Reading Time: 8 minutes
Are no-checkout stores like Amazon Go going to become common-place by 2025? Why or why not?
There is little doubt, many if not all of the concepts from the Amazon Go store will be adopted by A-level retailers over the next 5 years.
Software (And Hardware) Will “Eat” The World
The history of retail is also a history of automation. Slowly the retail shopping and food ordering experience has used technology to become streamline and more efficient over the last 100 years. Most recently the These concepts will extend to quick service food and even coffee shops. In fact, the the automation for food and beverage preparation will go beyond what we currently see at the Amazon Go store.
Robot Coffee Shop
Cafe X  has created an automated barista and a “coffee shop”:
Cafe X is 100% automated from the ordering and payment system that can be from with-in the app or the order/payment screens on the front of the system to the preparation and delivery of the coffee. The system is by far faster than any current coffee shop experience. Once the amortization of the system has been met, the cost to operate this “coffee shop” is orders of magnitude lower than the 2.5 baristas a single system replaces.
Three lines can form simultaneously and the system can deliver the order in record speed. Reviews of the quality have been it meets or exceeds a typical Starbucks similar product. This is a 1-click buying experience that closely aligns the experience we see online or in person with Uber.
Serverless Restaurants From 1902
Vending and automation have been around for food ordering since the rise of the Automat from Horn & Hardart  with roots to a start in 1902.
Specimen: Of the Automat from Horn & Hardart circa 1940s.
Horn & Hardart maintained an elegance and promoted the idea of cleanliness and efficiency at their restaurants. The system was perfected in the 1940s and became a centerpiece of New York City life. A patron simply walked into the restaurant, secured a table and took a tray down the line to select food options. The selection was made by inserting coins in the coin receptacle next to the item and press the button to open the door. The payment system was built into the shopping experience telegraphing and Uber-like experience.
The decline of Horn & Hardart started because of inflation, the machines were designed for coins only and as the 1970s inflation pushed prices to dollars, Horn & Hardart did little to try to solve the problem with expensive early bill reading machines. This started a domino effect as food quality dropped to lower costs. This pushed the primary patrons away to other fast food concepts and left it as a sort of discount food establishment. Slowly locations closed and by 1991 they closed the last location.
Your Mom And Dad’s Self Checkout
The first supermarket self-checkout system in the world was installed in 1992 in the Price Chopper Supermarkets in Clifton Park, New York. The system was invented by Dr. Howard Schneider. He was issued United States patents 5083638 and 5168961, granted in 1992. Dr. Schneider called the self-checkout machines “robots,” thinking that a new class of “service robots” would perform service work and provide a platform for his ideas on artificial intelligence. The company, Optimal Robotics, was founded in Montreal in 1991 to design, build and market these service robots.
Specimen: Optimal Robotics Self Checkout robot.
The Optimal Robotics “self-checkout robots” performed well at Price Chopper Supermarkets and in the 1990s was implemented in the Kroger Supermarket chain, and then in many supermarket chains throughout the U.S, Canada, U.K., and Australia. Optimal Robotics went public on NASDAQ in the mid 1990s with a new management and Dr. Schneider leaving the company. Eventually Optimal Robotics sold the technology to NCR and Fujitsu acquired NCR and left the robot/self-checkout business .
These systems were cumbersome and very difficult for most users to operate without assistance. The “Flow” of the transaction was complex and the systems of detection would produce many false errors or miss items that were not properly scanned. There have been many versions of self checkout but most are routinely avoided by a vast majority of shoppers. Even with the shoppers that do use these systems willingly, they will limit the use to only when they have a handful of items to check out. Although through offering no options to shoppers in some stores in Europe, self checkout is growing, it has stalled or reversed in the US.
The Apple Self Checkout Experience
In November 2011 Apple introduced EasyPay 2.0 and the ability to perform a self-checkout using an iPhone. The iPhone camera would allow for UPC barcode scanning and the completion of a transition, including payment without the need to interact with anyone in the store.
Specimen: EasyPay 2 checkout screen circa 2011.
By all degrees of evaluation EasyPay 2 and the later incarnations have been used by a very, very small number of customers. Apple has acknowledged that EasyPay 2 self checkout has not reached the level of use they had hoped.
The Amazon Go Store Model
I spoke to the way the Amazon Go store works in detail late last year . Amazon Go is the hybrid of many technologies and ideas that started with the very first website Amazon created. When Jeff Bezos invented and patented the 1-click shopping experience, that Apple licensed later, few could imagine it could come to retail stores. It is the paramount amalgamation of:
- 1-click-like web shopping in retail
- Powerful App using location based services
- QR Code IDs
- Integrated Payment
- Image Recognition
- Multiple Sensor Technology
- Artificial Intelligence
- Machine Learning
It’s called “just walk out” technology and when you walk out, your purchase is complete with a receipt in your app, charged to your Amazon account. This is achieved by an entryway that is similar to the subway turnstiles that you see in major cities. Yes this sounds like magic, retail magic.
Specimen: Of the subway turnstile entrance area for the Amazon Go retail store.
Specimen: Of the QR code used to enter the Amazon Go retail store.
Specimen: Of a cell phone scan to enter the Amazon Go retail store.
A smartphone with the app installed is required to enter the store via presenting a barcode to a sensor. This barcode scan (along with other sensor technology eg: GPS, etc) tracks that you have entered the store, identifies you’re moving through the store and then identifies the product you pick up. To complete your shopping experience just walk out the door. Yes, that’s it. The image recognition combined with a sensor fusion of technologies has already confirmed your order and totalled it up. All billed to your future Amazon Bank Card, but currently to the payment card you have on file with them, the nearing 1 billion payment cards they have on file.
Specimen: Of the automatic shopping cart in the Amazon app for the Amazon Go retail store.
Specimen: Of a customer leaving the Amazon Go retail store.
Specimen: Of a customer verifying a receipt for the Amazon Go retail store.
New Retail Paradigms
I started out with quick food and beverage examples to illustrate a point where many consumers have been pleasantly surprised by the experience. The Automat concept gave way to some vending machine ideas and are still in use today. Clearly consumers do not feel the same about the self checkout concepts even with improvements as exampled in the Apple Store. I believe the demarkation point is the cognitive and mechanical loads placed on the customer to use these systems that ultimately become their downfall and rejection.
The fundamental aspect of the Amazon Go store is the “just walk out” premise. It presents a very clear process that after the first visit, can be very well understood. The same can be said of Cafe X. These new retail concepts also have integrated payments very much like the experience at Uber.
The systems that form Amazon Go store and Cafe X can be adapted to many businesses. The ideal would be to replicate the entire process and perhaps improve upon it. The pressure to build this at more retailers and food establishments will come from many angles, from containing costs to a streamlined, barrier free experience will drive this process.
It is my view Amazon will likely license many aspects of the Amazon Go store technology, just like they license AWS (Amazon Web Services). Perhaps this is the fundamental reason they are building the stores as a demonstration platform. I spoke to how many elements would change in retail process including a slight net loss in employees . There would be in some cases a gain in production staff to aid in the increase of customer throughput and ultimately sales.
A Retail And Food Revolution
This is part of a natural evolution but also a revolution. Amazon jumped a few orders of magnitude ahead of the current arc of retail and technology. They bypassed the issues of self-checkout and bypassed the POS system and credit card system entirely. They also have bypassed the smartphone to a greater degree as most assume the smartphone would be the place where all innovation would be centered. Amazon has shifted the equation from the smartphone to the smart store. They have moved the retail shopping experience into a place never seen before. Over time, this will fundamentally change the very fabric of just about every retail shopping experience.
The new Amazon Go experience may have such a great effect, that the very thing Amazon took away so many years ago: retail shopping, they will give back by reinventing retail shopping all over again. What was old is new again and it will likely be at more and more retailers as time moves on. By 2025 it will become a common experience, for better or worse.
 Premium coffee in seconds  Horn & Hardart – Wikipedia  Fujitsu Completes Acquisition of Optimal Robotics’ Self-Checkout Business  Brian Roemmele’s answer to What is the Amazon Go Store, the new retail shopping experience and why is it important?  Brian Roemmele’s answer to How will Amazon Go affect the retail industry?
IMPORTANT: Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. We are not financial advisors, nor do we give personalized financial advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated, and there is no obligation to update any such information. Recommendations should be made only after consulting with your advisor and only after reviewing the prospectus or financial statements of any company in question. You shouldn’t make any decision based solely on what you read here.