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H-E-B the new Amazon? Grocery giant acquires food-delivery company Favor with eye on digital sales

Following in the footsteps of Amazon’s Whole Foods purchase, the Texas-based grocery giant H-E-B purchased a home-delivery service company on Thursday.

H-E-B acquired Austin-based Favor Delivery, which distributes restaurant meals and groceries via a mobile app.

H-E-B did not release the details of the transaction, but said the effort is designed to “accelerates (the company’s) path to become a digital retail industry leader in Texas,” as well as give customers choice in shopping and paying and receiving goods, particularly online. 

“I am thrilled to have H-E-B join forces with another well-respected and innovative Texas company,” said Martin Otto, H-E-B’s chief operating officer. “…Over the past two years, we have established a strong working relationship with Favor that has proven to be immensely successful for both companies. We see a unique opportunity with this partnership to support and accelerate each other’s growth through the sharing of experience, insight and resources.”

Favor will continue to independently operate their business as a separate brand. H-E-B will acquire all of Favor’s employees and its 50,000 runners, who operate as contract delivery drivers.

“It is our intent to continue to grow Favor just as it is our intent to grow H-E-B,” Otto said. “We’re very excited about this because of the opportunities it will afford both companies to better serve our customers.”

A joint news release issued by H-E-B and Favor says “this combination will provide Texans with an innovative, convenient and world-class home delivery experience.”

H-E-B operates 400 stores in Texas and Mexico.

Source: Click 2 Houston

CommonSense Robotics raises $20M for robotics tech for online grocery fulfillment

CommonSense Robotics, an Israel-based startup developing AI and robotics tech to help online grocery retailers speed up fulfilment and delivery, has raised $20 million in Series A funding.

The round was led by Playground Global, with participation from previous investors Aleph VC and Eric Schmidt’s Innovation Endeavors. It brings the company’s total funding to $26 million.

‘The funds will be used to scale up CommonSense Robotics’ facility deployment rate, develop their next generation of robotics and AI, and expand global operations and sales,” says the startup.

Using what it describes as advanced robotics and AI, CommonSense Robotics claims to enable retailers — even relatively small ones — to offer one hour, on-demand grocery deliveries to consumers “at a profitable margin”. It does this by employing robots to power bespoke warehouses or micro-fulfilment centers that are small enough to be placed in urban areas rather than miles away on the outskirts of town.

The robots are designed to store products and bring the right ones to humans who then pack a customer’s order. More robots are then used to get the packaged order out to dispatch. This robot/AI and human combo promises to significantly reduce the cost of on-demand groceries, thus broadening the range of retailers that can compete with Amazon

“Our AI software breaks the order down into robot tasks, and finds the right robots to complete those tasks,” Elram Goren, CEO and co-founder of CommonSense Robotics, tells me.

“We have robots that are capable of moving boxes (totes) around extremely efficiently and at high speeds. Our various types of robots will bring the right totes of products to a stationary human ‘picker’ who in turn packs the order, which is then sent by robots towards the delivery interface where orders are packed into a van or scooter for dispatch”.

In addition, Goren says all of this is designed to happen within a space of about 10,000 square feet made up of a 3D “cube” of racks ie utilising vertical as well as horizontal space.

Explains the CommonSense Robotics CEO: “Our robotics and AI are unique and proprietary with the entire system designed to maximise space efficiencies (how small we can have the warehouse), labor efficiencies (how little we can have human labor in the process), how fast we can deal with an average grocery order (usually less than 3 minutes, where a completely human process takes about 10x that), and how close we can have the centers to the customers”.

Meanwhile, The Tel Aviv company is currently deploying the first generation of its robots in its first operational facility, and has plans to open more facilities in the U.S., U.K. and Israel in 2018.

Source: TechCrunch

Why your grocery store wants to be like a startup

Grocery shopping has not changed much over the past 100 years.

Since Piggly Wiggly introduced the concept of picking out your own groceries in the 1930s, few technological advancements have stood out. The first shopping cart came along in 1937, and self-checkout was introduced more than 50 years later, in 1992.

But Amazon’s recent acquisition of Whole Foods Market was an abrupt wake-up call, setting off a scramble for supermarkets to adopt new technology to compete for customers who’ve become accustomed to getting exactly what they want, delivered quickly to their doorsteps.

The desire for change in the grocery shopping experience was made apparent last month, when the public got its first glimpse of the Amazon Go store in Seattle. Consider the irony: Designed to eliminate the check-out line, the store has had a line outside its entrance since it opened. And just last week, Amazon announced that it would begin offering groceries from Whole Foods through its two-hour Prime Now delivery service. 

“There is a sense of urgency,” said Laurie Rains, the Boston-based vice president of US retail commercial strategy for the Nielsen data analytics firm. “The consumer is changing, and nobody has really figured out the total picture.”

In 2016, about 23 percent of consumers made food and beverage purchases online, according to research from Nielsen and the Food Marketing Institute, but that’s poised to rise to 70 percent in as little as five years, Rains said. Online food and beverage purchases in the United States could reach $100 billion by 2022, according to a report Rains coauthored, yet most traditional grocery stores don’t have the talent, experience, or technology to truly compete both online and in stores.

Brick-and-mortar retailers “have serious work ahead of them if they are to hold their share of the market,” the report read. “[There] is no room for complacency, or for the business-as-usual mindset.”

In short, the grocery store has to evolve.

According to a soon-to-be published survey conducted by the Phononic, global provider of refrigeration equipment to grocery stores, 90 percent of people surveyed said they wanted to shop in a grocery store that understands how to make buying groceries easier and more efficient. And half of the survey respondents said that grocery stores haven’t figured out how to use technology like other retailers have.

For the past few decades, grocers have largely focused on updating the selections on their shelves: offering more organic produce or expanding their international food options, for example. But on the technology side, supermarkets have fallen victim to an increasingly wide “innovation gap,” said Sterling Hawkins, who oversees operations and venture relations at the Center for Advancing Retail & Technology, a consultants group that connects retail clients to companies that offer innovative solutions to longstanding problems in the industry.

Hawkins’s phone started ringing off the hook, however, soon after word spread about the Whole Foods acquisition in June. “It was like the Amazon thing lit a fire,” he said. “All of a sudden, the decisions and strategies and technologies are starting to move.”

In the ensuing months, many grocers took steps to introduce more technology in their aisles.

The stock price for Kroger Co., the country’s largest supermarket chain, took a dive after the Whole Foods acquisition was announced, and the grocer responded by announcing the national expansion of its “Scan, Bag, Go” program, which gives customers hand-held scanners to tally their items as they shop, then check out without interacting with a cashier.

Kroger also plans to install more digital shelves, which display video ads and offer coupons to customers. The company says that, eventually, the displays will synch with shoppers’ phones, highlighting items on a grocery list, for example, or offering discounts to loyal shoppers.

The New York Post and Reuters also reported last month that Kroger had held talks with Alibaba about partnering with Chinese e-commerce giant to “speed up the integration of online and offline [in store] sales.”

“While research has shown that the majority of shoppers still prefer buying groceries in person instead of online, those same shoppers are increasingly expecting an experience that blends online with offline,” said Karen Garrette, global retail industry director at Microsoft, who is working on Kroger’s in-store technology.

“They want to be able to do things like create their grocery lists online in a grocer’s app before visiting the store, or they rely on technology to remove friction in their shopping experience, such as waiting in a checkout line. With technology, the industry is finding it can deliver on these expectations and transform not only the in-store shopping experience but also the tools it gives to employees and the way it manages inventory — all to better serve customers.”

Other grocers have turned to acquisitions as a way to access technological savvy.

Walmart acquired an Amazon competitor, Jet.com, in 2016 to get a stronger toehold in e-commerce and has been intent on finding ways to sync its online and in-store sales. It recently acquired the delivery service Parcel for day-of purchases made online and is seeking a patent for an app that can help shoppers see images of fresh produce before it is purchased for delivery.

Target recently acquired the same-day delivery service Shipt, the Alberston’s chain recently bought the meal-kit service Plated, and Kroger is rumored to be in talks about acquiring Boxed.com, an online competitor to Costco.

And some have turned to partnerships.

The bfresh supermarkets in Allston and Somerville had experimented with an app called Selfycart that allowed shoppers to scan items then have a store employee scan a code on their phone on the way out.

Stop & Shop has partnered with a company called HowGood to allow shoppers to scan items to learn more about the ethical standards of each product.

And Roche Bros. and Market Basket now partner with a local startup called The Dinner Daily, a service that uses the sales offered in weekly supermarket circulars to create inexpensive meal plans for shoppers.

The challenge for grocers is finding ways to both speed up and slow down the shopping, said Leon Nicholas, an analyst at Kantar Retail. Some are zeroing in on the fact that shoppers are buying more fresh food than ever and are choosing to focus on finding ways to get shoppers in and out of stores faster to get that fresh food on a regular basis. The hope is that customers making multiple trips each week will eventually spend more.

At the same time, some stores are looking for ways to get shoppers to linger, in hopes they, too, will spend more money, Nicholas said. He pointed to the rise of in-store cooking demonstrations and full-service “grocerants,” such as the Burger Bar at Wegmans in Medford and the Borgatti Bar that will soon open in the Whole Foods in Shrewsbury.

Now, even the most established grocers must begin to think like startups.

“It’s important to test and learn and fail quickly and move on,” Rains said. “Everybody is really experimenting and figuring out what is the best way. There is no one model, but it’s very clear that this is what the customers are looking for.”

Source: Boston Globe

Grocery startup Instacart has raised nearly a billion in funding

On demand grocery-delivery startup Instacart has raised a new $200 million round of funding. In total, the company has raised $900 million. The money will no doubt be used to fuel its rivalry against Amazon, which is expanding its online grocery delivery service Fresh and building out new programs through its retailer Whole Foods.

Instacart expanded its network of grocers quite a bit in 2017, signing deals with Albertsons, Kroger, Publix, and owner of Giant and Stop & Shop, Ahold Delhaize. In total, the company says it has 200 grocery partners in the U.S. and Canada. The push came in the wake of Amazon’s acquisition of Whole Foods, one of Instacart’s partners. The purchase of the organic grocer had analysts questioning the viability of Instacart in a world where Amazon delivers food. At the time, Instacart maintained that its delivery structure offered traditional retail grocery shops a way of keeping a competitive edge as Amazon grows bigger. Now it wants to grow its services for grocers even more.

The new deal values the company at approximately $4.2 billion.

Source: Fast Company

Walmart is cutting management roles at some stores

Walmart is restructuring store management positions at some of its 4,700 stores.

The retailer is cutting two department manager positions at some of its lower volume stores, the Wall Street Journal reports. The hourly positions oversee cell phone departments and online grocery pickup areas, the company said.

Another position, known as frontend zone supervisors, has also been eliminated across Walmart stores, the company told Business Insider. That position was already cut at some Walmart stores during a restructuring several years ago. This most recent move eliminated frontend zone supervisors who remained because the job had redundancies with other positions in the store.

Many of the workers impacted by the cuts will be placed in other jobs at Walmart, including other management positions, Walmart said. Walmart is also adding 800 new ecommerce assistant managers at higher volume stores.

“Retail is changing rapidly and over the past two years, we’ve been transforming too,” a Walmart spokesman said. “Our associates are fundamentally important to this effort, and success depends on having the right people in the right place at the right time. That means creating new roles while consolidating and redesigning others.”

The restructuring comes one month after the retailer said it was removing 3,500 salaried co-managers and adding 1,700 lower-paid assistant store managers. Walmart also said last month that it was closing 63 Sam’s Club stores in a move that would impact roughly 9,400 employees.

The eliminations follow Walmart’s announcement in January that it would raise its starting hourly wages to $11, expand parental leave benefits, and give cash bonuses of up to $1,000 to employees.

“Retail is changing rapidly and over the past two years, we’ve been transforming too,” a Walmart spokesman told the Journal. “That means creating new roles while consolidating and redesigning others.”

Source: Business Insider

Amazon Just Got Serious About Groceries

Since Amazon.com took over Whole Foods Market last August, competitors and customers have been anticipating the e-commerce giant’s disruption of the grocery industry. Amazon tinkered with lower prices and added its pick-up lockers to the supermarkets, but it wasn’t until last week that the company launched the kind of disruptive gambit that it’s known for.

Amazon said it would offer free two-hour delivery from Whole Foods stores for orders of $35 or more to Prime members through its Prime Now program. The program started last week in neighborhoods in Austin, Cincinnati, Dallas, and Virginia Beach, and Amazon plans to expand it across the country over the rest of the year. Prime customers will also be able to get orders in less than an hour for a $7.99 fee.

The move amplifies Amazon’s longheld intentions to break into the grocery market, as it has tried to do for a decade with Amazon Fresh. However, the Whole Foods Prime Now program is a clear improvement over Amazon Fresh, as it offers similar benefits without the $15/month price tag of Fresh and carries the Whole Foods brand along with the quality and customer trust that represents.

Since most Americans are already Prime members, it seems like Amazon has found a way to ensure free, fast grocery delivery to anyone who lives within a reasonable distance of a Whole Foods Market. That could be a problem for its competitors.

What’s a supermarket to do?

The nation’s biggest grocery sellers, Walmart, Kroger, and Costco Wholesale, have mostly rejected grocery delivery. Walmart and Kroger have instead invested in grocery pickup capabilities for online orders, and both seem happy with that solution thus far. Walmart, which has already opened 1,000 grocery pickup locations, plans to add another 1,000 this year. Kroger opened its 1,000th ClickList location, its name for its grocery pickup program, in December and the company plans to bring the feature to all of its nearly 3,000 supermarkets.

Both companies are seeing strong growth from those digital initiatives, but have avoided focusing on deliveries, instead seeing online pickup as a way to compromise on costs and convenience. Such a service provides the convenience of online ordering and easy pickup without the cost of delivery to the provider.

Costco, meanwhile, is just beginning to experiment with e-commerce, launching free two-day shipping for non-perishables with a $75 order minimum and partnering with Instacart to offer same-day delivery. Kroger has also offered same-day delivery through Instacart, while Walmart is currently in the midst of testing its own grocery delivery pilot, teaming up with Uber to fulfill orders in Orlando and Dallas.

Target, which may have the greatest overlap with Whole Foods locations, has taken a different approach, aggressively going after the delivery market with its acquisition of Shipt late last year.  With the help of Shipt, an Instacart competitor, same-day delivery, including groceries, will soon be available at half of Target stores. However, groceries make up a significantly smaller percentage of Target’s sales than they do at Walmart, Kroger, and Costco.

The Instacart issue

Instacart, the leader in online grocery delivery, has for years been a foil for Amazon Fresh and it just raised $200 million at a $4.2 billion valuation, according to Bloomberg. The company partners with dozens of supermarket chains to offer same-day delivery of groceries for a one-time fee of $5.99 or higher, depending on the speed of the delivery and size of the order. Customers can also get free deliveries with Instacart Express, a membership plan for $149 a year or $14.99/month.

That was a similar price to Amazon Fresh. However, with the new Prime Now offer, Amazon’s value proposition is much better for Prime members — Whole Foods groceries in two hours at no extra charge. For customers who live within the delivery area, it seems hard to justify paying for Instacart with that kind of competing offer.

As a result, Instacart may have to find a way to lower prices, or work with supermarkets to find a way to compete with Amazon’s Prime Now offer. For Amazon, the new program will probably make a dent in its bottom line because delivery is expensive, but the company said in its recent earnings call that it believes investing in shipping costs is a way to gain a competitive advantage.

Threat level medium

For now, it’s not clear how much traditional supermarket chains are threatened by Amazon’s free delivery and it will largely depend on how many people eventually have access to it. There are fewer than 500 Whole Foods stores nationwide, so Amazon won’t be a direct threat to most Walmart and Kroger locations as those two companies have thousands of stores each. But Amazon’s rivals would be foolish to ignore it. Despite the benefits of online grocery pickup, it may not be enough to compete with free delivery, especially from a company that only seems to care about market share and not profits.

Source: Yahoo! Finance

‘Bargaining with a gun to your head’: Union says Sobey’s planning to close some Manitoba Safeways

United Food and Commercial Workers (IUFCW) Local 832, the company that represents more than 2,000 Manitoba Safeway employees, says chain owner Sobey’s refuses to negotiate and has told them it plans to shut down stores in Manitoba, though how many depends on the contract that workers agree to.

“We had the first day at the [bargaining] table on Jan. 15 and the company tabled pretty massive concessions that would have drastic impact on all of our members working at Safeway,” said UFCW Local 832 president Jeff Traeger. “They then broke off bargaining for three weeks totally and came back to the table this week and told us they weren’t willing to change their position or really even have discussions. They stated that there would be stores closing in Manitoba and that how many of those stores depended on what kind of contract they could get with us so we kind of feel as though it’s like bargaining with a gun to your head.”The union broke off negotiations with Sobey’s Feb. 8 and are scheduling meetings with members in Thompson, Winnipeg, Selkirk, Dauphin, Brandon and Neepawa before the end of February to ask for a strike mandate.

“We got to the point where we were just staring at each other across the table because they simply said they’re not willing to move on their original proposals and those proposals affect everything from wages and benefits, vacation, premiums, you name it, it’s all on the table,” said Traeger. “They tend to believe that we’re not speaking on behalf of all the membership until we’ve gone to them for a vote.”

The contract expires March 17 and talks are scheduled with the company from March 5 up until the 17.

“We’re hoping that we can get a deal there but if you look at what they done in B.C., in B.C. they announced right before they were going to the bargaining table that they were closing 10 stores and that they would reopen five of them as a new banner provided they got the deal they wanted to so this seems to be becoming their M.O. is that they go to the table with very, very big asks and say that if we don’t agree to it that they’re going to close down stores.”

Traeger says the tone is different than during the last round of contract negotiations in 2014, right at the time that Sobey’s bought the Safeway chain.

“The sale actually happened while we were at the table so it really was like continuing to bargain with the old Canada Safeway company,” Traeger said. “We did seek a strike mandate. We received a 97 per cent strike vote in 2014 and we were able to reach an agreement that was a strong agreement, fair and balanced, and worked for both parties and we’ve been working under that agreement for the last four years.

The Thompson Citizen contacted Sobey’s seeking information about the potential for store closures but had not received any information from the company as of press time. A spokesperson for the company told other media outlets that examining the viability of store locations is standard practice at bargaining meetings and that Sobey’s is seeking a deal that works for everyone.

Source: Thompson Citizen

A swing shift in stores

With new options and conveniences, there’s never been a better time for shoppers. As for workers — well, not always.

The retail industry is being radically reshaped by technology, and nobody feels that disruption more starkly than 16 million American shelf stockers, salespeople, cashiers and other workers. The shifts are driven, like much in retail, by the Amazon effect — the explosion of online shopping and the related changes in consumer behavior and preferences.

As mundane tasks such as checkout and inventory are automated, employees are trying to deliver the kind of customer service the internet can’t match.

So a Best Buy employee who used to sell electronics in the store is dispatched to customers’ homes to help them choose just the right products. A Walmart worker dashes in and out of the grocery aisles, hand-picks products for online shoppers and brings them to people’s cars.

Yet even as responsibilities change — and in many cases, expand — the average growth in pay for retail workers isn’t keeping pace with the rest of the economy. Some companies say that in the long run the transformation could mean fewer retail workers, though they may be better paid. But while some workers feel more satisfied, others find their jobs a lot less fun.

Bloomingdale’s saleswoman Brenda Moses remembers the pre-internet era, when the upscale store was regularly filled with customers ready to buy. These days, department stores are less crowded and the customers who do come in can make price comparisons on their phones at the same time as they pepper staff with questions.

“You tell them everything, and then they look at you and say, ‘You know what? I think I will get it online,’ ” Moses said.

Moses has seen her commission rate rise to 6%, from 0.5%, but her hourly wage dropped from $19 to as low as $10 before it came back up to $14. Depending more on commissions means her income fluctuates — and that she’s competing with her colleagues for each sale.

“Now,” Moses said, “you have to fight to make your money.”

The same could be said for the retailing industry overall. In 2017, 66,500 U.S. retail jobs disappeared (not taking into account jobs added in areas such as distribution and call centers). In the last decade, about 1 in 7 jobs have vanished in the hardest-hit sectors such as clothing and consumer electronics, said Frank Badillo, director of research at MacroSavvy LLC. Though department stores have suffered the most, smaller businesses also have struggled to compete with online sellers.

Many of the survivors are rushing to adapt. Of the retail jobs that remain, over the next decade as many as 60% either will be new kinds of roles or will involve revised duties, said Craig Rowley, senior client partner at Korn Ferry Hay Group, a human resources advisory firm. He estimated the number is about 10% now.

How fast retail jobs will change and what they’ll look like depends on three factors, Rowley said: the pace at which online shopping advances; the speed at which robotics and other technology progress; and shifts in the minimum wage.

“Jobs for workers will get more interesting and be more impactful on the company’s business,” Rowley said. “But the negative side is that there will be fewer entry-level jobs and there will be more pressure to perform.”

Some retail workers at the vanguard of the changes — such as Laila Ummelaila, a personal grocery shopper at a Walmart store in Old Bridge, N.J. — speak glowingly of their new responsibilities.

Walmart Inc., the nation’s largest private employer, has scrutinized every job in its stores as it looks to leverage its more than 4,000 U.S. locations against Amazon.com Inc.’s internet dominance.

Walmart now has 18,000 personal shoppers who fill online orders from store shelves, and 17,000 checkout hosts whose responsibilities are more extensive than the greeters of old, including keeping the area clean and making sure registers move efficiently. The company has also shifted workers from backroom clerical jobs and eliminated some overnight stocker positions in favor of more daytime sales help. The customers like the changes, company officials say, pointing to more than three years of sales growth at its established U.S. stores — a contrast with other, suffering retailers.

Ummelaila became a personal shopper after joining the company three years ago. To meet her store’s goals, she must pick one item per 30 seconds. If she can’t find something, she has to quickly get a substitute that’s as good or better.

“You start to get to know the customers, you know what they like,” she said, “how they like their meat and how long they keep milk in the fridge.”

Best Buy Co., meanwhile, has begun a free service in key markets in which salespeople will sit with customers in their own homes and make recommendations on setting up a home office or designing a home theater system. Best Buy said shoppers spend more with a home visit than they do at the stores. The project follows Amazon, which reportedly has been testing a program that sends employees to shoppers’ houses for free “smart home” recommendations.

At Steve Frederick’s townhouse in Chicago, Billy Schuler offered advice about speakers that can be adjusted from a smartphone. Schuler, who had previously worked at Best Buy for 14 years, returned to the company to take on the new role.

“Customers are more relaxed when they are in their home,” he said. “We can do a walk-through of the house and see their needs.” He likes to “break the ice” by calling the person and chatting a day or two before the visit.

Frederick, who is spending close to $20,000 on the equipment, describes himself as “old school” and says he needed a lot of help. He said it was worthwhile.

“When you are spending that kind of money, you want to have someone come in and explain it,” he said.

Schuler declined to give specifics but said he is well compensated. Ummelaila said her pay went up to nearly $12 per hour, from $10, when she became a personal shopper.

Target Corp. credits its strategy of assigning dedicated sales staff in areas such as clothing, consumer electronics and beauty for helping increase sales, and it says having visual merchandisers create vignettes like shoppers would see in specialty stores inspires people to buy. “You are making an outfit and telling a story on each rack,” said Crystal Lawrence, who works at a Target store in Brooklyn, N.Y. She said she likes the variety in her new job, and Target says it plans to keep paying higher wages for those specialized roles.

But a survey of nearly 300 retail workers — conducted by the Center for Frontline Retail and Community Development Project at the Urban Justice Center — found that of those workers whose job responsibilities have changed, more than 40% said they hadn’t received corresponding pay increases.

Wages for hourly retail workers have risen less than 9% since 1990, compared with 18% for private-sector workers overall. There has been some progress recently; some of the biggest retailers, such as Walmart and Target, have made moves to increase pay amid low unemployment and competition for workers.

“For a long period, these retail jobs were just terrible on average,” said Michael Mandel, chief economic strategist at the Progressive Policy Institute. “Retail stores have been following one strategy: high turnover, low wages. That strategy is no longer viable.”

Mandel sees hope in technology, which he says historically has created more and better-paying jobs than it has eliminated.

The National Retail Federation trade group points to government data showing that even in large supermarket chains where self-checkout has become standard, the number of employees per store has held steady over the 15 years through 2014. And the demand for grocery cashiers rose in the last few years, said Burning Glass Technologies, a company that analyzes labor market data.

McDonald’s says the self-serve kiosks it has been rolling out won’t result in mass layoffs, but will mean that some cashiers shift roles to accommodate changes such as offering table service.

But a report prepared by Cornerstone Capital Group for the Investor Responsibility Research Center Institute predicts that more than 7.5 million retail jobs are at risk of being eliminated by automation over the next several years.

Amazon is testing a grocery store in Seattle without cashiers, using cameras and shelf sensors to keep track of the items that shoppers grab and charge them. Eatsa, an automat-style restaurant in San Francisco, lacks cashiers as well — diners order at kiosks, and workers prepare the food behind an opaque wall, with virtually no interaction between them.

A labor group representing 1.3 million grocery and food workers is trying to combat automation by highlighting that workers’ specialized skills — such as the care they take in icing a rose on a wedding cake, or arranging flowers, or the ability of human workers to recognize spoiled food — provide a benefit to shoppers.

“Separating progress for the consumer, for the worker, for the economy versus the stockholders — those are completely different things,” said Erikka Knuti, a spokeswoman for the United Food and Commercial Workers International Union.

Others say automation and happy workers are not necessarily incompatible.

Walmart Chief Executive Doug McMillon foresees fewer sales associates at his stores, but says they’ll be better paid and better trained. Walmart has trained 225,000 supervisors and managers on topics such as new apps and better customer service. It says managers who go through the academies have better retention rates than those who do not. Workers who report to those managers stay longer. And entry-level workers who complete a new training program are more likely to remain.

It’s a shift retailers may have to speed up. Government figures show that in 2016, the rate of retail workers quitting their jobs was at its highest since 2007.

Alfredo Duran, who started as a sales associate at Gap and worked at six retailers over 15 years, left the industry two years ago. As a manager at clothing chain Mango, he was making $75,000 a year. But once the store closed, he had trouble finding another job in retail because no one wanted to pay him for his experience.

“It’s gone down. One person is doing three jobs. And you can’t move up,” said Duran, 38, of Queens, N.Y.

He’s now a concierge at a Manhattan hotel, making half of what he used to earn — but happy he left retail.

Source: Los Angeles Times

Once, twice, six times a grocery shopper

If Americans fulfilled their java urges the same way they carefully shopped for groceries, they would visit five to seven various chain coffee shops regularly — for a blend of different categories.

In fact, it turns out that grocery categories such as dessert toppings, motor oil, candles and refrigerated ethnic foods were some of the leading products that lure customers to separate stores.

In the first test of detailed consumer-buying habits by categories at more than one chain store selling groceries, a team of business school researchers led by Washington University in St. Louis found that shoppers weren’t monogamist or bigamist but rather polygamist in their choice of outlets.

The vast majority — a whopping 83 percent — regularly visited between four and nine chain stores within a year’s time to purchase groceries. Of 1,321 households studied among this rich dataset, only 12 stayed loyal to just one store. More than half, at 51.1 percent, went to the average of five to seven different stores. Eighty-eight households, or six of every 100, went to 10 or more.

So much for store loyalty.

Using tracked data from a vendor utilizing a swipe card akin to a loyalty card, the researchers parsed more than $1 million worth of shopping transactions over 53 weeks involving 248 types of products sold at 14 retail chain stores in a large metropolitan market. The study, “Polygamous Store Loyalties: An Empirical Investigation,” was published last month in the Journal of Retailing.

What shoppers want in breadth

In the study, researchers found the top 10 categories of products that change a store’s attractiveness over its competitors, based on the available breadth of the brand assortment.

1. Motor oil 2. Candles 3. Lighters 4. Refrigerated dips 5. Refrigerated baked goods 6. Dry beans/vegetables 7. Moist towelette 8. Hairspray/spritz 9. Hair accessories 10. Automobile fluids/antifreeze

“Store loyalty was pretty much a given in grocery retail,” said senior author Seethu Seetharaman, director of the Center of Customer Analytics and Big Data and the W. Patrick McGinnis Professor of Marketing at Olin Business School. “When people do their shopping, it’s the store close to where they live — location, location, location, like the real-estate mantra.

“Then there is a group of choosy consumers who stop at many stores, shopping for bargains or certain brands or products,” he said. “They’ve been called ‘cherry pickers.’ ” Often, those folks were associated with coupon shoppers.

“That made us do a deeper dive, and we found that people aren’t as store loyal as we thought,” Seetharaman said. “Clearly, people are polygamous. The majority of people are shopping at six grocery stores.”

Consumers tend to shop multiple stores for multiple reasons. In fact, the data showed little loyalty to a single store or handful of stores, but more so to types of products found in a store. Consumers shopped various stories for specific product categories: frozen treats at one grocer, meat and poultry at another, and so on. The researchers called this “intrinsic store-category attractiveness.”

Seetharaman was joined in this study by one of his former graduate students, Qin Zhang, assistant professor of business at Pacific Lutheran University, and one of Zhang’s former graduate students, Manish Gangwar, assistant professor of marketing at the Indian School of Business. They specified and estimated a statistical model of how consumers fractured their shopping basket and shared their wallet across stores.

The dataset comprised chains that were either traditional supermarkets (Albertsons, Bashas’, Food 4 Less, Food City, Fry’s Food Store, IGA, Safeway, Trader Joe’s and Wild Oats Market), supercenters (Kmart and Walmart) and warehouse clubs (Costco, Sam’s Club and Smart & Final). Further evidence of an ever-changing economy in which to purchase grocery, household and health and beauty products: Some of the studied chains have dwindled since the study and no longer service several of their previous states.

What shoppers want in pricing

Here are the top 10 categories of products that change a store’s attractiveness over its competitors, based on the degree of price consistency (or lack of price variability) over time. 1. Dessert toppings 2. Refrigerated eggroll/wonton/tortilla wrap 3. Pickles/relish/olives 4. Peanut butter 5. Toothbrush/dental accessories 6. Toilet tissue 7. Cat litter/dog supplies 8. Refrigerated meat/poultry products 9. Snack bars/granola bars 10. Spaghetti/Italian sauce (Source: Seetharaman, Zhang, Gangwar study)

“It’s very diffuse,” Seetharaman said of consumers’ purchases from a larger-than-expected list of stores. “Only 40 percent of their basket is coming from their ‘favorite’ store.”

Some other findings from the research:

  • In the market surveyed in particular, Fry’s Food Stores emerged as the market favorite by a sizable margin, with Albertson’s, Safeway and Walmart next behind it.
  • In a large set of categories, a handful of stores competed intensely: Albertson’s, Bashas’, Safeway and Fry’s.
  • Warehouse clubs attract loyalty in categories different from the traditional supermarkets and supercenters.
  • Family size predicted store loyalty — the larger families tended toward Fry’s or a Walmart Supercenter.
  • Income was a somewhat surprising predictor, in that households with higher incomes were more likely to “budget shop” at a Costco, which could be explained by the fact that large houses with large basements are usually needed to store products bought in bulk.

Companies in the grocery, household item and healthy/beauty realm could learn from such a category-intensive study, Seetharaman said. “This gives you a good sense of what you are winning, and how you are winning. But there’s no silver bullet.”

“Will it be a surprise?” Seetharaman asked. “Yes, it will be a surprise,” he said. “The traditional wisdom is: Walmart is an aggressive, everyday-low-price price retailer and Target is the assortment retailer. So let’s say both mass merchandisers … each of them has a certain strategic positioning and therefore thought they attract a certain type of consumer.

“We are upending that wisdom a little bit here: No matter what kind of strategic positioning you have carved out, consumers have a mind of their own. They are choosing to do different things in different categories. And businesses should wise up to this. Even your core customer is buying categories at other shops.”

Source: Science Daily

Retail jobs are undergoing a fundamental shift — but that doesn’t mean they’re getting better

Retail jobs are some of the lowest-paying jobs in the private sector.

According to a May 2017 report from Glassdoor, only the four top-paying retailers — Costco, Nordstrom, Whole Foods, and Tiffany & Co. — pay their cashiers and associates wages that are at or above the poverty level for a family of four, as calculated by the US Department of Health and Human Services.

That’s changed in recent years, with retailers like Walmart and Target bumping up (or planning to bump up) wages for their lowest-paid employees, and other employers touting their better treatment of workers.

But even the good retail jobs have their flaws, it seems, as many workers are feeling the pressures that come with a changing retail landscape.

New systems come with new challenges

Whole Foods has long been known for its wage transparency and for its generous paid time off and health insurance options.

But the demands placed on these workers has risen along with their wages and benefits. Business Insider’s Hayley Peterson reported this week that Whole Foods has instituted new inventory systems that are creating a tough environment for its workers.

Whole Foods has started using scorecards and “walks” with managers to grade employees on their performance, and these moves have had an impact on morale. The checks, combined with a new inventory management system called order-to-shelf, or OTS, have also caused food shortages on shelves and confusion for customers.

“The stress has created such a tense working environment,” a supervisor at a West Coast Whole Foods store said. “Seeing someone cry at work is becoming normal.”

Recent labor cuts have made things even more difficult, as there often aren’t enough people to manage the demanding system.

“It’s running everyone into the ground, and they absolutely hate it,” a high-level employee of a Midwest Whole Foods said.

Food-service jobs don’t seem any better

Starbucks frequently touts the benefits it offers to baristas, like tuition reimbursement and bonuses in the form of restricted Starbucks stock.

But according to a 2017 report from Business Insider’s Kate Taylor, many baristas say that they are underpaid and overworked. Chronic short-staffing issues, combined with increasingly elaborate, labor-intensive specialty drinks like the Unicorn Frappuccino, have created stress for workers.

“It’s exhausting. And a lot of us can’t leave, despite wanting to, because we have health insurance and scholarships,” an employee said. “That’s all well and good, honestly, but they really screwed us with labor and they really screwed us with our raises.”

Starbucks has taken action, giving workers a raise that took effect in January. The company just announced another raise for workers that’s set to take effect in April, and it expanded sick leave for all full-time and part-time workers. Parental-leave policies were also updated after baristas complained that Starbucks’ paternity-leave policies were unequal for corporate and in-store workers.

As the retail apocalypse forces more and more stores to close, warehouses catering to e-commerce sales are being built around the country, as online stores figure that they can better serve customers by being closer to them.

That can be a good thing for some workers. Data from the National Bureau of Labor Statistics says that warehouse worker jobs are on the higher end of low-paying jobs, and they even come with benefits like health insurance and 401(k) match, which traditional retail jobs often do not.

But warehouse jobs still pay about 10% less than the average job nationally. Not only that, but reports suggest that working at a warehouse can be a grueling experience.

A 2016 report from the Institute for Local Self-Reliance, a non-profit advocacy group focused on community employment issues, said that Amazon has “a work environment that is profoundly dehumanizing.”

“The company’s warehouses are finely-tuned machines, and the company creates conditions such that its workers are expected to be parts of that machine,” the report reads.

After the report came out, Amazon responded in a statement:

Like most companies, we have performance expectations for every Amazon employee and we measure actual performance against those expectations. Associate performance is measured and evaluated over a long period of time as we know that a variety of things could impact the ability to meet expectations in any given day or hour. We support people who are not performing to the levels expected with dedicated coaching to help them improve.

Is this all a stopgap before automation?

Retail workers’ jobs are increasingly seen as prime targets for automation. From burger flipping and taking orders to making sure aisles are stocked, new mechanisms are taking some loads off of workers.

At the ICR Conference in January, Jack in the Box CEO Leonard Comma said that the chain was considering swapping some cashiers with robots as the minimum wage rises in California.

“As we see the rising costs of labor, it just makes sense” to automate certain tasks, he said.

Fast-food chains are increasingly installing kiosks that take customers’ orders, replacing the need for someone to work the cash register.

There could be a bright side to this, however. Walmart, which has recently started testing robots that scan aisles for out-of-stock items, says this only takes away jobs that workers don’t prefer to do anyway, freeing them up to provide help for customers.

Source: Business Insider