While there’s no strict definition for frictionless technology, it is generally understood to be about removing physical or digital barriers to make a journey simpler and easier. In the case of Amazon Go, frictionless is enabled with computer vision, shelf sensors, and sophisticated AI. And whatever technologies you choose, the end goal of frictionless vision is to move checkout from the end of the journey to a continuous journey throughout the store.
As you remove an item from the shelf, it is placed in your virtual cart. Place it back on the shelf, and it is immediately removed from the cart. And only when you leave the store is the transaction completed, and you are charged for your shopping trip. It is hard to get more frictionless than completely removing the need for the checkout experience.
While the retail narrative for frictionless centers on the end consumer, the same frictionless solution provides an even greater benefit for retailer operations and the broader supply chain.
How much greater? According to McKinsey, a full store computer vision system can enable up to a 30 percent labor reallocation, significantly reducing the billions lost in annual slip and fall fraud. What’s more, it drives increases in on-shelf product availability to boost retailer revenue by over 7 percent through improved stock management and supplier coordination.
With real-time data on shelf stock, the retailer can ensure products are on the shelf, distributors know which items are running low and manufacturers can plan for the needs of the retailers and their end customers. According to Nielsen, manufacturers reserve up to 20 percent of their budget for marketing, product placement on store shelves and rebates. That’s $225 billion in annual spend that could be made on real-time data instead of month-old data as they do today. Frictionless technologies in retail enable the shift to a Digital Supply Network (Deloitte) and the potential to unlock trillions in new value across the ecosystem.
Public attention might be focused on just-walk-out shopping, but the industry, and frictionless technology players, see a much bigger opportunity.