Does it seem like self-checkout is everywhere this year? That's not your imagination, and it's about to increase rapidly. Earlier this year, Walmart (NYSE: WMT) debuted its first pilot store that offers only self-checkout. The store in Fayetteville, Arkansas, features open registers designed to allow customers to make it through the checkout process more quickly. If you still need the full-service experience, a Walmart "host" will check out your groceries using the kiosk.
Self-serve is everywhere
This wasn't the big-box giant's first attempt at this sort of system. Several years ago, it piloted the scan & go program for shoppers willing to download an app and scan their own groceries. That program was discontinued in 2018, but it appears to have a second life. Walmart's newest store redesign puts the emphasis on omnichannel, with reminders to download the Walmart app and use it during the shopping experience. Contactless payment options such as Walmart Pay will be prioritized, and some locations will offer scan & go as a way to check out. Those with a Walmart+ membership will be able to simply pay through their apps.
Of course, long before there was Walmart+, there was Amazon (NASDAQ: AMZN) Prime, and the e-commerce behemoth first debuted contactless shopping several years ago in a move deemed the creation of the store of the future. Amazon Go stores allow shoppers to move through the aisles and simply walk out with their purchases, which are automatically tallied on the app. Amazon Go stores are now operational in Chicago, Seattle, New York, and San Francisco.
In October, Amazon announced Amazon One, a palm scanner that can allow people to pay by waving a hand over a device. This technology could go far beyond shopping and be used at other times identity needs to be quickly verified.
Target (NYSE: TGT) is also testing out self-service snacking options. It also continues to make it easier for consumers to explore multiple options for purchasing, including delivery, in-store order pickup, and drive-up contactless service. The future of retail is not about any one method of shopping; it's about a panoply of options consumers can choose from, depending on their needs.
Other solutions include facial recognition terminals such as the ones created by PopID, which allows people to pay using their face and can also handle temperature screenings.
Where the giants go, the rest follow
Moves to a cashless society were already in the works long before this year, but the need for contactless payments has turned cash into an antiquated idea. The adoption of various mobile payment methods has been rapid, but most businesses haven't really updated stores to fit the way people shop.
That is starting to change as stores consider how to attract shoppers and keep them safe during the coronavirus pandemic, as well as make it easy for them to pick up online orders and use mobile technology. Stores are focusing less on what they stock on the shelves and more on how they can give customers access to all their offerings, online and off, quickly and easily.
AiFi, a startup that builds automation solutions for retail stores recently raised another round of funding and is both building and retrofitting retail stores. AiFI is already powering 10 stores around the world and partners with a variety of stores, including international brands Albert Heijn and Carrefour.
Most stores with self-service kiosks still need to keep workers in place to answer questions and offer assistance, but some cashier jobs may be at risk. The U.S. Bureau of Labor Statistics has forecast employment of cashiers may drop by 7% from 2019 to 2029, partly due to technology shifts. Some of those losses may be offset by other jobs in fulfillment and other new positions created by the omnichannel economy.
While retailers are evaluating their use of space, so far they don't need less square footage. In order to run a successful online and pick-up business, they may need more warehouse space than ever. A recent report from Jones Lang LaSalle (NYSE: JLL) said that e-commerce sales could increase the need for industrial real estate to an additional 1 billion square feet by 2025. And moves like Simon Property Group's (NYSE: SPG) collaboration with Amazon hint at the future of how stores can become e-commerce hubs.
The Millionacres bottom line
What happens in big stores eventually trickles down to smaller ones, and we're in the midst of a tectonic shift. Decades ago, no one pumped their own gas. Now, self-service is the norm. In the future, it's very likely stores won't have a wall of checkout lines at the front but will instead offer payments that feel more unobtrusive. The role of store employees will change, and there may be fewer of them, but customer service and the human touch will hopefully still play a role in the store of the future. These are trends real estate investors should keep an eye on when deciding where to put their investment dollars.