• Tech & Trends

Building the Future of Brick-and-Mortar One Autonomous Shop at a Time

By Christian Dornacher

The pandemic has been unkind to many retailers, with customer expectations shifting seemingly overnight. During the great recession of 2008–2009, e-commerce grew, and brick-and-mortar retail declined. As the economic recovery took hold, that trend continued while off-price, discount, and emerging players succeeded by appealing to new consumer demands.

For example, in January 2020, fast-paced home delivery was perceived as a unique selling point offered only by select stores. By mid-2020, that delivery capability had become the minimum expectation many consumers had for all of their retail transactions.

Brick-and-mortar retailers who began 2020 with inadequate or nonexistent digital channels struggled and, in many cases, failed to survive. For those that did make it, costs often rose. Even seemingly prepared retailers with an established digital infrastructure were challenged.

Leaders Partner To Create the Automated Shop

To deliver a solution for these challenges that retailers face, Hitachi announced a partnership with Shekel Brainweigh, a leading provider of weighing technology. Together, the companies introduced Hitachi Automated Shop, a solution for autonomous micromarkets based on Hitachi 3D Lidar Sensor and Shekel Brainweigh Product Aware Shelf.

Hitachi Automated Shop enables shoppers to pick desired items from the shelves and then simply exit the store without a checkout line. Each shopper’s account is charged automatically for the items selected. In the odd occurrence of a discrepancy, the shopper can resolve it with the shop’s staff, via a phone number provided on a digital receipt, or online.

And that example is only a sample of the potential. Hitachi Automated Shop is a complete foundation for autonomous retail. It enables retailers to deliver a new shopping experience that brings together frictionless purchasing, advanced tracking technology, and intelligent analytics. The goal of automated shopping is to provide a seamless experience and help brick-and-mortar stores thrive in the era of e-commerce. Hitachi Automated Shop makes it possible for retailers to:

  • Operate 24/7 without having to predict staffing needs.
  • Serve a variety of environments, from the traditional high street or neighborhood corner to transit hubs, festivals, pharmacies, manufacturing cafeterias, and more.
  • Gain new insights about customer preferences, inventory, and performance of multiple shops.
  • Differentiate themselves to customers based on a seamless, convenient experience.

Assessing the State of Automated Shopping

Hitachi convened a panel of experts from Intel, Shekel Brainweigh, and Hitachi at Hitachi Social Innovation Forum (HSIF) in the session How Smart Spaces in Retail Are Automating Stores and Driving Insights to help bring the story of this solution and partnership to the world. Together, the panelists shared an inspiring outlook that showed how brick-and-mortar retailers will close the gap between themselves and their digital-native competition. They also explored how new options such as Hitachi Automated Shop deliver compelling retail experiences for customers while also leveraging autonomous technologies to lower costs and drive growth for retailers.

Serving the Consumer Autonomously

Today’s shoppers, particularly those in the younger, digital-native, and increasingly wealthy demographic so critical to retailers, have been shaped by their online shopping; however, that does not mean they only want to shop online. They want retailers to adapt to their needs. Sometimes the consumer is in “productivity mode,” meaning they want convenience, often while on the go, with ready access to items that match their tastes, and without wading through a maze of shelves or waiting in checkout lines. Other times they are in “experience mode” when they want to engage in the process of discovery. By offering hybrid shopping experiences, customers can choose which checkout method meets their needs and preferences – for example, traditional check outs during the day versus autonomous self-check out during afterhours.

Autonomous shopping facilitates the needs of both, and the motivation of the productivity mode consumer can even be a significant driver for their acceptance of the terms and conditions of automated shopping. The autonomous store offers customers a convenient and frictionless way to shop- for those looking to grab a sandwich while commuting on a train or a drink before getting on a plane, without the lines and hassles of conventional shopping.

Smart Spaces Power Autonomous Stores

Customers gain entry to the store by scanning a QR code or a finger-vein reader. These mechanisms help ensure their shopping experience is secure and personalized.

Shekel Brainweigh’s Product Aware Shelves combine artificial intelligence and load sensors to detect and identify products when they are picked up. The system’s AI is always learning, providing 98% accuracy after just 15 product scans and 99.5% accuracy after 100 scans.

Hitachi 3D Lidar Sensor technology uses laser scanning to capture granular information to analyze the customer’s journey and preferences, generating insights for the retailer. The sensors calculate shoppers’ size, shape, and position to map the shopper’s journey in the retail space without requiring any personal information.

Hitachi Visualization Suite provides the retailer with a single-screen view that can include real-time video, incident alerts, facial recognition, and social media integration, as well as store analytics provided by Hitachi’s Lumada solutions for digital innovation. Together, these products offer a unified solution that makes it possible to monitor and proactively respond to issues and opportunities in real time. The data collected by the store is available to the retailer in analytics dashboards that help optimize the performance on a per-store basis and across multiple locations in real time.

Autonomous stores ultimately benefit from many of the same advances that enable everything from smart homes to self-driving cars, including increased bandwidth, 5G, computer vision, artificial intelligence, and analytics. Powerful edge processing can support the compute needs of the entire store for sensor data aggregation and data analysis. As described in the Scaling Fully Autonomous Stores white paper, “the connected nature of the store generates plenty of data to address three key pain points of the retailer – that is, increasing labor costs, controlling shrinkage, and avoiding out-of-stock and over-stock.”

Streamlining Brick-and-Mortar Operations Enables Delivery of the Best of Online Experiences

One of the primary benefits of autonomous stores is bringing retailers closer to their customers. Smaller points of sale with lower labor and operating cost mean retailers can have more locations closer to their customers. Secure autonomous stores can run 24/7, providing customers with greater availability and flexibility. Increased knowledge about what products are available on every inch of shelf space offers the opportunity to enhance inventory management, faster response to changing market conditions and buying trends, and more efficient logistics.

One of the significant advantages of online shopping is the data access and analysis digital platforms make available. Smart stores and autonomous shopping represent a convergence of online shopping and brick-and-mortar retail. The technology makes it possible for physical stores to react in real time to customer behavior in similar ways to online shopping experiences. For the first time, retailers can do the A/B testing that digital platforms take for granted, such as evaluating the effect of where items appear on shelves and in different store configurations related to conversion rates for specific SKUs or ads displayed in the store.

The real-time view of inventory also helps address a common pain point among retailers: shrinkage. Shoppers “check in” upon arrival on premises and subsequently are charged for items in their possession when they leave the store, reducing the risk of both theft and inadvertent removal of items. The shelves’ use of location tracking makes it possible for the system to triangulate each product’s location precisely and determine whether items have been rearranged. Such real-time precision knowledge of what is on the shelves allows retailers to act quickly in the case of discrepancies.

As detailed in the white paper Boost Business Success With Hitachi Smart Spaces and Video Intelligence: “By utilizing big data integration and reporting, and integrating video feeds, behavioral data and other sources like social media, Hitachi Smart Spaces and Lumada Video Insights [formerly Hitachi Smart Spaces and Video Intelligence] provide real-time information that retail business managers can act on, along with historical data to support smarter planning.”

Besides the corner store or the high street, the autonomous store applies to cafeterias in industrial settings, such as factories, gas stations in remote locations that are difficult to staff, and transportation centers such as airports and train stations. The vending market is eager for solutions that enable vendors to offer more SKUs and greater product variety in more locations. Autonomous stores can serve the needs of retailers looking to optimize their operating costs and those seeking expansion opportunities to more remote locations or serving mobile events.

Protecting Customer Privacy

Tracking a customer’s every move within a retail setting naturally raises privacy concerns. Autonomous systems must comply with legal privacy protections and regulations, of course. In the Hitachi Automated Shop model, Hitachi 3D Lidar Sensors protect a customer’s privacy through tokenization. The customer does not need to verify the account to complete a transaction. Instead, an encrypted token is created and linked to a “digital basket,” which is then charged to the account through the POS payment provider, similar to a cashless transaction in any setting. Otherwise, the customer is simply constructing a virtual basket of goods for checkout, which is no different from any current online or retail shopping experience. Autonomous stores give the consumer more of what is wanted in terms of the shopping experience while also ensuring that the engagement is private in the areas that matter.

Ultimately, automated stores are an opportunity for brick-and-mortar retailers to revisit how they address the consumer’s core needs in a digital world. We have the technologies to give insights into the consumer’s behaviors, identify quickly whether the shopper is in “productive” or “experience” mode, and instantly adapt the retail experience to what the consumer wants. By working with other technology and retail experts such as those at Shekel Brainweigh, Hitachi is helping accelerate the digital transformation that will propel brick-and-mortar retail business into the future.

Once again, the pathway to the new normal in retail is being paved by technology innovation to support groundbreaking ways of making consumers happy.

Christian Dornacher is Director of Hitachi Smart Spaces and Lumada Video Insights in EMEA at Hitachi Vantara.