Not too long ago, I was waiting on line at my local grocery store. I was only picking up one item and all of the self checkout lanes were preoccupied. Usually in this case, I would find the shortest line which happened to be the express lane with a 12 item limit. I proceeded to stand on this line for about 15-20 minutes with only 2 customers ahead of me. The reason? The first customer bought the wrong cream cheese and had to debate whether it was worth buying or not and she had coupons that weren’t scanning. The customer in front of me was able to checkout in about 2-3 minutes, then it was finally my turn. While waiting, I realized how horribly inefficient grocery stores have been designed. Ignoring the fact that you have to go and find your food in a large store, your whole shopping experience can be derailed by a customer making a simple human error. So, instead of being frustrated with the customer who picked the wrong cream cheese by mistake, I came up with ways on how to make this all avoidable.
Before I start, I want to say that I have a few years of experience working at a grocery store. I spent my summers and winters before interning to make some cash on the side. One of the places I hated working the most was the self checkout lane. The idea itself was supposed to help customers check themselves out so that they can leave the store faster. The problem with the machines is that they are not designed to take a large amount of groceries and they run out of receipt tape too quickly. On top of that, when it comes to produce, the interface on the machines assumes you work at the store. Just to take a simple example, there can be 2 or 3 different types of onions or potatoes at the average grocery store. Most of the time, there is no way to tell which is which without knowing the PLU (Price Look Up) code and sometimes, the produce doesn’t have the stickers on them. To compromise, the machines have a lookup function where the customer can type in the name of the produce. However, if there are 3 different types of onions that all look the same and you don’t know which is which, it is very easy to pick one that costs more per pound. I have had some of the worst experiences helping people in self checkout lanes, because for every customer on the machine at one time, at least one will have problem checking out. These machines have failed miserably at automating a task, but despite there notoriously bad design, they still managed to turn a profit, so they stayed.
To understand what we are trying to automate here, it may be best to understand the basics about how a grocery store operates. I have not worked in every section of a grocery store, but I’ve been around long enough to understand how the basics work. Let’s start with a simple diagram I put together:
Let’s work our way from the top of the diagram down to the bottom. All of our product will come to our warehouse which is located in the back of the store. Everything in grocery store is planned out, so if a new product comes in there’s a good chance that management already has a place for it somewhere in the store. The warehouse in a grocery store will also include some large freezer rooms to store product that needs to stay cold, but doesn’t need to go out yet. One of the hard parts when it comes to managing the warehouse is that once you send out product, it can be hard to relocate it later on. Customers will pick up a product, throw it in their cart and then discard it later making it harder to find before it expires. You also have to manage customer demand so you know what to order and this can be done differently between different grocery chains. For example, if a store has software that shows how much of a product was bought, someone needs to sit down a shift through that data so they can order what is being bought. If you order too much, you end up with excess stock that will lose the store money. If you order too little, then you have unhappy customers who won’t return. This balancing act is hard to maintain within a single store, so imagine upper management trying to balance stores across an entire region?
The Store Front.
The store front would be our checkout lanes as well as some specialty items such as the hot food bar, the deli, bakery, florist, seafood, possibly liquor, and much more. From personal experience, finding stuff in a grocery store can be difficult, especially if it is a store you do not frequent to often. This is probably where you will spend most of your time followed by standing on line. Also, depending on the time of day and year, you could be spending anywhere from minutes to over an hour at a store. Why does it take so long? My answer, from previously working at a store, is that grocery stores are stocked in a certain way to gain customer attention, but they also assume that you know what you are doing. This “know what you are doing” goes both ways between the employee and customer. If I put the wrong sticker on a cream cheese product, every single customer that picks it up is going to want it voided and price checked, which just added longer wait times for the checkout lane. There are hundreds of different products in a store, so imagine how easy it is to improperly price multiple items. As a customer the store assumes I frequent to it often enough to know where everything is, but when you have hundreds of items with dozens of different brands per product type, it can be pretty overwhelming to find what you are looking for.
The Checkout Lanes.
Moving on to the actual lanes themselves, a cashier has to scan multiple different items on a belt, some with bar codes and others with number codes. All of these codes have to be scanned properly and only once to avoid overcharging. The PLU codes need to be entered correctly in order to not charge the customer for more or less on a produce item. When something goes wrong, like wrongly priced cream cheese, the cashier has to void the item and may even be asked to request a price check. All of this creates long waits because there are other customers who are being helped by other employees throughout the store. This doesn’t even take into account coupons which have vague expiration dates and conditions in order to trick the customer into buying more than they need. Most of the time they don’t scan or the customer didn’t satisfy the conditions requiring a manager override. The whole system is a mess.
How Do We Solve This?
It’s important to note, that the ideas I express from here on, are simply ideas. They may or may not actually solve the problem itself since I did not work in every single section of a grocery store nor have ever held a management position in one.
In my opinion, the only way you can automate a grocery store, is if you change the way customers look at one. The only way to make anything automated successfully is if it actually makes the new process easier and convenient. From my experience, most customers hate self checkout lanes because it puts most of the work and pressure on them to actually checkout the right product. Me being a customer to a grocery store, if you wanted me to stop at your store all the time, then I want to be able to show up, get the products I need, and leave as quickly as possible. Also, if I want my groceries delivered, that should be an option too. Of course, almost every grocery store has this, so we aren’t really changing anything yet. This goes to my next point, most grocery stores have the pieces needed to launch their store into the modern world of technology. You may have already used this service and it is called grocery pickup.
Grocery pickup allows you to order online, show up to the store, and pay. The question is, why isn’t everyone using this? Part of the reason is availability; not all stores offer online shopping. The other reason that I can attest to is that you usually are charged extra for basically having store employees shop for you. Most stores don’t charge too much, but it may be enough for most people to do the work themselves, especially since food is so expensive.
So, if you want faster checkout times at a store, it is starting to look like the best way is to remove your checkout lanes and do only in store pickup. Just have your employees shop and have the customer pickup. On top of that, throw in delivery options and you will have a pretty decently automated store for starting out. However, this wouldn’t be enough to justify any store to follow this model. For starters, your store front takes up way too much space and then you have to pay employees to actually push carts around and shop for customers. Plus, all the work that management goes through in designing the store to lure customers to certain products is wasted. The next step would to be to not only gut out the checkout lanes, but also to gut out the store itself. In my solution, we take the warehouse and bring it to the store front while completely redesigning the checkout lane.
Bringing the Warehouse to the Store Front and to the Customer.
So, we gutted out the store front, and now we put a nice customer friendly interior section up for customers who want to pickup in store and completely separate them from the warehouse. This customer space may be where we put our specialty store fronts for people who may want to customize a cake or want to pick up something real quick. All of this could be purchased via mobile app, done online, or in store. It may seem like we aren’t changing the checkout section, but the idea is that this section should be really small and flexible. A customer could have a cake specialized separately from their grocery order and request to come in to pick it up. The idea is to try and simplify managing all of the customers purchases, but give the choice for special types of products that customers tend to want to be involved in.
For our new warehouse design, we now have a lot more space to allocate product and we can also not worry about having large aisles for our customers. In this case we don’t need employees to walk around with a cart anymore and we could setup an efficient system where the warehouse aisles can guide employees to fill customer bags with their orders. We could possibly automate the way products are gathered as well, but I don’t want to be overly ambitious at this point. We can use technology that may have looked ugly for a store front to know exactly how much of a single product is in stock. We can micromanage everything, because no customers are around to misplace items and employees can use the technology in the warehouse to know where everything is and where everything goes.
Finally, the most important part is creating the application for the customer to be able to order whatever groceries they want. This experience would work better than most of today’s online grocery shopping because our warehouse piece now knows what it has and doesn’t have at all times creating a more reliable experience. A customer can order whatever they want and setup a pickup time in the app. They could pay online or in store and even have it be delivered to their house similar to how other grocery chains handle their product. What’s important to note here is that this solution shouldn’t charge customers extra to shop online and pickup in store. The idea is that if we streamline our warehouse and store front so that they don’t need so much human interaction we can cut costs to prevent charging more to have employees put together grocery orders. Really, the only thing we’ve done was remove checkout lanes and replaced it with quick pickup stations. How these pickup stations would be designed to work could be multiple ways. One example is having a scan-able receipt attached to the bag that the customer can remove. However, we would really want to try and push customers to paying online always in order to have nothing to manage when it comes to our redesigned pickup lanes. Ideally, it would be only to pickup food you already paid for.
What’s great about this solution is that a customer can select a store online, shop for what they want, and have it delivered or go pick it up. By bringing the entire store to the customer, we don’t need to worry about store design or management of where the product needs to be placed; we can do all of that virtually now. In today’s world of business it’s all about the customer and if you want to have a successful business it needs to be convenient to the point where a customer points to what they want and the rest is taken care of for them.
Taking It a Step Further.
Now that we have these self aware grocery stores, we can use our warehousing technology to stock other stores. Maybe a store stocked too much on apples because the latest data trend suggested more people would by apples. This would hurt a typical grocery store that is now sitting on excess apples, but for our idea of a grocery chain, we could send the excess apples to a store that is selling a lot of apples and needs more. This reduces our overhead where profit margins on produce can be razor thin.
Our application that customers order through also gives us the ability to see what stores need what product. Maybe a store is missing a product and a lot of customers are requesting it through the app. We can react and order that product much more quickly rather than stay in the dark about what customers want in our store. Sometimes, customer’s voices go unheard when they report these inconsistencies to customer service.
Another great advantage, is that we can mine our customers to know what they are more likely to buy, this means that each customer will have a unique shopping experience through the app like something Amazon offers. We could offer products we know the customer will want to buy so that they have a more enjoyable shopping experience. Grocery stores could offer a ton of data based on the food customers are buying. It can tell you everything about their health to how they change diets. This information would be invaluable to research groups in the food industry.
Finally, the last feature that could improve customer satisfaction is to tweak in store pick up to offer “to-your-car” delivery. A customer could perhaps pull into a parking spot, use the app and indicate they are here, and have an employee walk out with their food and load it into their car. Giving the customer flexible options for how they want to get their groceries will ensure that they will return next time to buy from you.
Why Hasn’t This Been Done Yet?
If this idea was successful, I probably wouldn’t be writing about it right now. There are some flaws to this idea. The biggest issue is the investment to actually change a store into what we proposed above. You would have to hire an entire IT team to layout infrastructure and do the application development. No grocery store chain in America would be willing to sacrifice the cash to make that investment even on a test store. You also have the unions that come with grocery store workers and they may feel uncomfortable with changes that would shift the grocery store in a more automated direction. There’s also competition with Amazon, who now owns a grocery chain and already does at home grocery delivery. The cost to change your market to this solution would be expensive and would require a technology company with a large amount of money to invest to buy the chain and do the changes itself.
Amazon is the only company that could possibly implement such a solution. They already own the infrastructure to manage the technology needed and they have the money to invest in the installation of such technology in store. They also already have an efficient store front marketplace for their customers to invest in. Let’s not forget to mention that Amazon recently purchased Wholefoods for $13.7 billion.1 It wouldn’t surprise me if Amazon followed a similar model that I’ve talked about above. In the end though, only time will tell if such an idea is feasible and who was right.