How Sainsbury's put cashierless tech in one of its busiest stores

Counter to the trend — pioneered by Amazon — of launching cashierless technology in small stores to keep traffic under control, the U.K. supermarket chain Sainsbury’s has launched a trial of cashierless mobile shopping in one of its busy London stores, Clapham North Station Local.

Choosing a busy urban supermarket to test mobile scanning and payments reflects the fact that big city stores typically experience long lines of shoppers wanting to pay for their groceries at the end of the working day or in their lunchtimes. If the pilot proves successful, Sainsbury’s will roll out the payments technology to its stores throughout the U.K.

The U.K. is one of the world’s most advanced markets for contactless payments, with contactless accounting for 15 percent of all U.K. payments in 2017, according to financial services association UK Finance.

ADRIAN BROWN/BLOOMBERG NEWS

However, mobile NFC payments still represent a small share of the market.

In July 2018, the U.K. Payment Systems Regulator published a report on the contactless mobile payments (CMP) sector. While only a small percentage of transactions currently use CMPs compared with other methods, usage is rapidly rising, and CMPs could represent a sizeable part of all U.K. payments in the near future, the report said.

Shrinking Amazon Go into an app
Sainsbury’s, like other U.K. supermarket chains which are testing scan-to-pay apps, has been inspired by Amazon’s January 2018 launch of its checkout-free and cashier-free Amazon Go store in Seattle.

But, where Amazon built an entire store from the ground up with cameras and other sensors to eliminate checkout lines, Sainsbury's is focused on building the experience almost entirely on smartphone hardware.

Its trial involves adding a payments capability to the Sainsbury SmartShop app so that customers can scan and pay entirely in-app for groceries anywhere in the Clapham North Station local store, and avoid physical checkouts. So far, the pilot is limited to users of Apple Pay on iPhones.

Before leaving the store, shoppers have to scan a QR code to prove they have paid for their purchases. They also have to speak to a staff member if any of their purchases have security tags on them.

The SmartShop app is currently available in 68 Sainsbury’s stores in the U.K. out of the retailer’s 2,200 plus supermarkets and convenience stores, but there is still a checkout process in those cases.

In most stores, customers who have downloaded SmartShop app pay at a SmartShop-designated checkout. There are over 100,000 SmartShop transactions and between 3,000 and 4,000 new customer registrations every week, according to Alicia Painter, senior corporate communications manager at Sainsbury's.

Prior to its pilot in Clapham, Sainsbury’s tested SmartShop’s scan-and-pay capability in its convenience store at the Euston train station in central London. This involved shoppers being able to pay for the three items making up a £3 lunchtime meal deal on their phones (sandwich or salad, side order and drinks).

“In terms of how the payment-enabled app is performing so far, we’ve already seen hundreds of transactions completed by hundreds of customers downloading and using the app,” said Painter. “As this is a trial, we will continue to gain feedback directly from our customers to understand how the entire proposition can be made even better.”

U.K. grocers ripe for innovation
"I think all retailers are thinking about how to optimize customer experience, and experimenting with different approaches to shopping,” said Zilvinas Bareisis, a senior analyst at Celent. “The innovation here is less about payments – that is still done via Apple Pay – and more about the fact that the customers can scan goods while they shop with their phone, and check out online rather than at a physical counter.”

Last September, Tesco launched the new version of its QR code-based mobile payment app, Pay+, to replace PayQwiq, which it introduced in 2015.

The supermarket chain said in April 2018 that, in the six months since Pay+’s launch, the number of users had doubled to over 500,000. Tesco Pay+ allows customers to link their credit and debit cards plus their Tesco Clubcard rewards and can be used at the checkout in all Tesco’s U.K. stores

Tesco is also testing the NFC-based Tesco Scan Pay Go app with some of its employees at its convenience store at its Welwyn Garden City HQ. Tesco chief executive Dave Lewis told the BBC that Scan Pay Go could be rolled out across the company’s stores, but that Tesco’s needed to work out how to ensure people would not walk out of stores without paying. He noted that, with a profit margin of two to three percent, it would not take a lot of theft to make Scan Pay Go unprofitable.

Another U.K. retailer, the Co-op, is testing checkout-free in-aisle mobile payments using a Co-op-developed app at a store located at its Manchester support center, according to Andrew Torr, a Co-op press officer. The app lets customers scan and purchase any items in a store, apart from age-restricted products, without needing to visit a check-out or till.

The Co-op app isn’t designed to replace cash or tills, as customers adapt to technology at different speeds, Torr said. It is intended to sit alongside existing payment methods such as self-service tills, contactless card payments and staffed checkouts, to offer additional consumer choice.

Wider rollout of the app, which was developed with Mastercard’s Masterpass technology, will begin during autumn 2018. Customers using the app store their card details within Masterpass.

Marks & Spencer is running a trial of its Mobile, Pay, Go app in a store at its London corporate headquarters. The app enables customers to scan and pay for products on their mobile as they go, and check out with their saved card details or Apple Pay. Lauren Stratton, foods manager at the store, wrote in a blog post that 60 percent of mobile payment transactions take place between 12 pm and 2 pm. “We’ve seen a lot of customers wanting to scan after they’ve collected all their products rather than as they go, so we’ve installed a packing bench,” Stratton wrote.

Even though the implementation varies from store to store, research shows there is a strong appetite for some kind of technology-assisted process for buying groceries.

“Around 85 percent of shoppers are open to using some type of technology to help them with their food and grocery shopping,” said Vanessa Henry, shopper insight manager at U.K. retail consultancy IGD. ‘This is good news for the industry. However, U.K. grocers and suppliers are also facing a challenge – we see some of the lowest levels of shopper engagement with technology in the in-store environment versus other phases of the total path-to-purchase.”

As checkouts can be a pinch-point in the shopper journey in-store, technology similar to Sainsbury’s checkout-free trial in London helps to alleviate friction and respond to a fundamental need to save time, Henry said.

"However, we must also remember, that for tech like this to drive mass appeal, shoppers will need to be reassured about any security concerns,” she added. “Engagement with shoppers using technology in-store could be huge with the right solutions. Investment in the right digital solutions could drive a tipping point in shopper engagement with technology in the future.”