Supermarkets grapple with checkout-free stores

A small stretch of London’s Holborn district busy with office workers and shoppers has become a hotbed of experimentation for supermarket chains.

J Sainsbury on Monday became the latest to open a checkout-free store in the area and the first in Europe to license Amazon’s “just walk out” technology for its own use. Days earlier, Amazon opened its own checkout-free shop on the same street. Tesco has one nearby.

It is Sainsbury’s second attempt at such a store at the same site. The grocer abandoned its first try after three months in 2019 because customers “were not ready” for the change.

But the Covid-19 pandemic has helped accelerate a longstanding shift from cash to card transactions and triggered renewed interest in store automation technology.

The first Amazon Fresh store in the UK opened in March and the company now has eight of them, having poached former Tesco lifer Tony Hoggett to help accelerate the rollout of a fresh food operation in the UK.

Tesco and Sainsbury’s have opened a single store each and both have said they would evaluate customer feedback before proceeding further.

Customers need a QR code to enter the Sainsbury’s store, but once they are in no scanning is required; shoppers simply place items in a bag and walk out. A combination of weight sensors, motion detectors, cameras and software determine what items a customer has picked up or put back. The card linked to their account is automatically billed as they leave the store.

For its latest attempt, Sainsbury is using different systems, provided by Amazon — the first time the group’s technology has been installed by a third party outside the US and the first time it has been retrofitted to an existing store.

Sainsbury said it had selected the Holborn site as it was mostly focused on offering on-the-go food and drink to local office workers who wanted to complete shopping quickly.

An Israeli retail tech company, Trigo, provided the cameras, sensors and software that power the Tesco Get Go store on the same street, which opened in October. It has also installed them at a Cologne branch of Rewe, the German supermarket chain.

Michael Gabay, co-founder and chief executive of Trigo, said the company had contracts in place to fit out “hundreds” of stores across Europe over the next few years, initially in urban areas.

But he predicted the technology would also be used in rural areas where retailers have often struggled with the cost of running staffed stores. “It’s going to be massive”.

He said the technology used in all the stores was broadly similar and that its benefits included more data and better inventory management as well as eliminating queues.

Some customers have yet to be convinced.

At the opening day of Sainsbury’s store, staff outnumbered customers. Maria Rus, a student, picked up a flyer but crossed the road to a traditional branch. “I went inside [the autonomous store] to have a look because it’s a cool idea,” she said, “But I couldn’t find what I wanted”.

An 83-year-old man turned away after the concept had been explained. “I’ve never owned a smartphone in my life,” he said.

Meanwhile, another customer, Stepan Lavrouk, said he had visited the Tesco store around 10 times since it opened last month. “Apart from the general creepiness with the constant surveillance stuff, it’s pretty good,” he said. “I already had the Tesco app. Once you figure out how it works it’s easy.”

In response to concerns about privacy, Gabay said: “We blur the faces of everyone in the stores and we don’t store any of their personal details. It’s all anonymised.”

Vasco Portugal, co-founder and chief executive of Sensei, another retail tech group, said the payback time for the technology was relatively quick.

“You can see a return on your investment in around one year,” he said, though this depends on the density of the store, the nature of the products sold and the number of autonomous stores rolled out.

Portugal believes “people are grasping the concept for the first time now” but will in time “get used to buying with no queues”, with autonomous or hybrid stores becoming more commonplace.

Sonae, a Portuguese conglomerate, began trials of Sensei’s technology at one of its Continente convenience stores in Lisbon in May.

Retailers play down the idea that experimental checkout-free stores are an exercise in cost-cutting, pointing to the heavy fit-out costs and the number of staff that still patrol the aisles helping customers with the technology or verifying age limits for purchases of alcohol and pharmaceuticals.

But in an industry that employs millions of hourly-paid staff and has been heavily affected by minimum-wage legislation, the longer-term attractions of being able to run stores with fewer people are obvious.

That assumes customers embrace the concept. Of the three autonomous stores in Holborn, Amazon Fresh was busiest — thanks in part to offering customers £10 free credit.

Chloe Konstantinides, another shopper said she was “here for the free £10 to be honest”. “It saves a bit of time but I won’t say I love it. It’s a bit impersonal. The way they are getting rid of people feels a bit unnecessary.”