Sunday, December 22, 2019

People sometimes pay for goods even when they don't have to

See Retailers Ditch Cashiers and Trust Shoppers to Pay Before Leaving: Stores want to give customers an Amazon Go-like experience, without the cost of added security measures by Ilya Khrennikov and Jake Rudnitsky of Bloomberg.

Economist (or perhaps neuro-economist) Paul Zak has written a book called Trust Factor: The Science of Creating High-Performance Companies. This does not get mentioned in the article, but it shows that trust is a factor economists study.

Excerpts from the article:
"From Russia to Japan to the U.S., retailers are betting on the good side of human nature. In exchange for being able to grab an item and walk out, shoppers are relied on to be honest and pay — much like an unmanned roadside produce stand. So far, theft rates are low, which means these companies have hit on a way to offer a cashier-less experience similar to Inc.’s Go technology, but without the big expense of cameras, sensors and software.

“Our answer to Amazon Go is a store based on trust,” said Andrey Krivenko, founder and chief executive officer of Vkusvill, Russia’s fastest-growing grocery chain, which started opening what it calls “micro markets” in Moscow office buildings last year. “People scan everything themselves and, in our already sizable experience, there’s virtually no theft.”"

"Such a setup works because “you want to show yourself you’re a good person,” according to Kelly Goldsmith, an associate professor of marketing at Vanderbilt University’s Owen Graduate School of Management, describing it as “self-signaling.”

The Iris Nova location has a theft rate below 5 percent, according to founder and CEO Zak Normandin. Many retailers have rates of stealing, or what the industry calls shrink, of about 2 percent, but they also pay for deterrents such as security systems and employees."

"In Moscow, Vkusvill’s micro markets are similar, but customers pay using a credit-card machine after selecting snacks and ready-to-eat meals from fridges and shelves on the office floor."

"Vkusvill is also developing unmanned shops to roll out to the general public that will involve more technology, such as facial recognition, to increase security, Krivenko said."

"The idea works best in offices, where employees can easily afford to pay and feel like they’re part of a community."
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