The tight labor market could help accelerate contactless checkout adoption

The news: Amazon’s Just Walk Out cashierless checkout technology is a critical element within its brick-and-mortar strategy, per internal company documents reported on by Insider.

More on this: Amazon wants all of its Amazon Fresh grocery stores to be JWO-enabled, as well as a growing number of Whole Foods stores.

• It is also focused on selling the JWO technology to other merchants. For example, two stores at the Houston Astros’ stadium Minute Maid Park feature JWO technology.
• Other retailers are also active in the space. For example, Chinese retail giant JD.com launched its first “unmanned convenience store” in 2017, and has since rolled out line-free technology in its stores in China and Indonesia.
• A growing number of retail technology vendors are offering similar capabilities, including AiFi, which works with retail partners such as Aldi and Carrefour, as well as Instacart, which recently partnered with Aramark Sports + Entertainment to offer its contactless POS system at nine Major League Baseball stadiums.

The pandemic’s impact: The pandemic drove Amazon to move quickly to head off potential technology rivals as it sought to license the software package it called “Just Walk Out as a Service (JWOS).”

• Licensing the technology is significantly more profitable than running brick-and-mortar stores. Amazon is also focused on licensing other in-store technology, including its Amazon One biometric technology.
• While the pandemic drove Amazon to expand its JWO candidate countries from 23 to 81, and provided an inroads to discuss the technology with major brands such as Morrisons in the UK and Casino in France, it took until late last year for Amazon to name UK grocer Sainsbury's as its first international third-party JWO customer, per Insider.
• The reason for the slow uptick is the reluctance of other retailers to partner with a competitor.

The timing is right: While the pandemic drove consumers to accept, and in some cases prefer, contactless checkout, the tight labor market could be the catalyst that drives more retailers to adopt the technology.

• It’s increasingly difficult to hire workers as the US labor market is historically tight. Job openings outnumber the available labor pool by about 5 million.
• Contactless checkout and other tools, such as self-checkout, are driving down the number of cashiers; the number of cashiers is projected to decline 10% between 2020 and 2030, per the US Bureau of Labor Statistics.

The big takeaway: Contactless checkout offers the prospect of a major win-win for retailers and consumers.

• It can make for a faster, easier shopping experience for shoppers, while it enables retailers to have fewer employees working at any given time. Moreover, merchants can allocate those workers to higher-value functions than manning a register.
• The situation presents an enticing opportunity for Amazon. However, in order to scale its in-store technology licensing business, it needs to find ways to convince retailers that it is a partner rather than a rival.