In a rather detailed but somewhat breathless article published in the New York Times on April 1, the authors described the shock and amazement of traditional brick-and-mortar retailers as Amazon accelerates its Amazon Go program.  This is the fully automated store that Amazon has test piloted and it appears to be the future of retail.

The article goes further, examining the rapid deployment of mostly or fully automated stores in China, where several firms such as Alibaba are experimenting with fully automated stores or mostly automated stores with advanced technology.

We need to step back for a second and consider just who is going to win this "gold rush" as the article describes it.  If past experience is any guide, it's not the miners who make most of the money, it's the people who supply the goods and services the miners need.

A few caveats

There are a few caveats to consider when thinking about fully automated stores.  First, I think the vast majority of shoppers in the U.S. don't necessarily want or need a fully automated store.  Some people actually like interacting with store clerks or receiving a helpful human touch.  Other older shoppers who aren't attuned to technology, handheld devices, and robots may find the solution a turn-off.  Clearly the stores are targeting the shoppers of the future, Gen Xers and Millennials who are comfortable with technology and automation.

Second, it's interesting to see companies in China explore the automated store, because unlike in the West, most retail establishments in China, at least those catering to westerners, are overstaffed with exceptionally helpful clerks.  To some extent this was a jobs program and an attempt to build more customer service culture in a country where customer service at the retail level wasn't emphasized in the past.  The move to automation may work for some Chinese shoppers but clearly not all.  Much of this experimentation is probably for export purposes.

There's gold in that retail space

Strangely, at a time when more and more of us are getting our products online, delivered to our home, an eruption in new retail shopping is emerging.  This is causing many traditional brick and mortar retailers to shift their focus again, from traditional stores to online shopping and now to automated stores.  But these retailers would do well to remember that most of the members of any 'gold rush' often end up tired and broken.  Few actually hit the mother lode, and most make only enough to cover their costs.

The real opportunity in any gold rush is not in the digging or panning, but in selling the shovels, pans, picks and supplies to the miners.  It is the vendors who win in a gold rush, and any entrepreneur who is interested in this opportunity would do well to determine what supplies the miners will need, and how quickly this new gold rush will unfold, and how long it will last.  Levi Strauss made a good living in the California gold rush, selling supplies and clothing to miners.  Entrepreneurs and innovators who watch the automated shopping space and provide important services and products may create the next Levi Strauss company.

Published on: Apr 3, 2018
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