The pulse of smart checkout technologies with Martin van Vugt
Blog: Capgemini CTO Blog
In general, smart checkout technologies can be looked at from many angles. If you also consider self-scanning and self-checkout as smart checkout technologies, that is another ballgame compared to Amazon Go-like concepts. Let’s first clarify the different options:
- Self-checkout: The customer uses a kiosk at the end of the shopping trip
- Self-scanning: The customer uses their smartphone or a handheld device provided by the retailer during the shopping trip
- Frictionless checkout: The Amazon Go concept.
Let’s consider smart checkout to focus not just on the Amazon Go scenarios but also the entire POS scenario, including both out-of-store as well as in-store scenarios.
1. How would you segment the smart checkout technology industry? By technology or retail product?
You can look at this from different angles. For example, what types of products are best suited to smart checkout techniques? Would you consider targeting just a subset of your inventory to do self-checkout or not consider this solution at all if you can’t do smart checkout for all your products? What smart checkout technologies are best suited to different types of products and which ones are best used for all inventory?
Frictionless checkout technologies are best suited for smaller concepts such as Amazon Go and/or convenience stores (i.e., concepts with limited assortments and short customer visits). Challenges include installing necessary and substantial hardware in existing store environment ceilings as well as addressing the heat generated by that equipment.
From a technology perspective, self-checkout and self-scanning are easier to install and require less hardware than today’s frictionless checkout. If a retailer’s entire assortment is equipped with barcodes, the scanning and self-checkout options can be used within all segments throughout the retail sector.
From a surveillance perspective, there are potential savings in terms of store staff, as any of the three options can be used by customers without help from employees since the system can trigger alarms. But all three options will require staff surveillance to either help customers or prevent fraud.
An alternative technology could be RFID. However, using RFID technology for specific retail products in a store combined with products that aren’t tagged with RFID will not work, in my opinion. RFID should either be used for the entire assortment in a retail space or not at all. You must tag all products in your store to get the benefits from it, for stock visibility in the checkout process, and to not forget the entire supply chain.
2. Which segments are most promising?
I don’t think you can distinguish appropriate segments by type of retail such as food, non-food, general merchandise, fashion, or DIY. From an inventory perspective, fashion and DIY are difficult segments when it comes to smart checkout. For these two cases, I am talking about seamless/frictionless checkout without human interaction via computer vision and AI. For example, computer vision and AI can’t distinguish dress size or paint color , etc. – not to mention neatly fold and package apparel.
Convenience is the most promising segment for frictionless checkout. Products in this segment tend to have a higher margin and higher turnover rate. Moreover, convenience stores are usually smaller than supermarkets and therefore require less technology. There are attempts to address other segments, and time will tell with the opening of Amazon’s new 7,350-square-foot grocery store in September 2021 and four additional stores.
3. How saturated is the smart checkout technology industry?
There are two aspects to this question. The first is, how heavily deployed are smart checkout technologies? The second addresses the number of players and the competition.
Starting with the first question: Since the launch of the debut Amazon Go store in Seattle on January 22, 2018, a lot of initiatives have been started by retailers around the world. Most cases have been pilot stores and proofs of concept to prove the technology works. Only a few retailers have rolled out the concept. BingoBox has embraced smart checkout technologies – with operations in at least 30 cities in China and more in Taiwan, Malaysia, and South Korea.
Regarding the second question: A lot of startups and even scale-ups are trying to get a position in this market, but large companies, including Toshiba, are also working on solutions in this area, as are companies such as Aifi, Cloud Pick, and Shekel Brainweigh. Overall, this is still a developing and fiercely competitive market with winners and losers still to be determined.
Several years ago, Capgemini developed a frictionless checkout solution for convenience stores using NFC technology in combination with electronic shelf labels. A variant of this solution has been rolled out to several stores. While we are not a manufacturer, we engineered the concept and can integrate multiple technologies to help create similar smart checkout solutions.
4. Where do you see this industry headed?
In general, I expect technologies will evolve in the next few years and become even smarter and easier to implement at a larger scale. I do believe, however, that there will still be a place for self-checkout and self-scanning solutions, including some more traditional checkouts. Using one or the other is, in my opinion, related to what kind of shopper you are or what kind of shoppers you want to attract. Are you or do you cater to an on-the-run shopper who knows what they want, wants it quickly and without any hassle? Or do you cater to a window shopper who values social aspects and human interactions? Last but not least, will it increase ROI? Overall, the ROI will increase. Increased availability of technical solutions, combined with more mature AI solutions, should lead to lower costs.
Regardless – at Capgemini, we are happy to address one or the other or both shopper personas using a hybrid approach.
To learn more about our smart retail solutions developed in partnership with Intel, visit The Smart Digital Store. To learn more about smart checkout technologies such as RFID, visit How Retailers can implement an IoT strategy using RFID – part I and part II – or download the report Rebooting the retail store through in-store automation from the Capgemini Research Institute.
Martin van Vugt is the global PoS lead for Capgemini’s Consumer Products and Retail segment. He has deep experience in retail consulting with food and non-food retailers in the Netherlands and internationally.