also, the store currently lets customers check out without a cashier by having them scan barcodes on products; it will introduce an artificial-intelligence system this month that will allow customers to use their smartphone cameras to scan the product itself. An earlier version of this article didn’t make it clear the store is already operating. Sam’s Club announced the AI-powered cashierless system in March. An earlier version of this article said it was in July. (Aug. 12, 2019)

AVA retail .Ai opening Choice market stores to public soon with frictionless shopping

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DENVER — Choice Market will be the latest convenience store retailer to enter the autonomous checkout space with the opening of its third location.

The new, 2,700-square-foot format will open during the second half of 2019 at 2200 East Colfax and feature fuel pumps, electric vehicle supercharging, a bike share terminal, electric scooter charging stations and solar collection on the canopy.

It will also offer autonomous checkout, order and pay ahead via the Choice mobile app and traditional checkout.

"There's nothing more valuable than our customer's time and we are really excited to offer this new format which allows them to combine several different shopping occasions in one stop, while providing them the option to skip the checkout process all together," said Mike Fogarty, founder and CEO of Choice Market. "If customers cannot make it to the store, we will deliver any of our products to their doorstep within 45 minutes. That is true convenience."

Fogarty was a featured speaker at the 2018 Convenience Store News Convenience Foodservice Exchange in September.

To enable the autonomous checkout, Choice partnered with Ava Retail, which uses artificial intelligence, computer vision and internet of things to track customer's purchases within the store. This platform uses less hardware and infrastructure than other competitors while still leveraging the powerful Microsoft Azure cloud, according to the company.

"Real convenience is what Choice Market is doing using our technology — offering their customers a truly automated experience," said Ava Retail CEO Atul Hirpara. "Retail is undergoing a major transformation. With the power of Ava's technology, Choice Market is pioneering this transformation."

Choice currently has one location open in downtown Denver. A second store, which is under construction, is set to open in the second 2019 in south Denver. With the upcoming changes to liquor laws, Choice will also be one of the first companies in Colorado to offer delivery of prepared foods, groceries, and full strength beer in one transaction, according to the company.

To facilitate the company's growth, the company hired industry veteran John Varsames as its chief operating officer. Varsames has more than 30 years of experience with opening and operating natural groceries, including leadership positions at Wild Oats, Whole Foods and Alfalfas.

"I am thrilled to be joining the Choice Market team to help lead business operations and grow this exciting brand," Varsames said. "Healthy convenience is a fast-growing segment and our innovative approach will be a great addition to Colfax."

"We're honored to partner with Choice Market to create a fresh, new concept at the intersection of healthy living and convenience. Chute Gerdeman and Choice Market share similar brand values — belief in doing good for the people and communities that we serve," said Chute Gerdeman CEO Brian Shafley.

"As creators of brand experience and customer engagement, we look forward to our collaboration with this future-looking brand partner, and are confident our work together will further propel the mission of Choice Market," he added.

For this project, Choice has partnered with local developer St. Charles Town Co., which has a history of adaptive reuse and urban revitalization in the Denver area.

"A contemporary, fresh, and local market will fill a huge void in this dense part of the city. It has been nearly two decades since we had Wild Oats next door to this site," said Charlie Woolley, principal at St. Charles Town Co. "We are pleased to partner with Choice to bring fresh food and innovation to the neighborhood."

Denver-based Choice Market combines the operating hours, store size and transaction times of a traditional convenience store with the product selection of a natural grocery and fast casual restaurant.

AVA Retail’s CEO Shares What Drives Home Improvement Shoppers… and It’s Not Necessarily Price

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Lowe’s is testing augmented reality and virtual reality tools it says helps customers visualize and “feel” a large home improvement product in the context of the customer’s living space.

“We look at age-old customer problems,” said Josh Shabtai, Lowe’s director of lab productions at Lowe’s Innovation Labs. “These are problems that keep resurfacing that folks haven’t solved yet. Our hypothesis is that as we move people closer to realizing their visions, they’ll feel more confident.”

Lowe’s Innovation Labs, with offices in Kirkland, Washington, Mooresville, North Carolina and Bangalore, India, were established four years ago to delve deeper into these questions, said Shabtai. Often working with startups, the company has since rolled out several pilot projects to test customers’ comfort with virtual and augmented reality, including Holoroom How-To, which immerses a customer in a DIY project – such as tiling a shower – and gives them step-by-step instruction to complete the task; employee training programs that involve virtual reality; Holoroom Test Drive, a feature that uses VR to offer customers a chance to sense the feeling they are actually holding and using a power tool; and “View in Your Space,” a mobile app feature which lets customers visualize how a piece of furniture may fit within the physical dimensions of their own living spaces. Of these pilots, two currently are still in market, including Holoroom Test Drive in Charlotte and the AR feature which went live for Android users in March.

While quick turnaround trials may suggest there are challenges getting customers to comfortably use the technology on a regular basis, Shabtai said the timing is part of Lowe’s approach to test new use cases, study the outcomes, and apply the lessons to future releases. Other retailers are also jumping on the VR/AR bandwagon, including Home Depot and Walmart.

“We’re trying to refine the experience and move on to an application that will be better and ready to scale,” Shabtai said.

Shabtai said early results are showing that VR-and AR-enabled tools offer two key use cases: helping customers better navigate how they’ll use tools or whether products are physically compatible with their homes; and helping employees learn more quickly to offer more personalized expertise, and ultimately, add more value to the in-store experience.

“When [customers] come into a Lowe’s store, they want to talk to an employee who is a real expert in the space,” said Shabtai. According to company proprietary data, employees who are trained on machinery using VR are 76 percent more likely to try out a piece of machinery compared to those who were trained using conventional methods; and customers have 42 percent greater recall with VR tools compared to YouTube how-to videos.

He conceded that the biggest challenge standing in the way of more mainstream adoption is cost, while AR can be more quickly deployed given the ubiquity of smartphones that are already equipped with enabling technology. Retailers’ advantage — particularly those whose core product offerings are big-ticket home appliances — is to tie the customer closer to the brand through these types of immersive efforts. Tactile experiences through virtual and augmented reality ways legacy retailers can keep customers loyal, especially with competition from Amazon.

“Amazon wins on convenience and selection, so how can retailers combat that?” said Jim Cusson, president of retail marketing agency Theory House.”A lot of this has to do with the experience and brand engagement [derived from immersive tools like VR and AR].” Morningstar analyst Jaime Katz wrote in a recent report that Lowes’ business model is built off of customer service, knowledge, and innovation; using VR and AR could help augment its reach.

Despite larger retailers’ shift to AR and VR as differentiators, there’s a risk customers may preview items within the VR and AR interfaces and simply buy them on Amazon, so retailers like Lowe’s need to focus on those customers whose core goal is the pride they derive from carrying out hands-on home improvement projects. These customers aren’t necessarily motivated by price, said Atul Hirpara, CEO of AVA Retail.

“DIY shoppers enjoy visiting stores and build things that make them proud,” he said. “It’s not necessarily about money; what AR can do is augment their imaginations.”

Microsoft’s Partnerships with Walmart and AVA Retail Bigger News Than Prime Day?

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Prime Day, Shmime Day.

Amazon dominated the headlines this week with its annual July holiday. But I, for one, did not give it much notice. It has become de rigueur for Amazon. In fact, whatever hiccups Amazon did encounter this week will only make it stronger in the long run and possibly better prepare Amazon for what I fear more than anything else in the world—a last-minute preemptive Prime Day a week or two before Black Friday somewhere down the line. Such a move would be the Death Star, planet-destroying blow to traditional holiday retail. Even a minuscule 0.000001% chance of this happening frightens the hell out of me.

So, until then, July is just an amuse-bouche and not a time to get overwhelmed with Amazon-related Prime Day shenanigans. It is far more important to keep one's eyes on the prize each week, to look past Prime Day, and to maintain focus on who (and who is not) planning ahead for the future and going after the next great innovation in retail—the personalized physical store—so as not to be left in a cloud (pun intended, as you will see) of dust ten years down the road.

The most important news of this past week was therefore not Prime Day, but Walmart's clear decision to throw its hat into the next-generation retail ring with its new long-term partnership with Microsoft.

As I wrote recently, Amazon and Alibaba have both been doing their damnedest to begin defining what the future world of retail looks like: Amazon with Amazon Go and Alibaba, most specifically, with its Hema grocery store in China. While the physical superstructures of these installations are almost irrelevant, the technical operating platforms for data capture atop which both of these concepts sit are vitally important.

Just as e-commerce debuted in the late 1990s, nearly 30 to 40 years after the last large-scale innovation in retail, quite soon a new technological operating system for retail will also emerge on the same time trajectory, sometime between 2020 and 2030. The race is on to see who cracks the code first and who then benefits from selling this system to the countless other retailers that could never develop something so advanced on their own.

Sound familiar? It should. It is the same mousetrap Amazon laid with its e-commerce browser at the turn of the century, when Amazon powered many retailers' e-commerce businesses. No one should be surprised that Amazon is at it again and that Alibaba is thinking the same way.

Enter Walmart.

Walmart smartly realizes that it cannot lay dormant while Amazon and Alibaba chase this Holy Grail, which is why the announcement of its partnership with Microsoft this week was so important.

Walmart inked a partnership with Microsoft for a five-year, full-suite cloud deal. According to Retail Dive, Walmart will "capitalize on Microsoft's artificial intelligence, machine learning and data solutions for cloud innovation projects, including building out its global IoT platform on Azure."

Effectively this statement means that the deal could begin to give Walmart the three legs to the stool it needs to compete effectively in the world of next-generation retail: cloud commerce, mobile applications and location analytics (aka the Holy Trinity).

The intersection of these three technological capabilities is what will give retailers an unprecedented level of data capture within a physical retail store. It is what will turn physical stores into the analytical equivalents of e-commerce browsers. It is what will enhance not only the science of physical retailing, but the artistic expression of it as well.

Harnessing these three technologies will give retailers, all things being equal, an almost regression-like understanding of the value or impact in real-time of every action and reaction within a store, meaning physical experiences will be able to be tailored uniquely to each individual who decides to enter a retailer's four walls.

The days of a "mass" experience will be over. Every experience from one individual to the next will be different.

Microsoft is a strong partner to help Walmart pull something off within this realm. Microsoft's Azure cloud services give Walmart the speed, scale and security to process the data required in real-time; Microsoft's stable of mobile application partners, often on display annually in Microsoft's booth at NRF, is incredibly formidable; Microsoft's recently announced Partner of the Year, AVA retail .AI , also happens to specialize in location analytics and visual recognition technology, which, for those scoring at home, happens to be similar to the components within Amazon's Go concept; and Microsoft, unlike other cloud providers not named Amazon, actually runs its own stores.

Everything within this potential partnership just passes the smell test.

But keep in mind, Walmart is only through mile one of the next-generation retail marathon.

While partnering with Microsoft is the right move by Walmart, Walmart's next-generation life will only take shape once the company pushes itself to the edge of its current comfort zone. Amazon and Alibaba likely both have a leg up in the race because of their lack of existing physical retail operational, technological, architectural and cultural debt, so Walmart will, in many ways, have to work harder than the next guy.

The greatest barriers to entry for new retailers are physical stores themselves. Physical stores are expensive for upstarts to build. What matters, then, is not so much the Walmart stores that people know today, but the Walmart stores that people will know 10 to 20 years from now.

Future Walmart stores will need to look vastly different, regardless of how ready the Baby Boomers and Generation X are for the eventual transformation. Transforming Walmart stores for future generations will require thinking similar to how Apple designs its products. Just as Apple removes features that customers love in nearly every new product release—things like disk drives, earphone jacks, etc.—so too must current aspects of Walmart's business go away in the aim of long-term generational progress.

Will Walmart have the grit and determination to keep at it?

Yes.

Doug McMillon has thus far shown that he is the right man for the job. The partnership with Microsoft signals that he is taking the right approach and will not go down without a fight. While many retailers find themselves in a position unable to fight or are even happy treading water in the hopes of riding out what is, in reality, an insurmountable storm, McMillon appears to be willing to make the tough choices required to move Walmart forward.

McMillon appears to be playing the long game—selling off assets to sharpen the company's focus (Asda), bringing in new talent and perspectives (Marc Lore, Valerie Casey and others), focusing more on R&D (Store No. 8), and finding the right partners that could be essential to survival (Microsoft).

2019 could be the watershed year for McMillon and for Walmart. It could be the year that the seeds of his hard work, firmly planted in the ground, take root, begin to sprout and give the public a glimpse of Walmart's own Amazon- and Alibaba-like vision of what the future could be.

Until now, the public has seen only small, incremental tidbits of what Walmart's store of the future could look like, but this new partnership with Microsoft likely portends that there is far more on the horizon, that Walmart too will dream the American dream of entrepreneurship and do all that it can to lead retail through the next great innovation cycle in retail.

The clock is ticking. Now is not the time to follow. Now is the time to lead. America needs Walmart to do exactly what it appears to be doing.

AVA CEO Talks Creating a System to Compete with Amazon Go

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AVA retail, utilizing the “internet of things” has created a smooth, quick and easy solution that transforms store visits for the customer and the retailer. Our frictionless experience allows the customer to check in, shop and automatically check out without ever having to stand in line.

Once a customer enters the store, checks in via the AVA SmoothShop app, (or through the retailer’s app) AVA SmoothShop does the rest. Our system validates every item selected and holds them in our SmoothShop Cart, intelligently removing any products that may have been placed back on the shelf. Once the customer has left they instantly receive a confirmation and receipt on their smartphone. It’s that easy! AVA SmoothShop enables friction free, self-checkout!

AVA SmoothShop puts the customer first, offering a convenient and time saving option for shopping on the go.

What Sources are Saying about How Microsoft and AVA Could be Taking on Amazon

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Microsoft is testing technology that will track what items people pick up while shopping, and another Redmond company is working with Microsoft on the technology for physical stores, news services reported.

Microsoft may be gearing up to challenge Amazon on its home turf — the world of retail shopping — by developing cashier-less technology for grocery stores.

Six people told Reuters news service that the Redmond software company is testing technology that will track what items people pick up while shopping, something that could eliminate or reduce the need for cashiers.

Redmond-based AVA Retail, which develops technology to collect data about shoppers in stores, also told The Associated Press it is working with Microsoft on the technology for physical stores.

Amazon’s convenience store that uses cashier-less technology, Amazon Go, opened to the public in Seattle in January.

That store requires shoppers to swipe an app when they walk in, then uses computer-vision technology to track them and their purchases around the store. When people are done shopping, they can walk out and are charged through the Amazon app.

Amazon could sell that technology to other retailers. But a competing technology from Microsoft could be an attractive option because retailers might see Microsoft as less of a competitive threat than Amazon.

A Microsoft spokeswoman declined to comment.

Microsoft’s interest in the technology is hardly a secret. Microsoft for years has operated a Retail Experience Center from a nondescript building near its Redmond headquarters campus, meant as a showcase for Microsoft products as well as an experimental environment for the company’s business-sales groups to try out emerging technologies and show them to potential customers.

During a media tour in 2015, Microsoft showed how a big-box electronics store could keep track of where customers were and what items they were looking at or picking up by using technology borrowed from Microsoft’s Kinect motion sensor.

A tour of the same Microsoft retail facility in 2016 showed Bluetooth beacons that could track customers’ movement, Redmond Magazine reported. At the time, the company was partnering with AVA Retail to pinpoint what a shopper was reaching for on a shelf.

AVA Retail CEO Atul Hirpara said Thursday that the company is using Microsoft’s Azure cloud to develop technology that will enable stores to have a clerk-less checkout experience. AVA’s technology could roll out in the next six to eight months, he said.

The company plans to co-sell the product with Microsoft, but the clerkless techology is owned by AVA, Hirpara said.

Reuters reported that Microsoft’s technology could be getting closer to deploying in stores. Microsoft could be in talks with Amazon rival Walmart, Reuters’ sources said.

AVA’s Hirpara declined to disclose if his company has any ongoing talks with Walmart.

Microsoft looks to compete with Amazon with cashier-less stores

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Microsoft is working on automated checkout technology that could help retailers compete with Amazon’s new cashier-less stores.

One firm building automated checkout systems, Ava Retail, said Thursday it is working with Microsoft on the technology for physical stores. Both companies have headquarters in Redmond, Washington.

Ava Retail CEO Atul Hirpara said Microsoft could become a leader in the field because it has a strong cloud computing platform. That technology would power the retail system by pulling in data from in-store cameras or sensors.

Amazon opened its first cashier-less Amazon Go store in Seattle this year and plans more locations in Chicago and San Francisco. Overhead cameras and other technology help keep track of customers and what they're buying.

Microsoft's interest in working with retailers on similar technology was reported earlier by Reuters. It remains unclear how far along Microsoft is in the project. The report of its involvement didn't surprise others in the fast-growing automated checkout industry.

Michael Suswal, co-founder of San Francisco-based startup Standard Cognition, said Microsoft has the teams capable of developing the software and the infrastructure needed to deploy it broadly.

Suswal said his firm is also working with retailers — but not currently with Microsoft — on its own automated checkout system using overhead cameras.

"Within five years, everyone in the country will have visited an autonomous checkout store," Suswal said.