Post #39: Automation and the future of retail - Heptagon Capital – Production

The growing presence of automated solutions in general and robots in particular can cause fear and excitement in equal measure. Sure, outcomes tend to be more…

Post #39: Automation and the future of retail

The growing presence of automated solutions in general and robots in particular can cause fear and excitement in equal measure. Sure, outcomes tend to be more efficient, but the flipside is the potential loss of jobs that may occur. For one interesting insight into how this dynamic may play out, consider the creeping presence of cashier-less Amazon Go stores. There are only 16 at present across 4 different US cities, but the company has said it aims to have 3,000 by 2021.

When I was recently in San Francisco, I had the opportunity to visit an Amazon Go store. In summary, it was sinister in its efficiency. Whether it will become the future of retail remains to be seen. As the below photos attest, the store was almost deserted when I visited, despite it being 6.30pm on a weekday evening. Perhaps customers were put off by the absence of other people; perhaps it was the turnstiles which appear to prevent entry? 

In order to gain entry, customers need to download the Amazon Go app – which I duly did. Assuming you have an existing Amazon account (for buying books etc online), you can link the two and do not need to upload new credit card details. This certainly makes things easier. I scanned the QR code generated by my app and – hey presto – I was in. Once on the other side, it was as mundane as any other convenience store; small format with the usual selection of sandwiches, soft drinks, crisps and chocolate bars. In the interest of research, I decided to purchase a packet of nuts. Once in my hand, I simply walked out of the store.  Being a law-abiding citizen in his 40s it was hard to escape the notion that I was shoplifting. However, the advanced vision and sensor technology deployed by Amazon meant that it had scanned both me and my packet of nuts prior to exit. Seconds later I had been emailed a receipt. Not only did it tell me that I had spent $2.29 but also that my store visit had taken exactly 3 minutes and 53 seconds! 

What to conclude from all this? First, the notion of job losses from automation needs to be nuanced. At the Go! store there were still two assistants on hand to aid customers with any queries they may have (most often, it seemed, how do I get into the store?). In addition, there was one security guard present, presumably to stop genuine shoplifters. Next, despite these limitations we should probably expect further experiments with cashier-less technology. By ‘seeing’ and knowing what we do and for how long we do it, Amazon (and other like-minded retailers) can further optimise how they design their stores and hence improve the consumer experience. Experiments are apparently underway to bring the cashier-less environment to retail outlets in selected cinemas and airports too.

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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