Checkout-free tech is coming sooner than you think

"I wish that we were further ahead," Jordan Fisher said. As CEO of Standard, formerly known as Standard Cognition, Fisher has found himself in a strange position this year. The startup's checkout-free shopping technology, which lets customers grab items from shelves and walk out without interacting with a cashier, has the potential to eliminate many of the most COVID-unsafe parts of retail. But the tech just isn't prevalent enough yet.

"Realistically, we're not going to make a major dent in the safety profile of retail as a whole during COVID," Fisher told Protocol. But that doesn't mean checkout-free tech is stagnating: anything but.

Recently, checkout-free technology has gone from being a novel concept to something actually available for consumers to use. Amazon kicked off the trend with its Go stores in 2018, but the idea has started to spread beyond the ecommerce giant. Mastercard launched a trial with Dunkin' and Standard opened three stores with food service contractor Compass, while Amazon and smart-cart maker Caper both launched new products. And heading into 2021, the tech is poised to proliferate.

Checkout-free's COVID-19 benefits are "a coincidence," said Grabango's chief business officer, Andy Radlow. The technology was never designed with health and safety concerns in mind.

"When retailers reach out to us, 100% of the time, it's always first and foremost about experience," Standard's Fisher explained. The idea is to bring the seamless ecommerce experience to physical stores. That means speed — and perhaps fewer cashiers on payroll — but a lot more, too. Checkout-free tech allows retailers to create "brand new experiences," Mastercard's VP of retail innovation Yannis Tsampalis said. At a gas station, for instance, a selection of products could be placed directly at the pump for drivers to grab before they drive away.

Checkout-free tech also enables the other main benefit of ecommerce: data. Omnipresent cameras mean retailers will suddenly know much more about what their consumers are buying, creating a wealth of opportunities for additional revenue. That particularly excites Lindon Gao, CEO of Caper. The cart's screens, he said, can show you personalized product recommendations, potentially even catered to the items already in your cart. "We interface with shoppers as they shop," he said, noting that stores that use the tech see "an increase in average basket size" as a result.

And then there is the potential for cost savings. That comes from a need for fewer cashiers, obviously, but also efficiency gains in other areas of the store too. "We're looking at reducing or eliminating shrink," Radlow said, using the retail-industry term for inventory reduction due to theft or stocking errors. Radlow noted that there's potential to use computer vision for inventory management too — in a much more seamless way than Walmart attempted with its ill-fated Bossa Nova Robotics partnership. All those cost savings, Radlow said, amount to "something on the order of 600 to 800 basis points in play in net savings opportunities. That doesn't even speak to top-line growth because you have a superior shopping experience relative to the folks across the street."

Retailers knew that, and as the cost of equipment and computation came down, the tech started to gain traction, accelerating significantly this year. "I think before [the pandemic], these sorts of solutions were a nice to have," Mastercard's EVP for digital partnerships Sherri Haymond said. "What we're hearing from our retail partners is now they're being thought of as more of a need." Others concur. "We've seen an enormous amount of uptake," Gao said, adding that some customers were accelerating their launch timelines from three months to one month. "I see COVID accelerating this industry probably by two years," he added.

The pandemic has pushed adoption of ecommerce to new heights, and it stands to reason that consumers will start having higher expectations of the physical stores they venture to. And though the tech might not be ready in time to meaningfully affect this pandemic, its safety benefits are starting to be seen in a new light. "I think there's going to be long-term changes to behavior that persist after COVID," Fisher said. Think about the touchscreens at self-checkouts, for instance. "No one wants to wait in line and then engage with this touch screen, which might not be giving you COVID in future [but] might be the flu," he said. "I think we're all going to be more thoughtful about that."

Even in these times where retailers are tightening their belts, cashierless tech is still finding an audience. Throughout the industry, Radlow said, "projects were eliminated across the board," though "our project not only persisted, but was promoted to number one with each one of our clients." There have been some slowdowns in rollouts as a result of travel restrictions, Radlow and others conceded. But by and large, it seems like things are moving full steam ahead.

To an extent, at least. While "the pandemic has certainly increased the hype and expectations for adoption," Gartner senior research director Kelsie Marian told Protocol, it is still far from prevalent. To critics of that grab-and-go technology, the tech still seems too expensive and too difficult to scale. Earlier this summer, those critics got extra evidence for their case: Amazon, an early pioneer of grab-and-go tech, launched Dash Cart, a smart shopping cart — arguably a less revolutionary piece of technology — signaling to some that true grab-and-go tech is difficult to scale.

And while Amazon entering your market would strike fear in the heart of most companies, for Gao the launch was an absolute delight. "Dash Cart is a silent nod to the fact that we're doing something right here," he said. "If Go's ROI really is that high, they would have no worries [building] Go into grocery stores — but the fact is that they didn't," he said. "That really speaks volumes to the scalability of our products, and the long-term vision of where the industry really is going to get."

So was Gao not worried about competition from Amazon? Not in the slightest. In fact, no one Protocol spoke to was, for one simple reason: Other retailers are highly unlikely to license Amazon's technology. Gao, Radlow and Fisher all gave examples of retailers telling them that they'd only partner with them if they stopped using Amazon's AWS. "I was literally told that 'this meeting is over, and you can fly back home now. Because we will never invest in a company that results in a single penny going to Amazon,'" Radlow said of one prospective retailer client. "They understand that when you start working with [Amazon], this is your path to downfall," Gao elaborated.

Though that might not bode well for Amazon's plans to license its checkout-free technology, it's promising for the cashierless startups, which now find themselves potentially on the cusp of significant growth. "We are rolling out numerous stores across a variety of top-tier retailers next year," Radlow said, while Fisher said Standard is at the point where it's "ready to be expanding this out much more quickly."

In a Zoom demo, Radlow showed Grabango's tech in action at a Bay Area convenience store, which is set to go live to the public soon. And those of us outside San Francisco will likely be able to try the tech before long, too. "I think five years from now, you've probably shopped in one of these stores in your own neighborhood," Fisher said. Let's just hope there isn't another pandemic before then.