Key Takeaways:

  • Amazon just reinvented the entire retail and payments experience with the debut of Amazon Go.
  • There is a tremendous amount of data this will generate, it will impact our workforce, change the need for physical space, and more.
  • These are my thoughts as a CRE guy on Amazon Go.

You may not have noticed yet, but Amazon just reinvented the entire retail and payments experience with the introduction of Amazon Go. The system combines technologies like Artificial Intelligence, machine learning, sensors, and image recognition to eliminate things like checkout lines and shoplifting. Next up … robots will push your cart and bring the groceries to the car, and maybe even shine your shoes when you're there! (Remember the movie I, Robot?)  

Amazon Go is in Beta testing at a location in downtown Seattle. It’s a grocery store, with staples as well as ready-to-eat foods, and is currently open to Amazon employees. Access to the general public is coming in early 2017. I wonder what they’ll do when they put a Starbucks inside!

The basic process for consumers is deceptively simple:

  •            Scan your phone when you enter
  •            Pick up the items you want
  •            Walk out of the store
  •            Amazon will charge your account

Of course its creation has been years in the making and involves tremendously sophisticated technology. Industry observers predict that Amazon will license this technology to small and large retailers, changing the way shopping happens, and becoming “the technology supplier for all online and retail commerce.” If we, as companies, would focus more on making our businesses tech-savvy and efficient, we would also be creating the “new” companies of the future.

This seems big on the surface, and when you dive in it has astounding implications for so many segments of the economy. It will affect the way that retailers approach marketing and customer service, obviously, and will also impact inventory management and the whole supply chain. For a CRE guy, Amazon Go technology brings some intriguing thoughts to mind.

Thought #1: The technology will yield a tremendous amount of useful data.

In addition to making the shopping experience more convenient and personalized, the technology behind Amazon Go will continually rake in data on customer behaviors and preferences. The image recognition and sensor technologies will instantly adjust inventory when a purchase is made, so that records are always updated and stocking decisions are streamlined and maybe even create better prices for all of us.

Thought #2: This ramps up the need to retrain our workforce.

While it will be some time before this technology makes checkout clerks obsolete, the change is beginning. It’s vital to move now on retraining the workforce for the jobs that will be created as this new retail reality comes into use. It’s all good and well for companies like Carrier to keep jobs in the U.S., but increased automation might eliminate those anyway.  We’re in a position to lead the charge in the automation of retail, but our workforce has to learn new skills to make that happen.

Thought #3: This is really going to affect commercial real estate.

The retail model is evolving. We now know we need less space for retail in general, and by the look of this year's holiday sales and planned store closings, we are now at the tipping point. Yes, that thing called the internet that was suppose to create these effects years ago is finally here and here to stay. As the algorithms become better and better at pinpointing the merchandise that a given consumer will buy, what does that mean in terms of the stores of the future? Once the technology knows your habits, how often will you even need to go to a physical store? (We all better start exercising more!)

Thought #4: Inventory management will change dramatically.

This technology gives us the capability to tap into inventory 24/7 in real time. We can be aware of every item that leaves the shelf, automatically. The same technology applied in the warehouse means that shipments could be transferred in the record simply by crossing the facility’s threshold. Imagine the flexibility and nimbleness that would be possible. This could also disrupt the warehouse business, but that’s a story for another blog.

Thought #5:  All of this signals big changes for manufacturing too.

Retailers will be able to predict demand for specific products based on the data, and this will change their relationships with manufacturers. We will want our manufacturers to be closer to store locations for faster delivery. Hopefully this can result in less waste, as some items can be produced on demand, with a purchase ensured. It also meshes nicely with the ongoing trend toward production on demand.

So a lot to digest, huh? Amazon keeps pushing the envelope and forcing all of us to leave that sweet spot we all love to live in —our comfort zone. Change is never easy, but with tech moving as fast as it is, and the ability to produce it in an effective manner, we all better get use to it!