Amazon opened a cashier free convenience store. What does it mean for the future of retail?

Amazon recently opened a convenience store that allows shoppers to use their smartphone apps to make product selections and leave the store without paying a cashier. Bruce Clark examines the future impact this kind of automation may have on commerce for News@Northeastern.

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January 29, 2018

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Amazon Go store. Photo by Alex Tsway/Sipa USA)(Sipa via AP Images

Bruce Clark, associate professor in the D’Amore-McKim School of Business, examines the effect the new Amazon Go convenience store may have on the future of commerce. Clark, an expert on managerial decision-making and marketing strategy answers questions about how the store concept impacts artificial intelligence, current business models, and automation.

Q: Grub Street, New York Magazine’s food and restaurant blog, called Amazon Go an “automated 7-Eleven killer.” How do you think convenience store chains should respond to Amazon’s initial push to join the $550 billion convenience store industry? Might they need to rethink their business models in an effort to compete in the age of artificial intelligence?

The short-term consequence to convenience stores is probably low. A lot will depend on local conditions. Convenience stores have very localized trading areas because the primary reason someone goes to a convenience store is—surprise—convenience. Unless you have an Amazon Go next door to your store, I’m not sure this is a big deal. A longer-term threat might be if Whole Foods went cashier-free and you had a Whole Foods next to your convenience store. At a broader level, convenience stores are already looking at how to incorporate technology into their business models. Many have apps and loyalty programs. Self-checkout or online ordering is increasingly common in food retail of all kinds. Convenience stores have to keep up with technology, but it’s not clear to me the customer experience of an Amazon Go store is sufficient to make me walk past the local 7-Eleven. Geography is destiny in this sense: where you have more convenient stores, you will do well. Studies show that retail salespeople and cashiers, who make up 6 percent of the U.S. workforce, are particularly vulnerable to automation. In your opinion, what role will artificial intelligence play in their ability to find stable, well-paid employment in the years to come?

At a broader level, convenience stores are already looking at how to incorporate technology into their business models. Many have apps and loyalty programs. Self-checkout or online ordering is increasingly common in food retail of all kinds. Convenience stores have to keep up with technology, but it’s not clear to me the customer experience of an Amazon Go store is sufficient to make me walk past the local 7-Eleven. Geography is destiny in this sense: where you have more convenient stores, you will do well.

Q: Studies show that retail salespeople and cashiers, who make up 6 percent of the U.S. workforce, are particularly vulnerable to automation. In your opinion, what role will artificial intelligence play in their ability to find stable, well-paid employment in the years to come?

The key point to remember is that AI doesn’t automate whole jobs, it automates pieces of them. AI therefore allows employers to change the nature of retail jobs, with unpredictable effects. The famous counterexample here is the relationship between ATMs and bank teller employment. Despite widespread adoption of ATMs, employment of bank tellers increased over much of the past three decades. The driving factor was that while a given bank branch might require fewer tellers, that reduction in labor costs meant that banks could open more branches, offsetting the loss at any given branch. Tellers’ jobs in turn became more like that of a customer service representative rather than a paper- and currency-pusher. More recently, as Starbucks has allowed mobile ordering for pickup it has found it sometimes needs more baristas at peak times to deal with increased demand. The common thinking is that over time, human jobs will evolve toward processes at which humans remain better value, notably in emotional intelligence and physical dexterity. Retail employees will find their jobs increasingly specified in those terms. You’re either interacting with customers or efficiently managing the stocking and layout of a store. Employees who excel in these areas should be OK. All that said, I’m not sure any of us should be assuming we will have stable, well-paid employment in the future.

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