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Checkout free stores: what they’re all about

By James Stark, account director NER, GSV at Worldline

What is the concept behind checkout-free stores?

In theory, checkout-free stores drive convenience for both the merchant and the customer. Everyone has demanding lives and as a result will, understandably, look to minimise hassle if they can. 

Through the right payments’ infrastructure, these stores, which first appeared in the UK through Amazon Go, allow customers to walk into a shop, pick-up their items, and walk out again without having to queue or make a ‘physical’ payment. More recently in October, Tesco announced the opening of its own checkout-free store, which has prompted the latest discussion.

As such, they allow people to get on with their personal and professional lives, particularly at the end of a long week when their priority is often to relax or enjoy time with friends and family. 

Instead of waiting for a till to become available, people would spend less time in a shop and would be more inclined to spontaneously go into a store on their way back from work as a result. Checkout-free stores therefore make going shopping more of an attractive proposition. 

How do they benefit the merchant?

The benefits to the merchant are multi-faceted. Clearly, shoppers being able to go in and out of a shop at greater speeds means the stores can accommodate more business, and therefore increase revenue. But there is a more nuanced side to this type of system which makes it attractive to retailers – one that offers a bespoke service to all customers.

This is largely through the store’s app which customers need to download before being able to use the service. The app requires each user to enter information such as card details and, first and foremost, allows the payment-enabled sensors to link a shopping trolley and the shopper to their bank account to make the correct payment. 

But through the non-sensitive information provided, retailers can see where their customers are shopping, what they are shopping for and when. This allows them to place a frequently bought snack, for example, at the front of the store on a Saturday evening for a discounted rate if precedent suggests this is what their shoppers like to buy.

By doing so retailers are catering more to the specific needs of the customer, bolstering the likelihood they will return to shop in their store. And many recognise, customer retention is an important aspect of business revenue.

Are they the future?

At face value, these stores seem like a very attractive option for merchants, but obstacles remain and may well be a slow burner. A big challenge is the educational and behavioural side. As a customer we are used to going into a store, picking up a basket, completing our shop and then having a ‘physical’ checkout at the end, either through a traditional till or at a self-service checkout. 

But many are still not used to contactless shopping yet and may not be aware that someone else can use their card, without knowing the required pin, if they were to drop it on the floor. And, as history suggests, people often revert to their normal ways if they feel uncomfortable.

Having said that, a mindset doesn’t change overnight and the Covid pandemic has hugely accelerated the trend towards contactless, as people naturally look to limit contact to protect their health and that of loved ones and family. If merchants can install the infrastructure without marginalising certain customer groups, then there is a greater chance contactless will be the future of our shopping experience. 

Certainly, younger generations who now plan and pay for their lives largely through their smartphone would be able to adapt quite easily. The other important challenge to overcome is to instal the correct payment infrastructure in these stores. This is vitally important for both shop revenue and reputation, as if the systems went down and there are no back-up ‘physical’ checkouts, then you have a problem.

Find out more about Worldline’s Retail solution here: Retail (worldline.com)

About the author

James Stark is an experienced payments leader who has spent over 12 years within the payment industry in client focused roles. During his time with Worldline, drawing on the expertise he has gained throughout his career, he has been playing a key role in supporting the company developing its retail business – retail being one of the company’s key verticals.

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