How much will technology change the in-store experience?
This is the dawning of the Age of Aquarius, with technology dramatically reshaping how the food industry goes to market. Driverless trucks, strawberry picking robots, delivery drones and robots that actually like taking inventory are just a small sampling of what is on the horizon. Quite frankly, retail is never going to be the same.
The move to robotics and automation is being driven by a series of factors, chief among them rising wages, including a drive to a $15 an hour minimum wage nationwide, as well the desire to improve the overall in-store shopping experience, efficiency and the bottom line.
The seeds of this change have taken root in Amazon Go—the internet giant’s first foray into retail brick-and-mortar grocery. Amazon Go opened its first unit to the public this month in Seattle to great fanfare from local and national media. By downloading an Amazon Go app, shoppers can walk in, grab a cart and fill it with drinks, prepared meals, sandwiches, a chef-made meal kit and a few grocery staples, and simply walk out—without ever having to wait on a long line behind someone with a stack of outdated coupons, waiting for a price check, the override key or dealing with a surly cashier.
Tech-savvy Millennials see Amazon Go as nirvana; traditional retailers see the 1,800 square-foot boutique as a Little Shop of Horrors—especially if the (denied by Amazon) rumors of 2,000 of them springing up from coast-to-coast are true.
“I believe this format will be very successful for Amazon—it is the right idea at the right time and in the right place,” says Gary Hawkins, CEO and founder of CART, a retail technologies coordination firm based in Los Angeles, and the former CEO of Green Hills Market in Syracuse, N.Y. “Is there any shopper who enjoys standing in line to checkout? If Amazon can do what they suggest in their announcement—the ability to walk into the store, gaining access with the Amazon app on your phone, and pick up products you want and just walk out the door—it is amazing.”
“I think we’re in a really exciting time,” says Colm O’Brien, director, solutions – global consumer industry, in the Dublin, Ireland office of IBM, and a former supply chain director at Tesco. “Look at Amazon Go. Retail has gone through a period of disruption, what I call transformation. Stores still matter and if we look at even the most aggressive projections, the vast majority of grocery retail sales will still be happening in a physical store with human interaction. Consumers often go to the store to get inspired and get great service, rather than just have a purely functional experience,” O’Brien says.
Amazon literally gets into the heads of its customers, say industry observers, by carefully watching their each and every move through devices like its Echo home speaker system with its “Alexa” voice.
“The more you interact with Alexa as a person, the more data Amazon is collecting on you, and the more they are understanding exactly what you want,” says Babs Ryan, the Boston-based retail principal at ThoughtWorks Retail, which maintains U.S. headquarters in Chicago. “Now they can listen to you in your home all the time. It is different than just tracking you while you are on your phone.”
Amazon, Ryan says, garnered tons of information about consumers when it placed its lockers in supermarkets and drugstores, like Rite Aid. “Amazon learned about the customers who were going in to get those groceries,” she says. “So, everything about Amazon is about learning about people. It is not focused on what people buy. It is focused on how people behave.”
Traditional supermarkets should carefully take a page from Amazon’s playbook, Ryan says.
“Instead of worrying how they can do self-checkout, retailers should be thinking about what is that next big thing that customers want, like dinner tonight in one place, and use technology to help their customers get that,” she says.
“What would be brilliant for grocery stores to do is take the information they already have and actually turn it into something innovative—in baby steps. Amazon didn’t get there overnight,” Ryan says, noting that Amazon carefully developed its automated payment system to the point where consumers are now very comfortable using it.
Improving in-stock positioning is one of those baby steps, and one where the latest technology—like robots—can play a pivotal role. Mass merchandiser Target is one of the retailers at that forefront.
“Target has been testing the use of robots to understand how their capabilities could automate various processes and improve inventory management,” says Jenna Reck, manager, public relations at Target Corp., based in Minneapolis. “We brought a few different robots into a handful of San Francisco stores earlier in 2016 and have been testing and learning in our stores.”
Tally Up Inventory
Simbe Robotics has been key in that learning curve. The San Francisco-based company tested what it bills as the world’s first fully autonomous shelf auditing and analytic solutions robot—named Tally—in Target’s Bay Area stores, and also deploys them in limited assortment stores, supermarkets and drugstores.
“Our original goal was to automate some of the key operational tasks in-store, and we decided to align around the problem of inventory distortion,” says Brad Bogolea, CEO of Simbe Robotics. “Today retailers spend countless hours every week trying to ensure product is properly stocked in the right place at the right price.”
With its flashing head and taillights, and a series of “beeps” and “boops,” Tally—which resembles a 96-inch tower speaker—simply glides up and down each side of the aisle, using computer vision to check product stock, if it is in the right place, and if it has the right price. It then uploads the information to the Cloud. “Once we analyze those components for each of the planograms or categories in the store, such as deodorant, laundry detergent and salty snacks, we provide those key insights back to the retailer, to alert them that there are empty facings of Tide on Aisle 19, or that the endcap with the Greek yogurt on feature at 10/$10 is sold out and we have to make sure we get more in on the next truck,” he says.
“We found the ideal time for Tally to run in a grocery store is in the evening, just post-rush, to provide key insight to the restockers coming in in the evening, and then run again in the morning after they leave to ensure that everything was set,” Bogolea says, adding that retailers may wish to have Tally check “hot button” sale categories throughout the day to ensure shelves remain stocked.
Simbe Robotics rents Tally to retailers as a service. “Everything is bundled in a monthly fee, and that fee is based upon the number of products we are keeping track of, the size of the store, and the frequency in which we are scanning or processing them,” Bogolea says.
“We have found this incredibly cost-effective in comparison to existing means,” Bogolea says. “And the fact that the brands are asking for this data essentially provides a new revenue stream for the retailers so that they cannot only subsidize the cost of this technology on the brands, but also create revenue generation possibilities because a small handful of brands will essentially pay for the solution itself.”
Tally has been a hit, Bogolea says, with customers—and employees.
“Consumer feedback has been overwhelmingly positive, especially when they understand what Tally is doing,” Bogolea says. “In most stores that we bring Tally in, the retail associates are very welcoming because retailers struggle with auditing because it is such a mundane, monotonous task, so Tally makes for a much better work environment for all involved.”
Powershelf, an affiliate of Compass Marketing, based in Annapolis, Md., has installed “smart” shelves in several supermarkets in the Columbus, Ohio area in partnership with Hitachi Consulting, Microsoft and King’s Hawaiian. Powershelf’s technology can be added to existing shelving and detects and automatically alerts store personnel when products are out-of-stock.
“By helping retailers prevent empty shelves, we hope to improve the shopping experience for consumers, while improving sales and delivering unique shopper insights that retailers can monitor in real-time by using a unique software dashboard,” says John White, co-CEO and chairman of the board at Powershelf.
“When fully implemented in a chain of stores, the labor required to change paper tags on the shelf can be nearly eliminated,” White says. “These now can be done with a keystroke and executed immediately chain-wide, saving millions of dollars in labor. Just as important, the Powershelf system integrates out-of-stock sensors. Tests with retailers and CPG companies have yielded a 50 percent reduction in out-of-stocks.”
San Francisco-based Quri offers its Performance Driven Merchandising platform as a way for manufacturer field labor forces to help retailers improve in-store merchandising conditions through the eyes of the shopper, say company officials.
“This data provides the information currency needed to make routine, efficient improvements to the in-store merchandising process across all functions and all levels of a manufacturer’s organization in three solutions: Field Labor Optimization, Trade Efficiency and Data-Driven Selling,” says Justin Behar, CEO and co-founder of Quri.
Many manufacturers have been culling their field labor resources as a way to save money, Behar says. “That approach can result in fewer field employees and have a negative impact on in-store merchandising execution as field teams attempt to execute against a growing list of priorities with reduced resources,” he says. “Quri’s Performance Driven Merchandising platform turns field labor resources from a cost center into a strategic growth driver by enabling them to achieve greater efficiency and increased return on investment.”
On the sales floor retailers are also using technology to improve the efficiency of their staff.
Been inside a Sears lately? For all its financial problems, the iconic retailer is on the cutting edge when it comes to equipping its sales associates with iPads, allowing them to research, order and ring up sales of appliances and other products without having to walk the customer over to the cash register.
“Internet, mobile and data are actually coming into the store now,” says O’Brien. “You are seeing a transformation around connecting things in the store. I see the ability to connect with devices in the store, store inventory, and ultimately consumers and store associates. The power to connect those things within the shop will really transform how stores operate and the data that they generate,” he says.
As an example, O’Brien cites IBM’s partnership with Apple, and how the two worked with Boots, the 2,000-unit U.K. drugstore chain owned by Walgreens, to deploy iPads to its staff, essentially transforming them into concierges to assist customers.
“If the customer is looking for more information about a particular product, if it is in stock, how can they purchase it, etc., the employee has an iPad with all of that information at their fingertips,” O’Brien says. “It gives them better service at the point of contact.”
The program has been well received by both Boots management and shoppers, largely for its simplicity and ease of use, O’Brien says.
“What is unique about this is that we designed it with best practice in mind in terms of the user interface,” he says. “We talk technology a lot, but you have to have something that somebody can get into their hands and use right away. The days of having to take people off the selling floor and train them in various technologies is becoming quickly redundant because you need to be up and running very quickly.”
Retailers are also looking to take people off the warehouse floor, largely by automating distribution centers with robots. Canadian department-store conglomerate Hudson’s Bay Co., which owns Saks Fifth Avenue and Lord & Taylor in the U.S., made news when it opened a robotically-managed distribution center in Toronto for fulfilling its online orders. Citing the fact that the Toronto robots are fulfilling orders 12 to 15 times faster than humans, management said this year it is introducing robots to its Pottsville, Pa. facility, which services Lord & Taylor and Saks Off 5th.
OTTO Motors, a division of Clearpath, manufacturers self-guided robotic vehicles that can replace human operated forklifts and manual tuggers in warehouses and factories, including supermarket distribution centers dealing in palletized dry grocery.
“We consider our vehicles an evolution of AGV (automated guided vehicles), which follow a track or magnetic strip, because unlike AGVs there is absolutely no infrastructure required to run our solution,” says Meghan Hennessey, marketing communications manager at OTTO Motors, based in Kitchener, Ont., Canada.
“Our vehicle is completely collaborative, so it understands how to recognize obstacles, whether that be a fallen object, person or another unit. It can identify something is there and stop, and simply move around it,” Hennessey says. “OTTO has on-board intelligence, just like a person has a brain; it has on-board vision sensors, just like a person has eyes. It can start and stop and reroute its path just like a person would problem solve if there was a spill and he had to go around it.”
While it does not have arms, OTTO can ferry loaded pallets around warehouses and factories. It can also help address labor issues, including rising wages and employee shortages.
“Wages are going up here in North America, but they are going up in China too,” Hennessey says. “Technology is certainly allowing onshoring to happen, so manufacturers can bring their facilities back to North America to be closer to customers, and also have their facilities in less populated regions where taxes and utility costs are cheaper.”
By placing facilities in lightly populated areas, manufacturers can further improve productivity by employing a fleet of self-driving trucks from Otto (no relation to OTTO), a San Francisco-based start-up that was launched in January 2016 by Lior Ron and Anthony Levandowski, two former Google executives who invented Google Maps and Google Cars.
The company made international news when it teamed with Anheuser-Busch and ran a driverless tractor-trailer full of Budweiser beer across the state of Colorado. Otto trucks use a collaboration of GPS, radar, lasers and sensors to guide the trucks, which still maintain a human driver in the cab as a “copilot.”
The brewer has prided itself as a transportation innovator, going back to the 1880s when founder Adolphus Busch pioneered the use of refrigerated rail cars to ship Budweiser around the country.
“What piqued our interest is the safety issue, and the large number of accidents that happen with Class A tractors,” says James Sembrot, senior director, logistics strategy at Anheuser-Busch, based in St. Louis, noting that there are almost 4,000 fatalities a year involving Class A tractor-trailers. Sembrot sees Otto trucks not only reducing that number, but also helping the environment in terms of fuel savings and carbon emissions.
“These trucks are always driving the speed limit, and when you drive slower it is better for the environment and just more efficient,” Sembrot says. “We are not burning as much fuel, so as a shipper you are not paying as much money for a fuel surcharge. We would stand to save tens of millions of dollars by avoiding that buy on fuel, because these trucks would be more productive.”
The self-driving trucks can be employed on long-distance routes from the breweries to the distributors, but distributors will still use traditional trucks to make deliveries to supermarkets, liquor stores and on-premise establishments. However, Sembrot does see applications for Otto closer to home. “At our breweries, we have a lot of trucks parked in our lots, with 500 trailers in a given minute parked just in our St. Louis brewery, as an example. We are looking at how we can use these autonomous vehicles to spot those trailers to move them and park them in a more efficient and safe manner,” he says.
Strawberry Fields Forever
Officials at Harvest CROO Robotics are giving new meaning to the term “farm hand” by developing a fully autonomous robotic strawberry picking platform, essentially eliminating the need for costly—and increasingly hard to find—manual labor.
In December, the National Science Foundation awarded Harvest CROO (Computerized Robotic Optimized Obtainer) a grant of up to $1 million to develop robot technology. The first phase of the grant—$225,000—is to build the controls and make the platforms that carry the robots through the fields, using GPS and radar.
Company officials say robotics is necessary for the survival of the U.S. agricultural industry.
“One of the biggest constraints that growers have in the U.S. is labor, which is an ongoing issue and has been getting worse over the last 10 years,” says Gary Wishnatzki, co-founder of Harvest CROO Robotics, based in Tampa, Fla., and owner of Wish Farms, a major Florida strawberry producer. “Availability has been shrinking and cost of labor has been going up. That has been a limiting factor for how many acres of strawberries can be planted.
“Plus, you’ve got competition from Mexico. For U.S. growers to be competitive we really have to find a way with automation to keep our costs competitive,” he adds. “The availability of fresh fruits and vegetables is going to be diminished by the labor shortage. A lot of growers have turned to H2A guest worker programs to fill the void, but it is a much more expensive way to go and I don’t believe it is sustainable when your competing against places like Mexico that have cheap labor.”
Enter Harvest CROO. Each of its platforms houses 16 robots that glide over the rows of strawberries using a proprietary vision system that can see and identify everything that is a berry, and even tell its level of ripeness. Each plant has a GPS coordinate attached to it, so the robots know exactly where the plants are. Each platform unit can replace 25 to 30 manual workers.
Unlike humans, the units have the ability to work 24 hours a day. However, Wishnatzki expects them to run 20 hours, doing the bulk of the harvesting at night and during cooler dayparts. During the heat of the afternoon, the machines will be cleaned and serviced. “It is better to pick at night because berries are less apt to bruise when they are picked during the cooler parts of the day,” he says.
Once the berries are picked they move to the top of the platform where they will be packed into proprietary plastic consumer-ready containers.
Wishnatzki expects the robots to drastically increase yield and reduce food waste.
“It will pick the entire crop and not leave berries to rot in the fields because you don’t have the labor,” he says. “But the main way of increasing yields will be because the unit is weighing each package. Currently when berries are picked in the field, human harvesters fill by volume. We are going to reinvent the packaging and have a system where packages are weighed so we don’t have the gross overpacks that we have now.”
The first prototype tested took eight seconds to pick a plant. Wishnatzki expects that to be reduced to four seconds this year.
Sidewalk Delivery Drone
While self-driving trucks are about to become commonplace on the interstate, pedestrians are sharing the sidewalks with delivery drones on wheels, taking parcels, bags of groceries and take-out dinners to consumers.
“The last-mile delivery industry is the most inefficient part of the entire transportation process,” says Henry Harris, director of marketing and communications for Starship Technologies, a Tallinn, Estonia-based manufacturer of delivery drones, which also maintains offices in London and San Francisco. “Robots are the most efficient in doing that in the future. Man is still the most efficient for the first 10 or 100 miles, but robots are the most efficient over the last one or two.”
Starship Technologies is currently testing its delivery drones in Washington, D.C.; Redwood City, Calif.; London; two cities in Germany and Switzerland.
Weighing in at 40-pounds, the robot can hold 20-pounds, the equivalent of two or three grocery bags. Retailers would place the bags in its compartment, lock the lid and send the drone on its way. While the compartment is not temperature controlled, Starship Technologies aims to make its deliveries within 15 to 30 minutes. Coordinated through their mobile phone, consumers select a window of delivery time and receive a message when the drone arrives at their house, along with a code they can enter to unlock the lid.
The robots use computer vision and have strong sensor detection systems to prevent them from running into people. “We’re aiming to be 99 percent self-driving, which means we always want an element of human oversight and control,” Harris says, adding that the human overseer can be anywhere in the world. “At the moment, we have robots driving around London that are controlled from San Francisco or Estonia.”
Starship Technologies maintains the fleet and it is used between groups of retailers and restaurants in the cities where it operates. Retailers pay a monthly fee that includes the robots, maintenance, spare parts, cleaning and the human operators. “Our ultimate aim is to offer on-demand delivery for $1” Harris says.
“This isn’t something that is three or four years away. This is something that is here now. We are doing daily robotic deliveries in four cities as we speak,” Harris says.