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Amazon inspires 'oh shit' moment in the retail world

The Amazon Go brick-and-mortar concept has spooked retailers looking to tech to get you back in their stores.

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A man wearing an HTC Vive virtual reality headset looks around a digital supermarket aisle as if lost, then gingerly uses the Vive's hand controllers to reorganize virtual cereal boxes on shelves.

Elsewhere, people take turns acting out their best angry and sad faces for a photographer, so artificial intelligence software at Google's Emotobooth can divine their feelings.

You'll find service robots, customer-tracking cameras and machines making 3D-knitted sweaters at the National Retail Federation's Big Show conference in Manhattan this week. What you won't find: Amazon, which is forcing other retailers to respond to its new ideas with all these doodads and gizmos.

The online giant, one of the country's 10 biggest retailers, has grown steadily over the last year as consumers opt for online purchases over leaving their homes to pick up detergent or televisions. It's tip-toed into the brick-and-mortar realm, too, with a handful of physical bookstores and college drop-off locations.

Last month, however, Amazon unveiled an idea that has retailers shaking in their boots. It's still a concept, but the physical store, called Amazon Go, does away with the checkout process. Walk in, take what you need and leave. That's it.

"They're all like, 'Oh shit, we need to do something,'" said Alan O'Herlihy, CEO of Everseen, whose camera technology lets retailers create Amazon Go-like stores of their own. "Retailers are worried."


Just another day in the office rearranging cereal boxes in virtual reality.

Ben Fox Rubin/CNET

Never mind that Amazon Go is just one location in an Amazon building in Seattle and it isn't even open to the public yet. There's reason to be afraid. Macy's and Lowe's this month announced thousands of layoffs, and traditional retailers have faced four years of declining store traffic. Meanwhile, Amazon keeps growing its revenue in the double digits, and it just unveiled plans to hire 100,000 more workers in the US. Now the Amazon Go concept has come to shake up physical retail.

"Amazon Go changed the conversation," said Ray Hartjen, director of marketing for RetailNext, which uses in-store cameras to track shopper traffic. "Amazon Go has gotten some people to realize the [internet of things] store of the future is already here."

This alarm comes after Amazon forced retailers to invest in making better websites. Now they'll have to rethink their stores, too. That means we may start seeing a lot of new gadgetry at physical stores from a group of retailers that at times seem allergic to innovation.

Will more in-store tech help or just cost retailers more money? That's anyone's guess.

Amazon representatives didn't respond to a request to comment for this story.

Telepresence robots, AR and eyes in the sky


Meet your friendly neighborhood telepresence robot.

Ben Fox Rubin/CNET

Unless you're Amazon, retail has turned into a brutal game. Over the holiday season, US retail sales grew 4 percent, but most of those gains came from online, which surged 19 percent, according to MasterCard SpendingPulse.

To help keep up, retailers are turning to tech. At one booth at the NRF show, held at the Javits Center, Autonomous CEO Duy Huynh on Tuesday showed off a telepresence robot, essentially a videoconference screen on wheels. He said these gadgets could someday roam around a Best Buy or Home Depot, allowing remotely stationed employees trained in, say, TVs or paints to answer customer questions.

"It's kind of like live-chat online," he said, "but you bring someone into the store to talk to you."

Google showed off an augmented-reality app that lets shoppers check the fit of Gap shirts in different sizes on a virtual mannequin.


Google's AR technology lets shoppers visualize what new furniture may look like at home before buying.

Ben Fox Rubin/CNET

Intel's booth presented a large black sensor fitted with Bluetooth, video and Wi-Fi that retailers can use to track consumers and better understand their shopping habits in stores. These sensors, already in 100 physical stores including Levi's and Thomas Pink, work like browser cookies, but for stores.

Intel also announced at the show plans to spend $100 million over the next five years to advance retail technologies.

"I'm seeing a lot of retailers getting off their stick and moving with a sense of urgency," Michelle Tinsley, a director in Intel's internet of things retail division, said, noting that that urgency has only increased since Amazon Go was revealed.

There's skepticism, though, that more tech is the answer to retailers' woes. James Tenser, a retail consultant and analyst at VSN Strategies, said that more data tracking could creep out customers and that adding VR headsets won't fix poorly formatted stores.

"If you create experiences that people want to have, people will want to visit," he said, referring to Macy's potentially adding spa services to its stores.

Regardless of whether it's spas or roving robots, trying anything may be better for retailers than just waiting for Amazon's next move.

First published Jan. 19, 5:00 a.m. PT.

Update, 3:29 p.m. PT: Adds context about Amazon's physical bookstores.

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