Around the World: What Amazon’s “Just Walk Out” rollback tells us about the future of the in-store experience

In today’s episode, host Bill Fisher is joined by researcher Man-Chung Cheung and analysts Sarah Marzano and Carina Perkins to discuss the in-store retail experience. What’s next for Amazon’s Just Walk Out technology, what lessons can be learned from Asia-Pacific, and how is Tesco helping marketers get in on the in-store act?

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Episode Transcript:

Bill Fisher:

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Hello, everyone. Welcome to Behind the Numbers: Around the World, an eMarketer podcast made possible by Walmart Connect. It's Monday, April the 29th. I'm your host Bill Fisher and it's my pleasure, as it always is, to welcome you all to Around the World. And this month we're concentrating on the in-store shopping experience.

Welcome, folks, to a Behind the Numbers show that takes you around the world, looking at what various countries are doing in the worlds of commerce, media, and advertising. Each month we have our Three and Three global news recap, then we have our talking heads, where my guests and I have an open discussion about the main theme for today's show, which this month is all about in-store retail. And we finish it all off with my wickedly tricksy recap stats quiz. Again, all related, this month, to in-store retail. This month we will be asking why did Amazon's Just Walk Out technology fall flat?

Sara Marzano:

So really creating a headache where there really wasn't one before is a really big watch out for rolling out, introducing this new technology.

Bill Fisher:

What can we learn from in-store gimmicks in Asia Pacific?

Man-Chung Cheung:

But at the same time, we're looking at older population, also learning how to use e-commerce and fintech, and the upcoming older generation will also be a bit more tech-savvy.

Bill Fisher:

And how can marketers benefit from in-store tech?

Carina Perkins:

I think that's just absolute genius because customers can be served ads as they're going around and scanning items in, so that brands can serve relevant promotions and ads on things that they're actually looking at and buying.

Bill Fisher:

Okay, I have three experts to help me out with today's show. Let's get to know them a little bit better, shall we? First up, we have our senior analyst covering all things retail and e-commerce in the UK and Western Europe, it's Carina Perkins. Hello, Carina.

Carina Perkins:

Hi, Bill. Thanks for having me back on.

Bill Fisher:

Good to have you back as ever. Next, he's our research analyst covering China and Japan. It's none other than Man-Chung Cheung. Hey, Man-Chung, thanks for joining.

Man-Chung Cheung:

Hey, Bill. Always a pleasure to join you on this podcast.

Bill Fisher:

And last but not least, she's a newbie on this particular incarnation of Behind the Numbers, but we're very excited to have her. She's our principal analyst covering retail media. It's Sara Marzano. Hello, Sara.

Sara Marzano:

Hi, Bill. Thanks for having me.

Bill Fisher:

Great to have you on the show. Okay, bear this in mind because before we get into the main part of the show, let me introduce you to this month's culture shock, and we're going to stick with holiday destinations. Anyone know what the most popular holiday destination is worldwide? I'm just looking for a country, just country level. Any ideas?

Man-Chung Cheung:

Mexico.

Sara Marzano:

Greece.

Bill Fisher:

It's not Greece, it's not Mexico. It's France, in fact.

Sara Marzano:

Really?

Bill Fisher:

At least that's according to the United Nations World Tourism Organization. These were 2022 figures, these are the latest figures we have. So things might have changed, but apparently, 80 million visitors that year. So I thought I'd give you a little tip in case you're considering a visit, and this one's right up my street. When you interact with the locals in France, don't smile at them. Apparently, they view this kind of gesture as fake and a bit disingenuous. You've got to mean it, otherwise they'll think you're being a hypocrite. What are you smiling at and that kind of thing. What do you think?

Sara Marzano:

I'm from Texas, so I'm trained to smile at people that walk past me. It doesn't go over great in Brooklyn either, but I can't stop it.

Bill Fisher:

Yeah, the French have a bit of a reputation for being a bit cold, don't they?

Sara Marzano:

Yeah.

Bill Fisher:

But I like that pragmatism. I think good on them. Maybe I'm a little bit French.

Carina Perkins:

I think maybe it depends a bit where in France you go as well.

Bill Fisher:

Maybe.

Man-Chung Cheung:

Yeah. Now I know because I have a couple of French neighbors, just don't ever smile, right?

Bill Fisher:

There you go. We learn something every time on this show. Anyway, let's get into our new segment now, something we call Three and Three. We're tweaking the format a little bit this month, trying something a bit new. I have, still, three interesting and related news stories, but what I'm going to do this time is introduce them in turn, one story to one guest, and they're going to give me their very quick take. Between the two of us, we're going to do it all in a minute. So we've got three stories, three guests, three minutes. Maybe we should rename it Three and Three and Three. But anyway, the timer is set. Let's go.

Story one is for Carina. At the start of the month, Amazon announced that it'll be walking back it's Just Walk Out checkouts at its Fresh stores in the US. This doesn't affect its UK stores and it absolutely doesn't affect its desire to push forward with the tech, with the company stating it'll crop up in smaller third-party stores throughout the rest of 2024. Carina, what's your take?

Carina Perkins:

So my take is that really there isn't a one size fits all solution for retail. So the Just Walk Out tech works really well in smaller stores where the emphasis is on convenience and speed. Customers are just picking up a couple of items, they want to get in and out as quickly as possible. But if they're doing a larger grocery shop, consumers want a bit of a different experience. That might be interacting with people, or, indeed, Amazon's using its Dash Carts, which it thinks improves the customer experience because people can see the cost of their shop as they go along, rather than with a just walk out experience, being presented with a bill after leaving the store.

So I think it is sticking with the tech in UK stores, but those are all smaller format stores. And it has actually scaled back on its initial rollout ambitions for Just Walk Out tech in the UK. And I think some of its stores, it was talking about introducing normal checkouts where you can pay with card as well. So I think it's really learning that it's a great solution for some customers, it doesn't suit all people, and it doesn't suit all stores.

Bill Fisher:

Very good. Story two is for Man-Chung. The Japanese telecoms firm KDDI has made a ¥500 billion bid to take physical retailer, Lawson, private. KDDI sees an opportunity to integrate its digital capabilities with the convenience store's 15,000 sites, to provide logistics bases to support online shopping services to the country's aging population. Good move, Man-Chung?

Man-Chung Cheung:

Yeah, so I think many pundits would see this as a very aggressive, perhaps bold move, because it's a time when e-commerce and fintech are growing [inaudible 00:06:57] in society. But they're right in that Japan does have an aging society, whereby I think one in 10 are actually over the age of 80, so in that sense, it makes sense. But at the same time, we're looking at older population also learning how to use e-commerce and fintech, and the upcoming older generation will also be a bit more tech-savvy as well. So there are a lot of moving pieces. It's probably going to take years if not decades before we can judge whether this is a really good deal for KDDI or not.

Bill Fisher:

Nice take. Thanks, Man-Chung. And story three is for Sara. Aldi has retrofitted a store in suburban Chicago with checkout free technology. The Aldi Go experience uses tech developed by Grabango, which relies on computer vision to identify and track store items. Shoppers don't have to use it, they can revert to traditional cashier experiences, and the store layout has been unaffected. Sara, hot or not?

Sara Marzano:

It's hard for me to get really excited about this one, I think, even beyond the recent announcement from Amazon. I think the cool stuff is that it's retrofitted; they used an existing store and were able to deploy the technology using just computer vision. But on the flip side, it sounds like there's a fair amount of work that needs to be done to educate the shopper that this is available. I think Aldi's doing the right things. They have signage in place, they're using promotions to encourage that uptake. But for customers who want to use it, they have to download an app, the Grabango app, they have to load their payment information in. If they want to purchase age restricted items, there's an extra layer of approval that's then needed. So a fair amount of friction just to begin engaging.

And then it sounds like to finish their shopping trip, there's still a step that needs to be completed. They need to pay with their credit card or they need to use the Grabango app at a specific Grabango kiosk within the Aldi store. So there's still bagging that needs to happen. I think the main thing it takes away from the consumers, the need to scan items, which I would argue that all their customers enjoy scanning their items.

Bill Fisher:

Very good, very good. And thanks to the three of you. That is our Three and Three for this week. Well done for being my guinea pigs for the new format. You did great. Well done.

Okay, now it's time for the main part of the show. This is where we dig a little bit deeper into today's topic and the stories that we've spoken about. And I want to start by digging into the Amazon story. This is the genesis for this episode. You've covered a little bit of it already Carina. Amazon's dialed back Just Walk Out, but it's absolutely not the end for this technology. Is it right to call it a bit of a failure or has it actually been successful? How do we judge it?

Carina Perkins:

I think calling it a failure might be going a little bit far. I think that it's been testing a newer format and it's found that it works well in smaller stores and it doesn't work so well in larger stores. It works really well for specific shopper missions. And so like you said, now it's going to be providing that tech to other smaller stores. So I think failure is a bit strong, but I think definitely, perhaps, it got a bit overexcited about the tech to begin with and imagined that this is how everyone wants to shop.

And I think what we are really seeing with some of this in-store technology is that it's not necessarily solving a friction for the consumer that exists. So either that friction just doesn't exist for the consumer or the technology is not solving the friction. So I think that retailers really having to go back and think a little bit about bit how the technology that they're installing is going down with the consumers and with their specific customers. Because you might have a Gen Z consumer that really doesn't want to talk to people, wants to go in, doesn't want to interact, and wants to leave the store without any kind of human interaction. But for some older shoppers, going shopping might be a social experience, and they actually want to engage with human staff. So I think it's really just learning what tech works where.

Sara Marzano:

I think that's absolutely right. And I would argue, also, that beyond solving a point of friction for a customer, where we've seen tech in physical retail go really wrong is when it actually creates friction where it wasn't there to begin with. So one of the things with the Amazon Just Walk Out within the Fresh grocery stores is you heard about customers having to wait hours for their receipts. And we know that folks are really budget conscious these days, and if you're doing a large grocery shopping trip, knowing what you spent is really important. And so having to wait a long time for those receipts, and then knowing that there were even mistakes being made in terms of the items that were being tallied up, so really creating a headache where there really wasn't one before, is a really big watch out for rolling out, introducing this new technology.

Carina Perkins:

Absolutely. And we've seen that as well in the UK stores. There's been quite a big backlash against self-checkout in general because there was a big concern over theft. Instances of theft went up and so then retailers started doing things like installing barriers, and customers had to scan their receipts. And so from a customer perspective, not only are they doing all the work of scanning all their shopping themselves, but they're also then being treated like a criminal. That's really not solving a customer friction, that's a really poor customer experience.

Bill Fisher:

Yeah, funny story about that. I actually tried to walk out of a Sainsbury's in the UK, and I didn't know I had to scan my receipt, and all the alarms went off.

Sara Marzano:

Oh, no.

Carina Perkins:

Wow.

Bill Fisher:

And I was approached, I was like, "Oh Christ. What have I done?"

Sara Marzano:

So embarrassing.

Carina Perkins:

And it's just not a good-

Man-Chung Cheung:

Sounds terrible.

Carina Perkins:

Not a good experience. And I think then we're seeing some instances where technology is improving the customer experience. So I think perhaps these Dash Carts, where people can add items to their basket and it will help them see the cost of their grocery shop as they go along, that's a good idea. Similarly, as we've seen in the UK with the Scan & Go handheld scanners, people quite like using those because it means that they skip the queue at the end. And they can also really keep in control of their shop and see how it's tallying up over the course of the shop.

Bill Fisher:

Yeah, I definitely want to come to you, Man-Chung, because a lot of the out-there retail experiences come in China, Southeast Asia, right? So do you have any insight as to things that may have gone well or may not have gone so well in Asia Pacific, that retailers have then walked back on and have improved upon?

Man-Chung Cheung:

Yeah, there have been many cases like that. Speaking of getting over-excited about technology that Carina brought up earlier on, I think before the pandemic, back in 2018, when the Chinese economy was growing in near double-digit, and there was just a lot of hot money, so all kind of experimentation was going on in China. We saw these [inaudible 00:13:29] stores where people just walk in, have their face scanned, pick up an item, and then leave the store, whatnot. That kind of stuff that was happening. At the time, it seemed like it was going to just take over the world. You just can't stop reading about them.

But in hindsight now, in 2024, we haven't seen them taking over the world. They still exist, but they certainly haven't made the type of impact that we were expecting at the time. At that time, it seemed inevitable. Just an example of how crazy it was, KFC was introducing this Smile to Pay, which uses facial recognition. When you think about it, it seems like a gimmick, right? You have to smile and then pay. It's just sort of like, "Hey, we got this facial recognition technology out there, why don't we do something about it?" But it never truly taken off.

And same with... I remember going to one of Alibaba's supermarket flagship store, Hema store in Shanghai. So they have this robot butler or server that go down this runway that runs across the restaurant, and sends you the dish. And when the robot gets to your table, you open the lid and then pick up the dish like that. When you look at it, it seems kind of cool and unsightly, and I don't think they have ever expanded that to other stores.

Bill Fisher:

Yeah, some of this sounds like solutions looking for problems. You just mentioned it before, Carina or Sara, one of you, about customer requirements versus retailer preferences, or them just wanting to show off what they can do. Is there a middle ground that we think is working, that is successful?

Carina Perkins:

Well, I think that retailers always have to balance out retail efficiency with customer experience. And I think sometimes they will invest in retail efficiency, and that might not benefit customer experience. But sometimes, I think, if they're clever, then they can find technology that improves efficiency and improves the customer experience. Like I said, I think those scan and shop handheld scanners a good example. I don't know, Sara, if you've got any other...

Sara Marzano:

Yeah. I think on that same vein, the smart carts, we're hearing and seeing that consumers are at least reporting that they enjoy using them. I think there's almost a gamification element that comes with being able to use a device like that, scan as you go.

And then for retailers, I have to acknowledge this is expensive technology. The average smart cart, I think I read somewhere, is between $5000 and $10,000. So there's a lot of considerations there, but there's also the opportunity to offset that tech investment with bringing retail media in stores via the screens that exist on those smart carts. And I think if it's done right and the advertisements that are served to the customer feel contextual and relevant to their shopping journey, it's one of those instances where it can be a win all around. For the retailer who's made this investment but is unable to offset it with a profitable media business, or the brand who's looking to get their messaging to the customer at that point of purchase. And for the customer, who's maybe interested in discovering new products or learning about promotional offerings. So I think that's a place where there could be a really good balance struck

Bill Fisher:

Huge margins, right?

Man-Chung Cheung:

I think just also knowing what the customer pain point is and bringing convenience. Where the customer would find stressful, for example, for me when I go to a fast food restaurant, I prefer to go in-person versus going to the drive-through because it's just stresses me out, trying to figure out what's on the menu and whatnot. So yeah, always know your customer, where the pain points are, and just try to reduce the stress and frictions.

Sara Marzano:

I think that's a good point around having the option. So making sure the customer can choose a drive-through or come inside the store makes me think of having the option of self-checkout and also a traditional, manned checkout. And maybe, eventually, for groceries who do have smart carts available, making sure that the traditional shopping cart you can just pick up in the parking lot is available as well.

Bill Fisher:

Listen to the customer. Interesting. Give them a choice.

Sara Marzano:

Revolutionary.

Bill Fisher:

Fancy that.

Sara Marzano:

Yeah.

Carina Perkins:

And just do the basics right, I think. And I've said this many times; before jumping on the latest technology, retailers should just be really ensuring that they're doing the basics right. They've got the right product mix, they've got the right prices, they've got the right promotions, they've got well laid out stores. Technology can add to that. But if you're not getting that right, there's not really anything that technology is going to fix.

Man-Chung Cheung:

I do think that the smart cart idea is brilliant because it becomes hands-free in that case, over holding your smartphone or another scanner. And it just kind of force you... It's right in front of the customer's face, so we kind of have to force you use it in a way. So I like that.

Carina Perkins:

Yeah. So Tesco has introduced digital ads on its scanners, [inaudible 00:18:21] shop handheld scanners. And I think that's just absolute genius because customers can be served ads as they're going around and scanning items in, so that brands can serve relevant promotions and ads on things that they're actually looking at and buying. And also, you have to be a Clubcard member to use the scanners, so they know exactly who you are and who's shopping, and so they can fully close the loop on measurement. And I think that's just a really clever use of existing technology that customers already trust and enjoy engaging with.

Bill Fisher:

Yeah. And it doesn't feel too creepy, right? It's not like tracking your face and facial expressions, the smiling to pay thing.

Carina Perkins:

Exactly. And I think people feel a little bit uncomfortable, to some extent, with sensors in stores that are tracking their every movement. Whereas I think if they're just being tracked by a handheld scanner, that's a bit of a different thing.

Sara Marzano:

But it's almost like you're making... You're an active participant as a customer, to say, "I'm going to use this tool to track what I'm purchasing." So it makes sense that you, the retailer, know what I'm buying, right? Versus being like, "How did you know that I paused here and picked up something and thought about buying it and didn't buy it?" That's a little uncomfortable.

Bill Fisher:

Awesome stuff. Okay, really, really interesting discussion. But unfortunately, that's all we got time for for that segment because now it's time for our recap stats quiz. I know you've all been waiting for this bit. This is where we recap today's theme with a few related stats questions. There's no prize, it's all about bragging rights. There are only three questions, they're multiple choice, so it should be nice and quick. And I'm going to try something new. We're going to do this live, if you can open Slack, and I'm going to ask you to Slack me your answers. People complained there was influence and things going on. So open Slack, get a direct message ready for me.

We'll start with our first question, and we're going to start with the Just Walk Out data from Amazon itself. The tech, as we mentioned, it's not exclusive to Amazon Fresh Stores, Amazon licenses it to many third parties. But according to the company, how many third party locations globally employ this technology? So we have 44, 140, or 500, they're your options. I'll ask you the question. According to Amazon, how many third party locations globally currently employ Just Walk Out technology? 44, 140, or 500? And Sara already gets a point because she's the fastest to respond. So well done, Sara.

Carina Perkins:

I responded ages ago. [inaudible 00:20:57]. I responded before you'd even read it out twice.

Bill Fisher:

That's because we were talking earlier and it wasn't a new message, so didn't give me the notification.

Sara Marzano:

Oh, shoot. What's the time stamp?

Bill Fisher:

Yeah. You do win, Carina. Sorry.

Sara Marzano:

Yes,

Bill Fisher:

Okay, so-

Man-Chung Cheung:

So what's the answer? What's the answer again?

Bill Fisher:

I'm going to go through the answers that are right and wrong, okay? So if you would've said 500, that would be incorrect. That's how many Whole Foods Market stores there are in the US. If you had said 44, unfortunately you would also be incorrect. That's the number of Amazon Fresh stores. If you'd said 140, that's the correct answer. There are actually 140 plus, it says in its official PR, across the US, UK, Australia, and Canada. Should I do a tally after each question?

Carina Perkins:

Yeah.

Bill Fisher:

Let's do it. So after the first round, Carina and Sara, you are both in the lead with one point. Man-Chung, yet to get off the mark, but plenty of time. Our second question, physical retail, still a really important part of retailers revenues of course, but in some countries that's more the case than in others. So which country, of those that we forecast, do you think has the highest proportion of retail sales that happen in physical stores? So there's a country where 97% of all retail sales occur in physical stores. Where do we think that is? These are 2023 figures. We have the Philippines, Austria, or Peru.

So the answers are in. So Peru would be incorrect. You'll notice that I went region by region. So Peru is the biggest proportion in Latin America, nearly 94%. If you said Austria, that would also be incorrect, 94.5%, the biggest proportion in Western Europe. The correct answer is the Philippines. 97.2% if you can believe it.

Carina Perkins:

Wow.

Bill Fisher:

And so that's easy for me to tally up those scores because no one got that right. So it's still Carina and Sara out in front, Man-Chung yet to get off the mark. But it could all come down to this final question. And for this final question, I've had to alter it at the death because Carina blatantly cheated earlier today and discussed with me the answer to the original question. So I've had to alter it.

Carina Perkins:

I didn't cheat, you asked me.

Bill Fisher:

Yeah, I know. Yeah. I can't say that, can I? I'm the host you cheated. We've discussed Tesco's Scan as you Shop retail media advertising opportunity. The retailer has been rolling this out throughout the UK for the past year almost. I was going to ask you how many stores this is now available in, and the answer is, Carina?

Carina Perkins:

359.

Bill Fisher:

359.

Carina Perkins:

Or it was as of February, 2024.

Bill Fisher:

Yeah. I can't ask that now, so instead I'm going to ask you in what year was Scan as you Shop type technology first introduced in the UK? And it wasn't Tesco that introduced it, there's a clue. So in what year was Scan as you Shop type technology first introduced in the UK? Was it in 2012, 1998, or 1995? 2012, 1998 or 1995? Carina Perkins is typing. Okay.

Carina Perkins:

I know when it was introduced by Tesco, but I feel like that's why it's a trick question.

Bill Fisher:

Okay. 2012, I don't think anyone said that, did they? That's incorrect. That's when Tesco introduced its Scan as you Shop service. Have I got that right, Carina?

Carina Perkins:

That's right. Yeah.

Bill Fisher:

Good. 1998 is also incorrect. This was the first widespread rollout of the technology by Waitrose. It rolled out its Quick Check scan and pack device in '98. But in 1995, Safeway in the UK introduced this-

Carina Perkins:

Safeway. Wow.

Bill Fisher:

... on the 14th of March that year in a store in Wales. And if I tally up the scores, like a phoenix from the flames, Man-Chung with that correct answer at the end means it's a three-way tie.

Carina Perkins:

Oh my gosh.

Bill Fisher:

All three of you-

Man-Chung Cheung:

Can we have a bonus question or no?

Bill Fisher:

... on one point. So we have a tie-break. I always have a tie-break, Man-Chung-

Man-Chung Cheung:

Oh, nice.

Sara Marzano:

Nice.

Bill Fisher:

... lined having exactly for these circumstances.

Man-Chung Cheung:

Go for it.

Bill Fisher:

I'm always disappointed when it isn't a draw. Okay, so we're going to head back to the culture shock stats that I hit you with earlier. You may remember France, the most popular tourist destination, 80 million visitors in 2022. Second on that list was Spain with 72 million visitors. How many tourists do you think the US saw through its gates in 2022? It came third on the list. So this is just a free form answer. Give me a number, the closest number wins. And we're going to do it on Slack again. You can go to the decimal places if you like.

Okay. The answers are in, and there is a clear winner. Man-Chung, you went highest with 70. Carina not far behind, you did go to decimals, 66.9. But our winner today, she went lowest with 55, is Sara. The answer is 50.9 million.

Sara Marzano:

Woo-hoo!

Man-Chung Cheung:

[Inaudible 00:26:17].

Bill Fisher:

Beginner's luck, Sara. Well done.

Carina Perkins:

Well, done.

Sara Marzano:

Thanks, everyone.

Man-Chung Cheung:

I couldn't complete my comeback. Congratulations, Sara.

Bill Fisher:

It was a good effort. It was a good effort, Man-Chung. But unfortunately, that is the end of the show, we don't have any more time. But fortunately, we always end the show with a winner, and that winner is Sara. Congratulations, Sara, and thanks for speaking with us today.

Sara Marzano:

Thanks for having me.

Bill Fisher:

Great to have you on the show. Man-Chung, you almost did the ultimate comeback, but not quite. But thanks for joining us on the show.

Man-Chung Cheung:

You're welcome. Great to be here, always.

Bill Fisher:

And Carina, you would've won if I'd have stuck with the original questions, so well done on that. And thanks for joining us today.

Carina Perkins:

Thanks, Bill.

Bill Fisher:

And thanks to all of you for listening in today to Around the World, an eMarketer podcast, made possible by Walmart Connect. Tune in tomorrow for our Behind the Numbers daily show, hosted by Marcus. If you want to ask us any questions at all, you can of course email us at podcast@emarketer.com. I hope to see all of you next month for another edition of Behind the Numbers: Around the World. I will be happy to see you and I will smile a genuine smile. I won't be offended if you do too. Bye for now.