Amazon Go is set to make a huge impact on retailers across the United States, whether they are ready for it or not. Amazon rolled out the new technology that allows shoppers to go into stores, put the items they want in their cart, and simply walk out the door and be automatically charged for the items. The new Amazon Go uses a combination of a virtual shopping cart, sensor technology and deep learning algorithms, that will track shopper's every move, and charge them for what they purchase.
Here are some possible ways that Amazon Go may affect commercial real estate if it is widespread in its use in the future.
Smaller retail spaces may be used for the same store
Retailers are well aware that the large overhead of having a huge box store is crushing profit margins. Along with automation and other sensor technology to use just-in-time purchasing and stocking, Amazon Go may be a great thing for their bottom line. Because retail outlets will no longer need large check out areas, as well as big storage facilities for stocking merchandise, they will need less real estate space.
Some of the new Amazon stores are set to be only 1,800 square feet compared to 10,000 or more square feet, for traditional retail stores.
Retail spaces may need to be modified make shopping easier
It's true that free shipping and 2-hour delivery have taken a huge bite out of retailer's share of customers. In an effort to regain shoppers who are reluctant to leave their couches to come back to the stores, retailers will need to make changes to the way the stores are laid out. More emphasis on speed and convenience. Merchandise based on what shoppers in that area may actually purchase, and based on analytical data, will be part of the formula. Those goods will be shipped in and stocked exactly on time for those people to come to the store and purchase the items.
This future model will allow retailers to stock exactly what they need by what is selling and what customers will actually purchase.
Retail jobs will slow
It's safe to say that with Amazon go and other automation technologies that there will be fewer and fewer people needed working in the retail industry. These jobs are easiest to automate and replace with robot technology. Using Amazon Go to eliminate jobs will save companies millions of dollars per year. There will be problems at first, but as the technology improves, you can expect to see more instances where sensor based technologies are used in everyday experiences, such as going to the doctor or getting your car repaired.
Amazon is expected to change the shopping experience once again by disrupting the old way of doing things. Amazon Go will make the shopping process completely automated and eliminate the need to check out or pay when you leave the retailer. There will be many changes needed to retail locations to support this new way of shopping. Commercial real estate brokers will need to work with their retail clients to plan for this new change.