What Rewe’s hybrid concept says about the future of checkout-free stores

Back in 2020, Amazon opened its first Amazon Go store in Seattle, introducing consumers to the concept of full-size, cashierless grocery stores.Essentially, shoppers could walk in, scan a QR code from their Amazon mobile app at a turnstile, add their items to their baskets within the store, and just walk out when they were finished. All the payments would be done automatically.Now, a similar revolution is happening in Germany. Rewe, one of the country’s leading food retailers, has just launched its second Rewe Pick & Go store in Prenzlauer Berg, a central neighbourhood in Berlin known for its many attractions and nightlife. According to the Trigo CEO Michael Gabay, the Berlin location is nearly double the size of the Cologne store, where the concept debuted, and has additional offerings, such as promotional baskets, crates of beer and other bulk items, as well as pans and kitchen utensils.The store also features smart scales that allow shoppers to buy produce by weight for the first time in Rewe’s autonomous stores. With 9500 SKUs, the Berlin store sets a new benchmark for the Pick & Go concept.Powered by Trigo, the store is based on a hybrid model, where customers can either choose to go through a conventional checkout process, or have a frictionless experience using the latest camera and sensor technology. If they opt for the autonomous checkout, customers need to use the Rewe app to register at the entrance to the store. Then, they can take the products off the shelves, pack them up and then walk out of the store. The invoice will appear automatically on the app.Data security and privacy are a central aspect in the development and operation of the system. Images of shoppers are processed in a data saving manner and only used to enable cashless shopping.The company claims that the system only collects data to recognise which products are removed or put back. There is no facial recognition, nor can the system recognise customers after they have visited the store.Rewe has 3700 stores in Germany, operated as branches or by independent retailers, and a turnover of 26.7 billion euros in 2021. Cutting down costsDr Seshan Ramaswami, associate professor of marketing at Singapore Management University, believes that rising labour costs will drive more supermarkets around the world to experiment with checkout-free stores. “The main advantage for the supermarkets is on the cost side, as it saves on manpower costs. It allows supermarkets to run on a 24/7 basis which may also result in increased revenues during off peak hours,” Ramaswami told Inside Retail.He feels the model makes particular sense in locations where manpower costs are high, where mobile internet penetration is extensive, and there is widespread adoption of e-commerce and m-commerce. “Other than labour costs, which may not be that high in some Asian cities, many other cities, such as Singapore, Hong Kong, Tokyo, Seoul may well have all the other characteristics,” he noted.He added that the tracking software developed for Covid tracing in many countries has also made consumers amenable to being tracked through their phones.Already at it in SingaporeAccording to Ramaswami, Pick N Go, a checkout-free chain of convenience stores, has already been operating on university campuses in Singapore for a few years.“A central bottleneck to its smooth operation is the restocking of stores on a real-time basis, but that is surely a short term problem that will be sorted out,” he stated.Indeed, he feels that this model may well be expanded to a variety of other stores, including specialty stores, such as clothing, accessories, electronics where the items are small enough to be carried away by the consumer.  But he said that manufacturers will need to cooperate to hasten the process by incorporating the technology into packaging through RFID devices.“There is some substantial shelf-level technology that is required to make this work smoothly, to detect the product being purchased. With future technology developments, this may well become smoother,” he added.The model is most likely to work well with tech-savvy consumers and in categories where salesperson support is either not necessary, or where similar support can be extended by bots or through QR codes,“One additional advantage that this technology will have is the ability to track movement within the store, and some aspects of the shopping process – e.g. time taken to make a choice and number of brands touched by the consumer – across multiple shopping trips,” he explained.Ramaswami feels that just like with e-commerce and digital advertising, there are pluses and minuses for consumers. “Not all consumers may be willing to make that trade-off, giving up information in return for more targeted promotional offers, so retailers should allow consumers to opt-in for that level of tracking,” he stressed.Ultimately, he is of the opinion that for those with greater concerns about privacy, there should be an option to turn off the tracking and only use the technology to record transactions.Further reading: Checkout-free grocery shopping gets worldwide test drive.