Convenience Store Retailers Embrace Contactless Checkout Experiences

NATIONAL REPORT — Five years ago, a new competitor began causing a stir in the convenience channel. Amazon Inc., the company that went from online bookseller to e-commerce giant, started testing a new physical store format that took direct aim at convenience stores: Amazon Go.

The first locations debuted in January 2018 in Amazon's hometown of Seattle and featured the company's Just Walk Out technology, which leverages a combination of computer vision, sensor fusion and deep learning to enable shoppers to shop the store, pick out what they want, but skip the traditional checkout process.

Concerns among convenience store operators swirled. Some worried the contactless shopping experience would draw customers away from the corner store, while others raised doubts that the concept would ever catch on.

Fast forward to today, and while the e-commerce giant is reevaluating some Amazon Go locations, the company remains committed to the technology. And in what may be a case of "if you can't beat 'em, join 'em," c-store chains are now embracing contactless shopping in various forms — from self-checkout kiosks to checkout-free solutions.

Growing Interest

Attendees of the recent NATSO Connect 2023 event in Dallas were asked to define "convenience" as part of a poll. Many said self-checkout springs to mind. It's no surprise then that the service is currently among the top items for technology spending.

At the conference, Onvo Chief Operating Officer Gerald Danniel spoke about how the travel center operator's location in Dorrance, Pa., embraces technology inside and outside the store. Scranton, Pa.-based Onvo has installed card readers at all the fuel dispensers and features self-checkout kiosks inside the store, as well as at its quick-service offering, Burger King. Onvo plans to invest heavily in self-checkout and mobile app pay solutions, he said.

Sean Register, president of Port Fuel Center in Savannah, Ga., told the NATSO Connect audience that the one-year-old travel center offers a mix of self-checkout and manned checkout counters. The retailer is also implementing handheld point-of-sale options — what Register referred to as the "Chick-fil-A model."

Travel centers are not the only players in the industry embracing checkout options. Franklin, Tenn.-based MAPCO opened its first checkout-free location in December. Powered by Grabango, the checkout-free store in Brentwood, Tenn., allows shoppers to check out via the Grabango app. The experience is fully contactless; shoppers select the items they want and are billed through the app. There's no need for barcode scanning.

BP also recently entered a partnership with Grabango and earlier this year, its Amoco brand went live with the technology at two Coen Market-owned sites in Pennsylvania. BP had previously tapped Grabango to retrofit several of its ampm stores last year.

Fueling the Interest

Like other changes over the past three years, many industry players point to consumer demand for contactless shopping experiences driven by the COVID-19 pandemic as the key reason retailers are exploring new checkout options. That's true in a way.

During the pandemic, contactless was certainly an appealing aspect of the various checkout-free solutions emerging, but several other benefits are contributing to their staying power.

[Read More: NACS SHOW REWIND: Making the Case for Self-Checkout]

"As all of us have seen, contactless continues to be appealing because it is fast and it's better that everyone isn't touching our products when we are checking out and, of course, it is better that we are not waiting in line anymore, whether the pandemic is here or not," said Andrew Radlow, chief revenue officer at Berkeley, Calif.-based Grabango.

Frank Beard, senior marketing and customer experience manager for Standard AI, agrees that the contactless attribute of these new checkout-free technologies is not what is driving adoption today. "The big picture is that we're in the midst of a shift toward self-service at the moment of checkout," he explained. "It began prior to the pandemic — especially with grocers and big-box retailers — and now we're seeing it playing out in convenience stores."

The reasons are simple, according to Beard. For retailers, rising wages and cost pressures mean it's no longer economical to have employees scanning barcodes all day; they need to be redeployed to more productive tasks. For customers, the checkout queue was always a source of frustration, so when given options, many began gravitating toward the ones offering the most convenience.

The success or failure of contactless and self-service technologies used by retailers ultimately hinges on their underlying motivations, according to Sam Vise, cofounder and CEO of Toronto-based Optimum Retailing, a provider of in-store experience management solutions.

"Retailers who adopt self-service technology as a means to supplement and enhance their customer experience efforts are the ones largely seeing success," Vise said. "On the other hand, when self-service technology is used as an attempt to completely replace human labor, brands often see failure. The goal with any technology implementation in brick-and-mortar stores lies in evaluating how it will improve the overall shopping experience for their specific target audiences."

Interpreting the Language

Understanding the various contactless shopping options available in the market these days takes some knowledge of the terms and differences among the varying solutions. There's been increased market demand for autonomous technology, otherwise known as frictionless, Beard noted. Standard AI is a startup in autonomous retail. It develops artificial intelligence that tracks the movement of products and shoppers throughout the entire store, enabling a range of solutions from autonomous checkout — where customers simply exit without getting in line to pay — to real-time business intelligence, operational assistance and more.

"We have experienced significant interest in autonomous retail technology. Autonomous retail tech has proven especially effective at solving longstanding problems in settings like college campus convenience stores and micro markets," he said.

In February, Standard AI reached an agreement to acquire self-checkout solutions provider Skip. With this move, Standard AI plans to further accelerate the adoption of autonomous retail by giving retailers the option to use their self-checkout hardware as the point of interface.

Radlow cautions against assuming all checkout-free experiences and vendors are the same. "We have been saying for years that there are big differences to the approach," he said. "I think the industry got ahead of themselves and started deploying artificial intelligence and immediately targeting a cashierless experience. People confuse cashierless with checkout-free. That is an error."

Describing Grabango as a hybrid solution, he said the company offers payment choice. "Our solution allows you to use the same checkout experience you normally had or, if you are short on time and appreciate convenience, you can just tap your app, tap your credit card or use Google Pay or Apple Pay, and be out in one second," he explained. "That doesn't mean you ignore the human needs in the store. Whether you are a store operator or a shopper, you still need to have proof of age verified for age-restricted products [and] need to help customers looking for a product."