The threat of Amazon is forcing supermarkets into drastic changes

UK supermarket giant Tesco is undergoing trials with Israeli AI surveillance business Trigo Vision to trial the concept of cashier-less stores, supposedly due to pressure from Amazon.

When Amazon first emerged, few could have imagined the revolution which would have been thrust upon the retailing industry. Even now, more than two decades after Amazon was founded, there are businesses which are still struggling to adapt to life in the digital epoch. The writing has been on the wall for a long-time in retail, and now it seems Tesco is attempting to get ahead of trends for the supermarket segment.

According to The Telegraph, Tesco is currently in trials with Trigo Vision to create a cashier-less store, a concept which Amazon has been playing with in the US for years. Don’t be fooled by the absurdity of the vision, it will soon enough be a presence on the High Street and once the benefits can be seen by all, it will become much more common place.

Take self-checkout tills as an example. When these first emerged everyone hated them, and in some regions, they still do. But you cannot walk into a Tesco or Sainsbury’s in an urban environment anymore without seeing them. And most importantly, no-one really cares anymore. The idea took some time to bed in, but once the bugs were worked out and people saw how much more efficient the system was, they accepted it. The same trend will most likely occur with cashier-less stores.

What is worth noting is that Tesco is not alone in pursuing the future. Sainsbury’s has also announced it is toying with the cashier-less idea, opening its first store in Holborn, Central London, in April this year.

Trigo Vision, the provider of the underlying technology, was founded in 2017 and has been through one round of funding thus far, attracting $7 million from Hetz Ventures and Vertex Ventures Israel. The team already has a partnership with Shufersal, Israel’s largest supermarket chain, to roll-out its automated retail platform in over 272 stores across the country.

The firm supplies both high-resolution RGB cameras, installed on ceilings and an on-premises processing unit that runs machine learning-powered tracking software. The algorithms are continuously honed by Trigo Vision through the data collected at various sites and the team can also help develop customisable apps and kiosks to improve experience.

The technology makes use of artificial intelligence and a dense series of surveillance cameras to track what items are being placed into a customer’s shopping trolley. Customers will be prompted to download an app and enter payment details, or an alternative for sceptics could be using a screen at the exit to complete the purchases.

As it stands, Amazon Go, the eCommerce’s cashier-less business, has launched in several cities across the US and has plans to open its first store in the UK at Oxford Circus in London. This will act as the flagship store for the UK though Amazon is reportedly on the hunt for more sites, 3,000 to 5,000 square feet in size, to expand the footprint.

The stores have been hailed as a success in the US and Amazon is reportedly targeting 3,000 locations within three years. Although this is far from proof the idea is profitable right now, the internet giants tend to run with unprofitable ideas they know will change the world, it should be viewed as a massive red flag for traditional supermarkets.

And while the bookstore segment did little until it was too late, Tesco is at least attempting to get ahead of trends. Another example of this is the ‘Scan Pay Go’ initiative. Here, customers can download an app and carry around a scanner to register products themselves as they wander the aisles, helping keep an eye on spending while also speeding up the check-out process at the end of the trip.

Many companies will state they want to disrupt themselves before being disrupted, though there is little evidence of this. The majority of the time there is an outside influence, a threat from a new player, to alter the status quo. This seems to be the case here, as Amazon is forcing the hand of Tesco, though future success of the Amazon Go business will depend on the ability of the traditional players to scale quickly.

Amazon grocery offensive continues with Alexa Ocado win

Supermarkets be afraid, be very afraid.

With the completion of its $13.7 billion acquisition of US organic food grocery chain Whole Foods Market, Amazon has wasted little time in unveiling a raft of aggressive moves apparently designed to challenge the traditional supermarket sector.

Here in the UK online grocer Ocado has announced it will be the first national supermarket to launch an app for the Amazon Alexa voice UI. Now you can say things like “Alexa, ask Ocado to add tea to my basket,” and it will. Apparently you can also keep track of existing orders and make stock enquiries too, all without so much as having to glance at a keyboard or screen.

This tie-up makes sense as Ocado is online-only and is presumably geared up to fulfil delivery orders in a similar way to Amazon. The way traditional supermarkets go about fulfilling online delivery orders is quite inefficient, with a member of staff having to effectively take on a proxy shopper role. This is primarily a defensive move in response to the likes of Ocado and probably wipes out the margin the supermarket makes on the goods bought.

Meanwhile the Whole Foods acquisition completed at the end of last week and Amazon immediately announced significant price cuts as a clear statement of intent. Bloomberg reports that certain varieties of hippy food have had their prices cut as much as 43% and Whole Foods is already flogging the Amazon Dot, the Alexa-driven device that will presumably offer similar voice tools to those announced at Ocado.

“By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission and reach more people with Whole Foods Market’s high-quality, natural and organic food,” said John Mackey, Whole Foods Market co-founder and CEO. “As part of our commitment to quality, we’ll continue to expand our efforts to support and promote local products and suppliers. We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”

There are reports coming from both sides of the pond of supermarket shares going down the toilet in response to this fresh threat from t’internet. Walmart recently announced a defensive move in partnership with Google and we can expect to see a lot more of this sort of thing. But the supermarkets seem to be in a weak negotiating position and their margins are likely to be the major casualties in a protracted grocery war with Amazon.