Shopping with machines: technology to overtake the human touch

Tuesday, 21 January 2020

Imagine shopping in a store and never coming into contact with another person — unless you want to.

Simply walk in, grab a basket, shop and then go; the payment has been automatically made from your phone, your retailer's club card discounts applied (and your shopping habits analysed).

With the rise of artificial intelligence and self service, a human-free shopping experience is becoming a reality — but personal service will become a defining detail of the high-end shopping experience, consumer behavioralist Sommer Kapitan said.

Technology heavy shopping is becoming the norm (file photo).

And New Zealanders should prepare themselves for an Amazon Prime-style shopping experience, Kapitan said.

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'What I mean by that is how the Amazon brick and mortar stores work overseas. Anyone can walk in and shop, but you just scan your phone and you get healthier prices if you are Amazon Prime member.'

Customers can order, click-and-collect, and consult workers at Amazon stores.

New Zealand consumers were used to scanning loyalty cards to get better prices but what was coming was 'next level', Kapitan said.

In-person retail could become more of a warehouse and collection point, with more storage in the back, and more pick up-your-order style service, Kapitan said.

The physical arrival of global digital giants like Amazon will require local retailers to step up in terms of better shipping, availability and selection, she said.

'I look at what the Warehouse Group is trying to do with The Market and I think it has potential, but so far don't see much take off among real consumers,' she said.

Auckland University business lecturer Mike Lee said that the trend to use artificial intelligence and self service would continue to build.

'The trends that we are gradually moving towards are normally to do with greater use of AI and self service technologies, but these are obviously not restricted to 2020, and great advances there may also not occur in 2020 immediately,' he said.

Imagr's Smartcart will be trialled at Faro's Auckland store in Grey Lynn next year.

New approaches to the weekly shop

The weekly supermarket shop could be where most New Zealanders notice changes first.

Self-service checkouts are already here, appearing in New Zealand around 2009. In December, New World and Farro announced plans to introduce high-tech trolleys with built-in scanning systems this year, where customers will scan groceries themselves before paying at the checkout.

University of Auckland senior marketing lecturer Michael Lee says the use of AI will continue to grow throughout 2020.

William Chomley's company Imagr has developed a shopping cart with cameras attached, called Smartcart, which bypasses the need to wait at the checkout. It's one of several models of high-tech shopping carts being rolled out over the next year.

He said scanning products would become a thing of the past.

Kiri Hannifin, Countdown's general manager, says supermarket shopping was increasingly moving online.

'If you have people going shopping three-to-five times a week then they want to get in and out. This technology is about removing the point of friction,' he said.

Rather than being at the till, staff would be in positions around the store helping customers and acting as sales people, he said.

A recent report from global retail technology company Soti found 67.3 per cent of consumers perceived mobile technology as the most effective way to provide a faster shopping experience, while 76 per cent of consumers wanted in-store staff to use mobile devices to provide a better in-store experience.

But one-third were unwilling to sacrifice personal data security to improve their in-store experience.

'The way New Zealanders shop has changed dramatically in recent years. Today, two working parents is the norm, constant technology and communication means we're 'always on', and we all want supermarkets to be quick, easy and to fit around our lives, not the other way around,' Countdown general manager Kiri Hannifin said.

New Zealanders could see the arrival of Amazon within five years, says one retail expert.

Online shopping had grown in popularity in 2019, totalling 8.5 per cent of Countdown's sales in the September quarter, and it was expected to grow.

This year, Countdown will open its first dedicated online grocery fulfillment centre, or e-store.

Inside, the store will look similar to a regular supermarket but without the customers. The centre will fulfil online delivery orders for central and south Auckland.

Double-edged sword

Mighty Ape general manager Alastair Burns said the rule changes around GST had made local retailers more competitive against overseas stores.

But Burns said the rule change could also be a double-edged sword, potentially prompting stores like Amazon to develop local distribution centres.

Amazon's introduction of an Uber-like model for delivery, using delivery contractors to by-pass traditional delivery services was also something Mighty Ape was watching.

Massey University retail researcher Jonathan Elms says New Zealand shoppers should expect big brands to arrive in the foreseeable future.

'We are watching to see whether a service like that might start up in New Zealand,' he said.

'Anything that can get products to customers faster and in a more predictable manner is always useful to a company like us.'

The arrival of the big boys

Kiwis should expect some big international brands to come to New Zealand in this year, Massey University retail researcher Jonathan Elms said.

'There is very much a buzz in the market at the moment,' he said.

'I think the arrival of Ikea and Costco, they have long established but evolving business models, this will shift the mindset of local retailers in terms of what they need to offer and the way they do business.'

In 2020, Foodstuffs will be trialling out the trolleys with built-in barcode scanners and tablets at its new Pukekohe store.

To be competitive, local retailers will have to offer a wider range, faster delivery and better integration between online shopping and instore shopping, he said.

For Ikea fans, 2019 has been sparse in terms of details after the company announced it was coming to New Zealand.

Kiwis should hear details this year about where and when the furniture giant will open its first local store, Elms said.

Costco is moving forward with plans for its Westgate store, expected to open next year, he said.

Sustainability

First Retail chief executive Chris Wilkinson said customers were demanding a greener approach from retailers.

One in five New Zealanders said choosing a brand that operated in a sustainable manner or helped them live a lower-impact life was the most important factor in their purchase decision, according to a report from the Sustainable Business Council.

In the same report, sustainability was ranked the third equal most important factor when making a purchase choice after quality and price.

Hannifin said customers were pushing the retailer on environmental and social issues.

'The desire to reduce plastic is still top of mind for our customers, and suppliers are really starting to listen and follow suit.'

Kiwis are prepared to use their wallets to reward those retailers that are responsible and address wider social issue through their business practices, new research from Accenture showed.

The survey of 500 New Zealanders, by Coleman Parkes Research, found 40 per cent of consumers plan to shop only with retailers that reflected their values.

Accenture Interactive New Zealand managing director Ben Morgan said consumers were no longer simply purchasing a product, but were also supporting causes and concepts with their spending.

'Environmental and social responsibility is becoming an important differentiator for retailers,' Morgan said.

'This is a trend we've observed globally as consumers increasingly look for brands that reflect their personal values. They're prepared to use their purchasing power to encourage retailers to be more responsible in their environmental, social and workplace practices.'

Wilkinson said the way customers had adapted to the plastic bag banned showed shoppers' levels of enthusiasm around environmental issues.

'We expect to see brands and retailers re-double efforts in 2020 and see a similar seismic shift in how product is packaged at source – along with 'last mile' packaging and distribution – either from stores or online fulfillment.'

Wilkinson said wider overseas trends were revealing a greater consumer appetite for long-lasting products, the use of natural components, end-of-life responsibilities and a greater push for recycling.

'This is going to be new territory for some retailers and something they'll need to come to grips with quickly as gen Z's and millennials' values' and vision will increasingly influence the evolution of products, services and experiences.'