The force of frictionless retail

From Shopper Marketing Report: Couche-Tard is exploring opportunities in a concept most associated with Amazon as the pandemic keeps momentum strong.

McGill-Couche-tard store

(Image courtesy of McGill University)

While psychics claim they can see the future by palm reading, palm reading is already the present at Amazon.

The retailing giant recently rolled out the Amazon One – which lets buyers hover their hand above a scanner to pay for goods in retail – to eight Seattle-area Amazon bricks-and-mortar stores, including its Amazon Go convenience and grocery concepts, after first announcing the tech last fall.

It’s the latest development in Amazon’s exploration of “frictionless retail,” a concept that has become linked to the tech giant in the minds of many, which allows people to skip the checkout and “just walk out” with their purchases, using a variety of technology to charge them.

But not to be outdone, north of the border, convenience giant Alimentation Couche-Tard has linked up with McGill University for an innovation lab, what it’s calling a “live testing ground for innovative and frictionless technologies that address the retail sector’s challenges of the future.”

One of the first times this concept has been tested in Canada, the lab takes the form of what looks like a regular Couche-Tard store on the McGill campus. But within that store, customers use an app to unlock the entryway to the “Connecté” section, which allows customers to pick up items that are paid for automatically within the app. The products are recognized using computer vision and image recognition, with the cameras also tracking things like traffic and when certain items are out of stock.

Ken Wong, professor of marketing at Queen’s University’s Smith School of Business, says one key thing that makes Couche-Tard’s concept lab intriguing is how it overcomes variable control problems this kind of technology can experience: by having roughly the same footprint and layout as a regular Couche-Tard store.

Beyond making it easier for the tech to recognize items as they come off the shelves, it helps customers behave more normally, which helps from a research perspective but also the consumer experience.

“In order to combat low prices and endless ‘aisles’ of assortment in Amazon, you need to have some kind of some kind of customer experience to justify going in store, and this is one way to do that,” Wong says. For now, that is important, as these stores are still mostly test-and-learn centres, and anything that makes a customer feel less like a lab rat will go a long way. Lindsay Angelo, a growth strategist and former strategy manager at Lululemon, adds that the surveillance aspect of it can be a bit off-putting to consumers concerned about privacy, so a good experience will be one that makes the customer forget about it.

According to Angelo, the ROI for this concept is proven, and the concept has become normalized, so now it’s up to retailers to step up. But Amazon may have a leg up when it comes to censor fusion, deep machine learning and other innovations, and the majority of stores are in the highly-scalable 450 to 1,200 square foot range, with Whole Foods on its roster of bigger stores it could be added to.

“From a moat standpoint, given that Amazon has paved the way for it, and what they have in store, anyone in the convenience or grocery business is acting pre-emptively and trying to think through, how are we going to compete against that in the future?” she says. “Certainly the pandemic has been an accelerant to frictionless in general. Companies like Couche-Tard are thinking about it, it’s top of mind, and they are more willing to invest in it than they have been.”

Looking forward, the ongoing investment in this technology comes at a time when there has pent up demand for contactless interaction, and answering the question “how do you provide service to someone who doesn’t want to be around people?” Wong says.

For its part, Couche-Tard says its team members in these kinds of stores will be able to spend more time on customer service, speed up in-store visits and “make its customers’ lives a little easier every day.” In the future, Wong says human interaction as we know it will be reserved for higher end or independent mom and pop stores, who either want to emphasize white glove service or a community connection.