Why Amazon Go could swoop into airport retail
A new frontier for Amazon Go stores may be opening.
The retail giant is exploring the debut of its techy, scan-andgo shops at airports, according to a report by Reuters. So far, Amazon has opened seven brick-and-mortar locations in Seattle, Chicago and San Francisco. And on Monday, The Telegraph of Britain reported the company is looking for new sites in London.
Retail and airport experts agree that the Amazon Go model could bring a major boon to the company and airport shopping as a whole. As for existing airport stores looking for faster ways to get shoppers to their gates? Amazon could bring new competition to the terminal, they say. Amazon declined to comment for this story.
But experts also say that airports would just become the latest space for Amazon to cut down on employees in exchange for automated technology. And they say that could help Amazon set prices well below other airport convenience stores.
“One of the big problems at airports is that [people] are very busy and often very stressed, and there’s a real restriction on time,” said Neil Saunders, managing director of research firm GlobalData Retail. “It’s very interesting Amazon is looking to go there.”
(Amazon chief executive Jeff Bezos also owns The Washington Post.)
Reuters cited public records requests it sent to several airport operators that hinted at meetings related to Amazon Go stores. Those airports later told Reuters that they didn’t have further exchanges about Amazon Go, and that the process would likely involve competitive bids. Amazon Web Services, the company’s cloud unit, has been in touch with airports for unrelated reasons, Reuters reported. A person familiar with the strategy also told Reuters that Amazon is looking at how to bring checkout-free stores to airports.
To start, the setup of an Amazon Go store would do well for travelers, experts said. The stores have no cashiers or checkout lines. Shoppers scan their phones on a turnstile when they walk in. Cameras and sensors blanketing the store track customers as they move, including what items they pick up or put back on the shelf. Once they’ve found what they need, shoppers walk right back out through the turnstiles, and their phone generates a receipt and “trip timer” telling them how many seconds they spent shopping.
The cameras include infrared sensors, but Amazon said the store doesn’t use facial recognition. Some of the items have large codes that help the camera recognize when they’ve been picked up. Computers installed throughout the store then pair that information with weight sensors installed in every shelf.
When the first Amazon Go store opened in January, it quickly raised eyebrows for how closely customers — and their data — would be watched and tracked. Privacy experts cautioned that shoppers may not understand just how much personal information they’re giving away. And they said a setup like Amazon Go stood apart from other retailers: The company has the ability to track not only what you buy, but even what parts of the store you spend the most time in.
That level of technology has so far evaded most other retailers, especially at airports. Saunders said that some airport stores may have options to order ahead using an app. But travelers usually don’t think about what they’ll want for lunch, or which snacks and magazines they’ll want to grab, too long before boarding their flight. Then you add travelers who may be running late and don’t have much time to consider their options anyway.
Even order-ahead apps “require the consumer to put in some effort,” Saunders said. “It’s fair to say something has been done, but no one has been as comprehensive about it as Amazon.”
Granted, travelers still find time — and money — to shop. In 2017, travelers spent more than $1.7 billion at dozens of the country’s largest airports’ newsstand and travel convenience stores, according to this year’s Airport Experience News Fact Book.
But many items stocked on those shelves see some kind of price hike. Given how expensive everyday items can be at airport stores, Saunders said Amazon may see an opening to undercut that pricing.
Ryan Hamilton, a professor at Emory University’s Goizueta Business School, said Amazon Go stores have to factor in the steep price of installing a sophisticated system of cameras and sensors. But given how few employees work at the stores, Amazon won’t have to worry as much about the high cost of wages — which tend to be the largest expenses for small businesses. That could give Amazon an opening to drive down its prices, Hamilton said.
“This would be hard for a mom-and-pop store to replicate,” Hamilton said. “They’re not going to be able to kick down $100,000 for a complicated system.”
An airport store like Amazon Go could also tap into peoples’ urge to impulse-buy while they travel. Kit Yarrow, a professor of psychology and marketing at Golden Gate University, said shoppers reliably spend more when they don’t have to go through a checkout aisle, let alone stand face-to-face with a cashier.
And at airports especially, Yarrow said people often grab items without thinking much about price, knowing they’ll soon be in the air with even fewer options for snacks and entertainment.
“Consumers initially tend to love the convenience, and then ultimately wonder whether it’s slightly evil,” Yarrow said.
Ramon Lo, publisher of Airport Experience News, said Amazon Go’s model would work especially well at large hubs — like Atlanta, Dallas or Houston — where hoards of travelers are looking for quick, efficient options in between connecting flights.
But don’t expect other airport retailers to go cashierless too, Lo said. Stripping stores of cashiers would make it difficult for companies to manage large crowds, Lo said, especially if stores aren’t set up with the same technology that drives Amazon Go. Unless airport retailers source that technology from another company, or take on the massive challenge of building it themselves, Amazon Go would stand alone.
Amazon Go wouldn’t necessarily compete with specialty or branded airport stores, from Brooks Brothers to Victoria’s Secret. But for snackers and shoppers in a pinch?
“If I’m going through Atlanta and I just need to grab a power bar, a bottle of water and a phone charger, and I’ve got to make it to my gate,” Lo said, “something like Amazon Go would work.”