Microsoft is working on a rival to Amazon’s checkout-free stores

In 2016, Amazon surprised everyone with an innovation in brick and mortar stores – an unexpected development from a company that had done more than anyone else to drive people away from physical shops and towards virtual shopping baskets.

Amazon Go allowed people to wander into the shop, pick up an item and walk out without paying. Instead of being arrested for shoplifting, they would be billed for their items via an app that was scanned as they entered the shop. After 18 months of testing for Amazon employees, during which it was said to “freak out” if more than 20 customers were present at a time, this shop was finally opened to the public in January.

Now, according to six sources familiar with the matter speaking to Reuters, Microsoft is planning on getting in on the action, with its own brand of checkout-free technology. On the surface of things, Microsoft has even less business in this space than Amazon, but three of Reuters’ sources confirmed that the company was in talks with Walmart about a potential collaboration.

Presumably the technology would be pretty similar to Amazon’s: a series of cameras and sensors identify when products are removed from shelves and when they’re put back. While there’s only one shop in the world where this is currently in action, if this is where retail is headed, companies don’t want to be left behind: it would be very surprising if it were just Amazon and Microsoft examining this space.

Do shops want this?

Retail is based on razor-thin margins, and there are real question marks about how much the technology would cost to implement across multiple stores. One source revealed that making the technology cheap enough to interest retailers is a “major challenge” for Microsoft.

But reading between the lines here, while the benefit of checkout-free shops may be speed and convenience for customers, for the supermarkets the real advantage is cost savings achieved via a reduced headcount. If retailers can get away with paying fewer humans, than that’s a huge saving in the long run – and not just on salaries. Cameras don’t take holiday pay, need sick leave, get tired or complain to HR making them an appealing option to business owners with an eye on the bottom line. Assuming they function as advertised.

That may be a big assumption, but Amazon has proven the concept is possible. It may not be today or tomorrow, but automation is definitely coming and the impact will be unprecedented, as Tom explains in the video below.