Amazon solves Walmart, Target, and Kroger's shoplifting problem

Most Americans pay for their purchases with credit or debit cards. "Cash accounted for 14% of all U.S. consumer payments by number of payments, while credit and debit cards accounted for 35% and 30% of payments, respectively," according to a report from the United States Federal Reserve. Americans actually use a pretty diverse array of ways to pay for things."In total, U.S. consumers made an average of 17 credit card payments, 14 debit card payments, seven cash payments, six ACH payments, one check payment, and two with other methods every month," according to the data.The ACH payments are likely recurring bills like mortgages and utility bills, while credit and debit cards would mostly be used in stores. Cash is only used in a relatively small number of in-store payments, according to data from Capital One.Credit cards are king, not cashCash is now used in only 11% of in-store transactions in the United States.81% of shoppers prefer to pay with cards over cash.214.9 million Americans (82% of adults) have a credit card account in their name.Shoppers spend up to 4x as much when they pay with credit cards instead of cash.Consumers are twice as likely to use credit cards rather than cash for any given transaction.73% of nationwide retail sales dollars are from credit card transactions. Amazon has made some inroads in licensing its Just Walk Out technology.Shutterstock Theft is a major retail problemMajor retailers, including Walmart, Target, CVS, and Kroger, have struggled with how to make their stores customer-friendly while also preventing theft. Chains know that locking up items and forcing customers to get a staff member to unlock that item for them is not a customer service positive.They also understand that having people check receipts and having staff check self-checkout purchases can be intrusive in a way that drives away customers. The problem is that retailers have to balance their in-store customer experience with efforts to prevent shoplifting which remains a significant problem.Shoplifting has been a growing problemCapital One shared new data on Dec. 5 that shows how big the shoplifting problem has become.Stores are estimated to lose $47.8 billion to retail theft in 2025; projections indicate shoplifting could cost retailers over $55 billion in 2028.In 2023, there were 1.15 million reported cases of shoplifting nationwide, the highest rate since 2019. The average shoplifting incident cost retailers $461.86 in 2020.More than 1-in-5 Americans have shoplifted; juveniles aged 12-16 are most likely to shoplift (1-in-4).Stores catch shoplifters roughly 2% of the time; the average shoplifter is arrested once out of every 100 incidents.It's a big problem, but it's one that Amazon may have the solution for.Amazon may have the answer to limit shopliftingWhen you visit an Amazon Go store, you can simply pick up the items you need and leave as long as you meet certain standards. "With our Just Walk Out Shopping experience, simply enter the store using the Amazon shopping app. At select Amazon locations, you can use Amazon One or enter with your credit card. Once you're in the store, take the products you want off the shelf, and go! No lines, no checkout," the company shared on its website.More Retail:Costco CFO makes rare pricing promiseHome Depot faces growing consumer boycott calls ahead of holidaysTarget’s efforts to make amends with customers hit a snagAmazon lawsuit could be a warning to other employersI've used the technology at both an Amazon Go store in New York and at Daily's Place, a concert and event venue in Jacksonville, Fla, where I used it to pay for a drink and some snacks. It's as easy as Amazon says, and while you do sort of feel like you are stealing, the technology essentially makes actual theft impossible.Amazon stores do accept cash, but most customers use Just Walk Out, which greatly limits the opportunities for theft. Traditional retailers could add the technology, and it would do the same while also correcting the issue of accidental theft from people unintentionally mis-scanning an item in self-checkout.Amazon expands its Just Walk Out programAmazon has been offering Just Walk Out to other retailers since 2020."Customers enter or exit the store with a payment method, bypassing a checkout line. The technology uses camera vision and sensor fusion, or RFID technology, which allows them to simply walk away with their items," the retail giant shared on a dedicated website for that offer. The third-party version of Just Walk Out works a little differently from the Amazon Go version of the technology."While typical Amazon Go stores require shoppers to download the Amazon mobile app or create an Amazon account so that they can scan a QR code upon entry, future Just Walk Out-enabled retailers would require shoppers to insert a credit card into a gated turnstile to enter the store," Retail TouchPoints shared.It has taken some time, but Amazon now has over 300 third-party Just Walk Out (JWO) deployments across the U.S., UK, Australia, Canada and France in venues including sports stadiums, hospitals, warehouse fulfillment centers and college campus stores."The technology is poised to move from the pilot phase to a potential scaled growth phase,” Amazon Web Services Business Development Lead Anthony Leggett told Retail TouchPoints.Amazon's Just Walk Out could cut shopliftingGrabango, a rival to Amazon's Just Walk Out technology, Chief Business Officer Andrew Radlow believes that retailers having more visibility on their inventory will cut theft."When you know every product in the store and you track the product as they're selected and they make their way toward the exit, you know where every product is, and you know which product is paid for and which ones aren't," Radlow told CNBC. "So you have a very strong accounting for the movement of merchandise, and so the concept of theft really vanishes because you're constantly charging for products in an automatic fashion."Andrew Lipsman, a principal analyst for eMarketer, agrees."The technology knows to automatically deduct. It is monitoring you to know what you take off the shelf, so you really wouldn't be able to steal, because the payment is automatic," he shared.And, while some shoppers would opt out of using Just Walk Out or other similar technology, stores would, in theory, know which customers weren't using it and could focus loss prevention efforts on those customers.Amazon's Just Walk Out technology does face hurdlesMark Ryiski, a retail author and expert on store traffic, sees some problems with Amazon's Just Walk Out."When the first Amazon Go store opened, my primary concern was regarding the enormous amount of technology required to operate the small 1,200 square foot convenience store, and my concerns are the same with Grocery Go – at over 10,000 square feet in size, the number of cameras/sensors required to cover this space must be mind-boggling," he wrote on RetailWire. He sees that as something that makes JWO impractical for many retailers."While I have no doubt this type of cashier-less store experience will be part of retailing in the future, the cost to deploy and maintain the current technology required to deliver the experience is prohibitive for most retailers," he added.Amazon has also adapted the technology so it can work with RFID tags, another method of tracking inventory that's not reliant on cameras."We also regularly listen to our customers. For example, you typically couldn’t use JWO technology in a retail environment with clothing on racks, so we solved this with an RFID lane gate. When customers walk through the gate with an RFID-tagged item, it recognizes the item with our proprietary RFID technology. That’s giving these retailers a more accurate basket price, improving throughput, and creating shrink savings," Leggett told RetailTouchPoints.Just Walk Out beats self-checkoutGrabango, another rival to Amazon's JWO technology, shared data on how self-checkout leads to increased theft/shrink."A large number of grocery, convenience, and other food retailers have recently reported increases in shrinkage due to theft. Although some of these increases are due to organized crime, recent research from Grabango reveals self-checkout machines are a significant driver of shrink, with losses amounting to 3.5% of sales, or more than 16 times more loss than traditional cashiers," the company shared in a press release.Self-checkout accounted for just under 30% of total transactions in 2022, according to data from FMI.Based on a market size of nearly $1 trillion and a partial shrink rate of 3.5%, self-checkout machines cost food retailers more than $10 billion in lost profits annually, Statista shared."Checkout-free technology powered by computer vision eliminates self-checkout shrink by accurately tracking what shoppers pick up and charging them the exact amount they owe. For the average supermarket, eliminating partial shrink from self-checkout alone could increase bottom-line profits by more than 50% a year," Grabango shared.The Amazon rival's CEO belives the difference is obvious.“Grabango’s checkout-free technology uses computer vision to eliminate shrink. Automated systems don't lie, don't steal, and don't discriminate. With Grabango, shoppers are charged exactly what they owe, no more and no less.,” Grabango CEO Will Glaser. said. Related: 77-year-old convenience store chain closing all stores after sale