Amazon Go's new smart convenience store format designed to eliminate checkout lines is catching the attention of big supermarket chains and could pressure them to redouble in-store innovation efforts.
"I think it's definitely going to make other retailers stand up and take notice," said Patricia Orsini, an analyst at eMarketer. "It's addressing a lot of the pain points that people have in terms of shopping — the amount of time spent and standing in line and that sort of thing."
Kroger and Wal-Mart Stores, the nation's two largest supermarket operators, have been devoting more resources in the past few years to e-commerce and digital initiatives. However, analysts say Amazon's new store format appears to raise the bar in terms of automated technology by offering a grab-and-go solution that could some day be scaled to larger supermarkets.
There's only one Amazon Go location at present and it's in a private beta test currently with only Amazon employees and located around the corner from the company's Seattle headquarters. The company plans to open the store to the public in early 2017.
"The technology has a lot of potential to really be game changing in the way people shop," said Joseph Feldman, a retail analyst at Telsey Advisory Group.
Amazon Go's brick-and-mortar convenience store utilizes a smartphone app when the shopper enters the location and can detect when they pick up or return items to the store's shelves. It keeps track of purchases using a virtual cart, and when the shopping experience is complete the customer leaves without waiting in checkout lines and gets sent a receipt.
"I don't think there's a huge barrier toward a Kroger to set something like that up," said Zachary Fadem, a retail analyst at Wells Fargo. "Kroger is already far along on kind of the brick-and-mortar technology initiatives."