Author(s): Raghu Gopal
On Monday, US convenience store chain 7-Eleven announced that it's piloting a new mobile checkout process called Scan & Pay at 14 of its Dallas locations. The system lets shoppers track their own items by scanning the QR code for a product with their smartphone and pay using the company's mobile app. 7-Eleven says it plans to expand the service to additional cities in 2019.
This latest move shows that cashier-free shopping is becoming a real trend. 7-Eleven joins a host of retailers including Dollar General, Kroger and Walmart's Sam's Club in the US — and many others around the world — in offering this type of experience, allowing customers to self-manage the checkout process using a mobile app. If 7-Eleven decides to quickly roll out the system to most of its stores, it could change consumer behaviour in entire countries. It has a total of 67,000 locations in 17 countries, including about 12,000 shops in North America. About half of the US population lives within a mile of one of its stores.
It should be noted that the technology used by 7-Eleven is quite different to that used by Amazon in its cashier-free Amazon Go stores. Amazon has tapped computer vision and artificial intelligence technology to completely remove tills from its shops. Consumers can walk in empty-handed and walk out with groceries without ever having to scan product bar codes — it's a truly seamless experience. Amazon has opened six of these stores, and they have become a hit with customers.
Amazon may have a very limited physical retail operation, but its influence certainly makes up for its bricks-and-mortar presence. It pioneered the concept of till-free stores, forcing retailers like 7-Eleven to respond with their own convenience stores of the future, particularly given Amazon's plans for expansion: the e-commerce giant is reportedly planning rapid growth, and could open as many as 3,000 Amazon Go stores by 2021. The cashier-free trend is something we highlighted at our recent Predictions event, where we tipped that by 2025, five percent of grocery stores in the US will be fully automated (see CCS Insight Predictions 2019 and Beyond).
Despite the rapid growth in online sales, local convenience stores still cater to the needs of millions and millions of people each day. It's a shopping format that will be difficult to replace. In fact, these and other smaller stores are one of the bright spots in the bricks-and-mortar sector. This is encouraging for 7-Eleven, which holds about 28 percent share of the US convenience store market.
Disruption is accelerating in the retail space and stores will need to change the experience they offer to keep pace with the fastest kid in the class. This means adopting technology and hiring more digital product managers, software engineers and data scientists schooled in artificial intelligence and machine learning to build a better customer experience. The shopping revolution has begun and we'll be keeping a close on eye on future developments.