Who’s minding the store? In the not-too-distant future it could be cameras and sensors that can tell almost instantly when bruised bananas need to be swapped for fresh ones and more cash registers need to open before lines get too long.
Walmart, which faces fierce competition from Amazon and other online retailers, is experimenting with digitizing its physical stores to manage them more efficiently, keep costs under control and make the shopping experience more pleasant. Last week, the retail giant opened its Intelligent Retail Lab inside a 50,000-sq.-ft. Neighborhood Market grocery store on Long Island.
Thousands of cameras suspended from the ceiling, combined with other technology like sensors on shelves, will monitor the store in real time so its workers can quickly replenish products or fix other problems.
Walmart’s deep dive into artificial intelligence in its physical store comes as Amazon raised the stakes in the grocery business with its purchase of Whole Foods Market nearly two years ago.
That puts more pressure on Walmart and other traditional retailers such Kroger and Albertsons to pour money into technology in their stores. At the same time, they’re trying to keep food prices down and manage expenses. Amazon has been rolling out cashierless Amazon Go stores , which have shelf sensors that track the 1,000 products on their shelves.
Walmart’s online U.S. sales are still a fraction of Amazon’s online global merchandise empire, which reached US$122.98 billion last year.
Walmart hopes to start scaling some of the new technology at other stores in the next six months, with an eye toward lower costs and thus lower prices. As the shopping experience improves, the retailer expects to see higher sales.
“We really like to think of this store as an artificial intelligence factory, a place where we are building these products, experiences, where we are testing and learning,” said Mike Hanrahan, CEO of Walmart’s Intelligent Retail Lab.
Hanrahan said the cameras were programmed to focus primarily on the products and shelves. They do not recognize faces, determine the ethnicity of a person picking up a product or track the movement of shoppers, he said. Some other companies have recently started experimenting with store shelf cameras that try to guess shoppers’ ages, genders and moods.
“Machine learning fundamentally finds and matches patterns,” said Steven M. Bellovin, a computer science professor at Columbia University and a privacy expert, who hadn’t seen the new Walmart AI Lab. But he said companies run into trouble when they start to match behaviour to a specific customer.
Hanrahan said Walmart had made sure to protect shoppers’ privacy and emphasized there were no cameras at the pharmacy, in front of the rest rooms or in employee breakrooms.
The lab is Walmart’s second in a physical store. A glass enclosed data centre at the back of the store houses nine cooling towers, 100 servers and other computer equipment that processes all the data.
Last year, Walmart’s Sam’s Club opened a 32,000-sq.-ft. lab store, a quarter of the size of a typical Sam’s Club. The lab is testing new features surrounding the Scan & Go App, which lets customers scan items as they shop and then buy from their phones, skipping the checkout line.
Hanrahan said the company was embracing the labs in stores to better understand the real ways that technology affects customers and workers. It also wants to educate shoppers. Walmart has made a point to not hide the technology, and small educational kiosks are set up throughout the Neighborhood Market.