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Frictionless Stores: How do Amazon Fresh, Tesco's GetGo and Sainsbury's Pick & Go stack up?

Frictionless stores are popping up everywhere, Amazon, Tesco, Sainsbury’s and recently Aldi announced the pilot of a new store. This is undoubtedly the way forward for shoppers and grocery retailers. So, I decided to do my own comparison between three of the top retailers in the UK, to see what the customer experience is like and how the technology works.

I visited three relatively new stores all located on High Holborn in London: Amazon Fresh, Tesco GetGo and Sainsbury’s Pick & Go. In each one, I bought the same set of items to keep it comparable, adding some items to my basket and placing some back on the shelf again. The three stores had several common aspects such as very friendly staff to greet you and help you, all were really well stocked and I was impressed with the variety. I was curious beforehand to see whether they could sell things like alcohol, loose vegetables and bakery items using the frictionless technology, and they all did. The ceilings were full of cameras and sensors and the aisles seemed wider than your typical local format.

I didn’t have the opportunity to visit Aldi’s new checkout-free supermarket in Greenwich yet, but it’s next on the list. Interestingly they are tackling age restrictions in-store with facial recognition technology, which can verify the age of shoppers without human interference. People who cannot or choose not to use this system can still have their age verified by a member of staff, so I wonder what the percentage split will be here?

So, how did they all stack up?

From a customer experience perspective, frictionless checkout is the future…it’s an absolute joy not to have to queue or wait to pay. I can see this being adopted across all retail categories over time and in the hospitality sector. All the store experiences were very similar and given this way of shopping is in its infancy it’s impressive how seamless the experience was across all the brands. Outside each store there was a lot of interest, with people busily downloading the apps.

I’m assuming these store formats require the aisles to be wider for the cameras and technology to work, so there might be a trade off with the amount of product they can sell per sq. ft. However, the frictionless checkout obviously removes the need for fixed checkouts, which does return a lot of space for shopping. Although it might seem counter intuitive, I suspect the frictionless store formats will reduce shrinkage and shoplifting due to the level of surveillance and the need to scan in to enter.

Amazon's £10 first purchase offer is a smart way to encourage people to try the experience for a relatively low customer acquisition cost. I am not sure how much Sainsbury’s and Tesco spend acquiring a customer or getting them to download their apps, but now that I have downloaded the Tesco’s Clubcard app, I will definitely use it if I go to a regular Tesco’s store and over time it could make users more loyal to the brand. Sainsbury's potentially have more to gain, with their various other brands like Argos and Habitat, plus the Nectar card and other apps.

Amazon in poll position?

Amazon is clearly ahead of the curve in terms of store rollout (at least in the UK) with 15 stores already open vs Tesco and Sainsburys with one pilot store each. Over the next 3 years there are plans for 260 new Amazon Fresh stores across the UK. I suspect they are looking at this holistically too, using the stores as a distribution network. You can see the start of this happening already with their pick-up and returns desk in-store. It’s impressive to think that Amazon Fresh is likely to grab the market share for frictionless shopping, with very little presence before (except for Wholefoods).

Amazon Fresh won’t be as concerned about appealing to all demographics, just about carving out new territory. Whereas Sainsbury's, Tesco and other grocery retailers already have millions of customers to consider and hundreds of existing outlets to update. They will be trying to figure out how this technology fits in their overall store estate and will be very conscious of not generating a backlash from certain elements of their customer base who won’t or just can’t engage with this new way of shopping.

The Amazon Fresh stores are small in comparison to larger grocery stores, they are also second-use sites that require a low capital investment, translating into a low break-even sales volume. Many competitors will struggle to make their frictionless stores economically viable as margins inevitably get pushed down - and this is another strategy Amazon have got right.

The race is on

It’ll be an interesting race to watch, and Aldi might just be the next big contender using AiFi’s technology. AiFi has recently been leveraged by the Polish convenience giant Żabka Group, who has rolled out autonomous stores quicker than Amazon, already launching 25 across Europe with further 12 planned by March. Aldi launched its first pilot store in January 2022 with AiFi’s contactless, AI-powered computer vision technology, so certainly another one to watch over the coming months.

One of the most exciting things about the big grocery brands and Amazon suddenly getting serious about digitally transforming their stores and introducing frictionless shopping, is that it is acting as a catalyst for the rest of the retail market.

As David Grenham from MishiPay explained, “It makes sense that grocery is leading the way in frictionless shopping as their customers are high frequency and frequency builds habit. Mathematically, the more you shop, the greater you’ll reap the benefits from the technology efficiencies. You go to the grocery store several times a week, so multiply those time savings that frictionless shopping can offer you over a year, and you’re looking at some huge time savings per person. It’s a no-brainer for customers.”

Suddenly other sectors are waking up to the benefits of digitally transforming their stores and how it can improve the customer experience. In my next blog, we will look at how other sectors are adapting their stores and the underlying technology that’s driving this change.

Later this year we’ll be hosting an Innovation Dinner that focuses on the digital transformation of stores. If you’re a vendor or retailer, register your interest here to attend.

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