Cash­less con­fu­sion

Houston Chronicle Sunday - - BUSINESS - By Nel­lie Bowles NEW YORK TIMES

A re­porter tries out a store with 27 cam­eras, tons of be­hav­ioral data and no cash reg­is­ters.

SAN FRAN­CISCO — One re­cent af­ter­noon, the city’s new­est gro­cery mar­ket was try­ing to fig­ure out whether I would buy, steal or leave be­hind a bag of white ched­dar pop­corn — and so was I.

On its side: 27 cam­eras along the ceil­ing and a wealth of be­hav­ioral data.

On my side: crip­pling in­de­ci­sion.

Last week, San Fran­cisco got its first com­pletely au­to­mated cashier­less store, Stan­dard Mar­ket. Shop­pers who have down­loaded the store’s app can go into the 1,900square-foot space, grab items and sim­ply leave. There is no check-in gate, and there is no check­out swipe. Ceil­ing cam­eras iden­tify the shop­per and the items, and de­ter­mine when said items leave with said shop­per. Or, at least, that’s the idea.

The startup be­hind this op­er­a­tion is Stan­dard Cog­ni­tion, which has raised $11.2 mil­lion in ven­ture cap­i­tal and formed part­ner­ships with four re­tail chains around the world. This first mar­ket is a pro­to­type to show­case the tech­nol­ogy and work on the bugs. The am­bi­tious goal is to add the tech in 100 stores a day (each day!) by 2020.

Five of the seven founders came from the Se­cu­ri­ties and Ex­change Com­mis­sion, where they built ar­ti­fi­cial in­tel­li­gence soft­ware to de­tect fraud and trade vi­o­la­tions, be­fore start­ing Stan­dard Cog­ni­tion in 2017. Now th­ese fraud ex­perts are work­ing to dis­cern some­thing equally com­pli­cated: whether I am steal­ing a snack.

Stan­dard Mar­ket is the lat­est en­try in the emerg­ing fray of re­tail au­to­ma­tion, where com­pa­nies are throw­ing cam­eras, sen­sors and ma­chine learn­ing into gro­cery stores to re­place the check­out line. In Jan­uary, Ama­zon opened its first cashier­less Go mar­ket in Seat­tle to the pub­lic; it has since opened more of the stores. In China, ex­per­i­ments in cashier­less stores abound, us­ing ra­dio fre­quency iden­ti­fi­ca­tion tags and a self-check­out process that in­volves scan­ning a Quick Re­sponse code or your face.

Stan­dard Cog­ni­tion’s ap­proach is dif­fer­ent. It re­lies ex­clu­sively on the ceil­ing cam­eras and ar­ti­fi­cial in­tel­li­gence soft­ware to fig­ure out what you are buy­ing. The cam­eras doc­u­ment shop­pers’ move­ments, speed, stride length and gaze. The store knows when I glance at a poster and for how long. It knows if I slowed down, grabbed a choco­late bar and put it back. It knows if my body is fac­ing the dried man­goes but my face is set on the pop­corn.

And it knows (or is try­ing to know) when I am plan­ning to steal.

The goal is to pre­dict, and pre­vent, shoplift­ing, be­cause un­like Ama­zon’s Go stores, which have a sub­way turn­stile­like gate for en­try and exit, Stan­dard Mar­ket has an open door, and the path is clear.

“We learn be­hav­iors of what it looks like to leave,” said Michael Suswal, Stan­dard Cog­ni­tion’s co-founder and chief op­er­at­ing of­fi­cer. Tra­jec­tory, gaze and speed are es­pe­cially use­ful for de­tect­ing theft, he said, adding, “If they’re go­ing to steal, their gait is larger, and they’re look­ing at the door.”

Once the sys­tem de­cides it has de­tected po­ten­tial theft be­hav­ior, a store at­ten­dant will get a text and walk over for “a po­lite con­ver­sa­tion,” Suswal said.

Pre­dict­ing theft re­quires a lot of data about shop­pers, much of which does not ex­ist yet — “or at least no one is will­ing to give it to us,” he said.

So a few days be­fore Stan­dard Mar­ket opened, Stan­dard Cog­ni­tion hired 100 ac­tors to shop there for four hours. In Ja­pan, the team has worked with a con­ve­nience store chain, whose name it has not dis­closed, in a very use­ful data col­lec­tion ef­fort.

Stan­dard Cog­ni­tion said that un­like fa­cial recog­ni­tion, it did not col­lect bio­met­ric in­for­ma­tion, a pos­si­bil­ity that has trou­bled pri­vacy ex­perts watch­ing the tech­nol­ogy evolve.

The growth of cashier­less tech­nol­ogy could hurt the Amer­i­can la­bor force; there are nearly 5 mil­lion re­tail sales work­ers in Amer­ica. But as Suswal has pitched Stan­dard Cog­ni­tion’s tech­nol­ogy, he said, he has found that most shop own­ers are not look­ing to re­place work­ers. In­stead, they want their work­ers wan­der­ing the stores more, in hopes of luring shop­pers back into brick-and-mor­tar re­tail.

“They all talk about new ser­vices, mak­ing shop­ping more fun, mak­ing it worth­while to shop off­line,” Suswal said.

And they talk about data. While a store owner can look at re­ceipts to see who bought a generic ketchup, cashier­less tech­nol­ogy can help tell if the shop­per first picked up a Heinz bot­tle and how long he or she looked at it. Ba­si­cally, now an owner can see what a cus­tomer did not buy.

Store hours are short for the next few weeks — the store will be open only half-days on Wed­nes­days and Fri­days while the tech is tweaked. For now, the se­lec­tion of food is ex­tremely lim­ited. The store has only 25 square feet de­voted to food be­cause, the founders said, they have not yet got­ten the per­mits re­quired for more. So there is an odd as­sort­ment of items — Fri­tos, Ap­ple Jacks and Star­bucks Frap­puc­ci­nos — that leans heav­ily to­ward dorm-room-style snacks.

To shop, I opened my phone, which flashed blue, let­ting the store know I had en­tered. I wan­dered, throw­ing items into my tote. Then I left.

Out­side I found Suswal. A minute went by, and a no­ti­fi­ca­tion popped up on my phone with my re­ceipt: one white ched­dar pop­corn and one roll of toi­let pa­per for a to­tal of $1.19.

In fact, I had left with two bags of pop­corn. I had toyed with the sec­ond bag, de­bated buy­ing it, con­sid­ered my din­ner plans, put it back and fi­nally took it with a quick im­pul­sive grab. The sys­tem missed it.

“That shouldn’t hap­pen,” Suswal said. And yet it did. He shrugged and said I had won it.

So I left with the ex­tra 99-cent bag of pop­corn, and I did not feel bad, re­ally. Soon, Stan­dard Cog­ni­tion and oth­ers will prob­a­bly get bet­ter, will per­fectly de­tect where that snack went, and my move­ment will be sub­sumed and pre­dicted by ar­ti­fi­cial in­tel­li­gence’s end­less data maw.

But for now it’s not quite good enough. And I’m cov­ered in crumbs.

Cayce Clif­ford photos / The New York Times

Yoshi­masa Taka­hashi vis­its Stan­dard Mar­ket, San Fran­cisco’s first cashier­less gro­cery store. Shop­pers who have down­loaded the store’s app can grab items and sim­ply leave.

Man­ager Rebecca Schiff­man shows off Stan­dard Mar­ket’s app, used to let the store know who’s en­ter­ing and ex­it­ing.

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