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Supermarkets: High-Tech Hotbeds 126

Posted by samzenpus
from the lettuce-technology dept.
Esther Schindler writes "You don't think of your supermarket as the source of geeky innovation, but you may be surprised. For example, in Steven Cherry's Supermarkets Are High-Tech Hotbeds, a Techwise Conversation with Kurt Kendall, a partner and director at Kurt Salmon, where he heads the analytics practice there, we learn: 'A lot of supermarket tech is at the checkout area. Bar-code scanning was already old hat when U.S. president George Bush the elder was allegedly amazed by them in 1992, and retailers continue to experiment with the next logical step: self-checkout systems. There's a lot of technologies out there right now that are being introduced into the retail space to understand what consumers are doing in the store, and heat-mapping is one of those technologies--using cameras in the ceiling to actually track where the consumer's going. What this information tells the retailer is where a consumer is, how they're moving around the store, whether they're dwelling in certain places, like checkout or in front of specific merchandise."
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Supermarkets: High-Tech Hotbeds

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  • by justthinkit (954982) <floyd@just-think-it.com> on Sunday June 09, 2013 @10:49AM (#43952955) Homepage Journal
    How much tech can you have in an industry with profit margins of 1 or 2%?
    • by ArcherB (796902) on Sunday June 09, 2013 @10:54AM (#43953009) Journal

      How much tech can you have in an industry with profit margins of 1 or 2%?

      1% of a lot of money is still a lot of money. Businesses that do more business can afford to take smaller profit margins because they deal with such larger volumes. For example, a convenience store that does $10,000 worth of business over a weekend won't make it on 1% profit. That's a mere $100. But a grocery store that does $1,000,000 over that same weekend will do just fine on the same 1% as that is $10,000 profit.

      $10,000 buys a lot more technical investment than $100.

    • Markets with 1% margin tend to be the most aggressive with anything that can boost that to 1.1%

      Lazy companies are the ones that make steady profit. And never expect the market to change. Like the entertainment industry

    • When you have 600 billion dollars in sales, an exotic technology that gives you a tenth of a percent more profit is worth $600,000,000, so honestly the thinner your profit margins are, the higher your cash-flow must be (or you wouldn't bother with the business to begin with) so such businesses will probably always be early tech / efficiency adopters and will always be pushing the boundaries of what's possible.

      If I had some new tech that was applicable, these are exactly the customers I would seek out.

      G.

    • by rickb928 (945187)

      Is that EBITA or net? Net 2% isn't too bad, and of course is post-tech profit.

      Which would be the right way to calculate 'profit'.

      And this story brings up the reason why I don't log into WiFi in the stores I go to. With that, they track everything. Think not? You cling to your antiquated ideas of privacy, my friend. And read the Ts&Cs offered. Yeah, I know; tl:dr.

    • by bill_mcgonigle (4333) * on Sunday June 09, 2013 @11:32AM (#43953315) Homepage Journal

      How much tech can you have in an industry with profit margins of 1 or 2%?

      The net probably varies by store, but the old song about the grocer only making a penny or two on each item is long worn-out, even counting for inflation-driven price increases. There may be certain items in each store that are loss-leaders, but when I see whole-dollar differences in prices from store to store and have a general idea on what the wholesale prices are, it's hard to feel the pathos they desire.

      • by Anonymous Coward

        Wholesale prices vary depending on quantity. I did some work for a charity food drive and spoke to the owner of a single (non-chain) grocery store. He offered to let me have pallets of food at cost, but in some cases his cost was more than what I could pay for the same thing at a wholesale club (a nationwide chain).

        dom

      • by peragrin (659227)

        Just remember your only seeing product profit when you do that math. actual profits after you pay for the store, transportation, employee's, etc are much much lower.

        A store doing $100,000 in annual sales at 30% average profit on product brings in $30,000 From that they have to pay usually 1-2 employee's, etc. building, power, overhead expenses, etc.

        It is why things like taking apart the latest gizmo to see how much it cost is generally bogus. you miss out on all the overhead that is behind it and that ta

        • by ewibble (1655195)

          I believe Super markets also sell shelf locations to suppliers, people have a tendency not to look up or down, eye level product placement is premium real estate and large shops sell it. Those displays are probably not free either.

          As a side note I think this may be a model for more shops as internet shops are cheaper, the value of physical store may be their ability to "advertise" certain products, which they may be able to charge the manufacture for.

        • Not to mention waste.... Produce is always a gamble for grocery stores because while they may make a lot of money on the peaches they sell, they lose on the one's that they don't.
      • Yeah, it's pretty easy to actually verify that:

        Safeway's net margin was 1.19% last quarter: https://www.google.com/finance?q=NYSE:SWY [google.com]

        Kroger's was 1.94%: https://www.google.com/finance?q=NYSE%3AKR [google.com]

    • by gl4ss (559668)

      How much tech can you have in an industry with profit margins of 1 or 2%?

      well if your margins are that bad(they aren't) you're going to want to use all technology you possibly can to remove labor costs.

      and USA with their baggers.. the profit margin isn't really that bad, else you wouldn't have them. and don't get me even started on paying people to say "hi" when you enter the place.

    • You would be surprised. Kroger just got done installing sensors in all of their stores, which they can use to predict front-end traffic, allowing them to open registers to account for who's going to be checking out 10 minutes from now, rather than 10 minutes ago. It's been working good enough that their stated goal is to have one person being actively checked out, and one person unloading a cart behind them, and no one waiting behind that.

      It seems to be working - I wait way less than I used to.

    • Beets -5% profit margins!
    • How much tech can you have in an industry with profit margins of 1 or 2%?

      I dunno. Why don't we ask Amazon? After all, they operate on razor thin margins, but make up for it with high volume, and they seem to have a decent amount of tech going on, wouldn't you agree? Not just in terms of their web services either, but also in terms of their warehouse technology (e.g. they bought Kiva last year and have been deploying its robots [youtube.com]).

      In truth, I think that you have it entirely backwards, since high-volume, low-margin companies, like Amazon and Wal-Mart, are only able to exist due to t

  • This is just as creepy as all the prism crap:/
  • by houbou (1097327)
    Start with the identification process. Create a system where your unique DNA is basically your everything. SSN, Banking, Medical History, etc.. EVERYTHING. Then, when you go to shop, take something leave and let the store's system scan YOU and your items as you leave and it will know enough to deduct it from your banking. :)
    • by gl4ss (559668)

      Start with the identification process. Create a system where your unique DNA is basically your everything. SSN, Banking, Medical History, etc.. EVERYTHING. Then, when you go to shop, take something leave and let the store's system scan YOU and your items as you leave and it will know enough to deduct it from your banking. :)

      that's a pretty old idea that's a bit harder to get right than it is to come up with the idea, it's been peddled in near future predictions for two decades..

    • by Livius (318358)

      But it's really inconvenient when you are a victim of identity theft and you have to get new DNA.

  • by auric_dude (610172) on Sunday June 09, 2013 @11:01AM (#43953061)
    It doesn't matter if you are part of a loyalty scheme, pay by card or even cash, 'Big Brother' supermarkets know your every move http://www.guardian.co.uk/money/2013/jun/08/supermarkets-get-your-data [guardian.co.uk]
  • by Dr_Barnowl (709838) on Sunday June 09, 2013 @11:11AM (#43953131)

    The supermarkets are one of the most active propaganda experts on the planet - the next generation of infowar is being fought there.

    Forget the CIA ; their intelligence collection is old school.

    The supermarkets want to skew their customers towards raising that margin of about 4% ; even a tiny skew is worth it to them.

    So they profile your buying habits, they work out what you buy. They work out what everyone buys. They want to know what kind of person buys the high-end ice-cream, and other high-margin items. Quite aside from the obvious ploys, like putting coupons out for high margin items so you'll get into the habit of buying them, they'll coupon other items that aren't high margin, but they know that people who buy them are high-margin customers.

    Alas, this means less shelf space for the items that low-margin customers buy, like basic staples. Who cares, you can get those things from the Mom & Pop store, right? Oh...

    A whole host of infowar tricks, like reorganising the store shelves periodically to disrupt your "route" and get you in front of lines you don't usually buy.

    • Re: (Score:3, Interesting)

      by rickb928 (945187)

      Two weeks before Thanksgiving, you can find Durkees Fried Onion Rings on the shelf. Two days before, and all you can find is the store brand.

      Is this because the brand name product is sold out, or because they understocked it, and are selling their brand at a higher profit to those who waited to the last moment to buy? After all, they wouldn't run out of that very popular ingredient on purpose, would they?

      Contrast this with a competently-run convenience store, which relies on beer sales to make profits. T

      • by Anonymous Coward

        Speaking from knowledge, profit margins are generally less on store brands. Plus there's never any money coming back from the manufacturer in the form of coupon payouts. Add to that the fact that it costs the same to ship and stock store brand, and it becomes even less of a conspiracy.

        By the time we're two weeks out from any holiday, we will already be trying to sell the last of that stuff so we can move on to the next holiday. If we still have turkeys left the day before Thanksgiving, then we ordered way t

        • by peragrin (659227)

          Actually it is scarier than that. Just in time shipping has taken all the slack out of the supply chain. No one wants to stock more than they need to have before the next shipment arrives.

          The downside is when things go wrong they really really go wrong for a long time.

          • by xaxa (988988)

            Actually it is scarier than that. Just in time shipping has taken all the slack out of the supply chain. No one wants to stock more than they need to have before the next shipment arrives.

            The downside is when things go wrong they really really go wrong for a long time.

            The other downside is the increase in traffic, pollution etc, as there will be many half-full lorries, and the effect it has on competition.

            In the UK, the big supermarkets have used their JIT delivery system to set up small convenience stores (thousands of them). They're much bigger than an independent shop could be, since they don't need a stockroom at all, or at most they need only a tiny one -- the delivery lorry arrives overnight with exactly what was sold. It's not unusual to walk past these stores b

      • by tlhIngan (30335)

        Two weeks before Thanksgiving, you can find Durkees Fried Onion Rings on the shelf. Two days before, and all you can find is the store brand.

        Is this because the brand name product is sold out, or because they understocked it, and are selling their brand at a higher profit to those who waited to the last moment to buy? After all, they wouldn't run out of that very popular ingredient on purpose, would they?

        Store brands inevitably sell for LESS than the name-brand ones. Even if you take two identical products

    • by Jawnn (445279)

      The supermarkets are one of the most active propaganda experts on the planet - the next generation of infowar is being fought there.

      Forget the CIA ; their intelligence collection is old school.

      The supermarkets want to skew their customers towards raising that margin of about 4% ; even a tiny skew is worth it to them.

      So they profile your buying habits, they work out what you buy. They work out what everyone buys.

      Quite right, and when you use your "rewards card", you give them detailed information about your individual buying habits, which is why I delight in the expressions I get when I decline their incessant offers to give me one - "No, thank you. My privacy is worth more to me than the few bucks I would have saved." I mean, slack-jawed, glassy-eyed, totally-don't-get-what-you-mean type stares. It's... "priceless".

      • You're referring to the till jockeys earning just north of minimum wage? That 'glassy-eyed' look is them not giving a fuck about your philosophical pontificating as they struggle on with life.

        Feeling a sense of meaningless superiority is priceless.

        For everything else, there's mastercard.

      • by Noughmad (1044096)

        Quite right, and when you use your "rewards card", you give them detailed information about your individual buying habits, which is why I delight in the expressions I get when I decline their incessant offers to give me one - "No, thank you. My privacy is worth more to me than the few bucks I would have saved." I mean, slack-jawed, glassy-eyed, totally-don't-get-what-you-mean type stares. It's... "priceless".

        Would you care to elaborate on that? This is a common sentiment on Slashdot, but I still don't think it's rational. What is the benefit of knowing that some corporation with millions of customers doesn't know what products you buy? I know there's a warm fuzzy feeling of 'sticking it to the man', but are the other, more tangible benefits?

        • by Nexus7 (2919)

          If I buy a store brand potato chip all the time, and they give me a coupon for say, Frito Lays, I'm not like "hey, invasion of privacy", but more like "hmmm, only 25 c more for Frito, I'll try it, maybe I'll like it."

          Sometimes a coupon is just a coupon.

        • by adolf (21054)

          It's just a fear of data.

          From my own perspective:

          I don't mind much that Kroger knows what I buy. What I do mind is that my loyalty card and my credit card are just a database JOIN away from being marketable, personal data, which can be aggregated with other retailers, and subsequently used to form a database of everything that I buy, wherever I buy it from. It's easy to extrapolate that into where I was, when I was there, and what I might have been up to at the time.

          Use a different loyalty card along with

      • "A few bucks" is like their hourly wage. Also depending on the store the penalty for not using the card can double your cost...
      • I have no idea if they actually do this, but I reckon they can profile you on any kind of card payment as well. You could tie purchases on a single card together without storing the card number (and thus contravening PCI regulations) if you hashed them. If they're not already doing this, I guarantee that they are prohibited from doing it by law. Of course, they can't actively mess with your buying habits by mailing you coupons without a club card.

        It's not as bad as what I hear in the States, where they can

        • One neat trick I find is to mash up the garlic and the tomato before cooking with a pestle and mortar. I've no idea why but it makes the whole taste just awesome.

      • You are what the slack-jawed, glassy-eyed workers refer to as a "dick." They don't give a shit about your privacy or listening to you lecture them about the evils of using a shopper's card. Quite frankly they want you away from them as quickly as possible. In fact, you're wasting time, you see, from the moment they scan that first item to the time you cash out, they're being timed and if they get dick after dick after dick, store management holds them accountable. You really don't wanna use the card fin
    • by Ryanrule (1657199)

      I dont use coupons. BOOM.

    • Alas, this means less shelf space for the items that low-margin customers buy, like basic staples. Who cares, you can get those things from the Mom & Pop store, right? Oh...

      Actually, this just isn't true. Basic staples will always be a main part of a supermarket and have the widest choice.

      Yes supermarkets want you to buy the profitable high margin items but the most important thing is that they get you into the door to shop with them in the first place. If you go to a Supermarket and feel they don't have enough choice or, even worse, they don't stock the item you're after, you're probably not going to want to come back.

      It's for this reason supermarkets also stock stuff they ba

  • The latest thing I have noticed is the freezer cabinets are getting LED lighting and motion sensors. The kids (I am much too mature) run up and down the isles waving their hands to turn on the lights.
    • by 54mc (897170)
      This is such a simple energy saver that it's kind of amazing they didn't come up with using one of the two parts (motion activation and LEDs) it much, much earlier.
    • by Ambvai (1106941)

      I tend to shop at odd hours and have always found that creepy. It brings to mind of various sci-fi horror films where they're going down a long dark corridor and the lights turn on as they start walking through, usually with a loud ka-chunk and buzzing.

  • by Waffle Iron (339739) on Sunday June 09, 2013 @11:39AM (#43953363)

    Supermarkets can't seem to get the most basic data processing concepts right. If they correctly applied ACID principals to their databases, it would be impossible for an advertised special to not ring up at the discounted price, or for an item picked up from the store shelves to not scan at all. But for us, this seems to happen more often than not, and it's been going on for decades.

    Lame.

    • by Jmc23 (2353706)
      You know God only does that to you because he knows how much it bothers you right? Doesn't happen to the rest of us :)
    • by Anonymous Coward

      If they correctly applied ACID principals to their databases, it would be impossible for an advertised special to not ring up at the discounted price

      Unless the advertiser prints the ad too early.

      Humans fuck up all the time. We're really good at it. Just look at your typo-ridden post if you need a reminder.

      • Unless the advertiser prints the ad too early.

        No, the ads are usually in the correctly dated flyers. The problem is that either: (a) the computer system that correlates the promotions and the actual prices is just plain hosed, or (b) as you suggest, they're not using a computer at all -- in which case the whole premise of the article is invalidated.

        Humans fuck up all the time. We're really good at it. Just look at your typo-ridden post if you need a reminder.

        Looks like I struck a nerve. You must be one of the incompetent developers who programs these systems. "Oh! but the margins are so low! Don't blame *us* for fraudulently shafting the customers! There isn't e

        • by baegucb (18706)

          Having worked for three retail chains at various points in my career, pricing mistakes are usually of two varieties. First someone at the central office typos a price that is pushed out to the store. The other problem is when the new price is pushed out to the stores, but the communication line is down to a particular store. The new price doesn't register at the store.
          Twas real fun at one chain I worked for with 1000 stores, and I admin'd that network/pricing system. Think we were successful in communicatin

    • It would help greatly if there was any standards for product data whatsoever. Only very recently has there been any efforts to standardize the metadata on products in a format that vendors and retailers can interchange, and if you think that a large grocer can just swap out all their merchandising systems overnight, the you don't know what it's like to work for a low-margin retailer. The average stat is that $100 of saved expense is equal to an additional $10k in sales. The slightest amount of shrink can

      • It would help greatly if there was any standards for product data whatsoever. Only very recently has there been any efforts to standardize the metadata on products in a format that vendors and retailers can interchange, and if you think that a large grocer can just swap out all their merchandising systems overnight, the you don't know what it's like to work for a low-margin retailer. The average stat is that $100 of saved expense is equal to an additional $10k in sales. The slightest amount of shrink can be the difference between a profitable store, and a money siphon.

        Frankly there are, and have been for years, UPC code databases, but you have to license them, unless you are willing to go for the vastly more incomplete consumer assembled EAN/UCC-13 code sites. My first experience with a licensed UPC database was in 1995, but I was aware of NCR systems where you could get them in 1985 or so. They used to come on QIC-20 tapes for loading into the NCR Tower XP and Tower 32 systems that they used to use to run all the cash registers in the supermarket. Now you can get the

    • by Livius (318358)

      And you know it's unintentional and random because it works in the customer's favour 50% of the time...

  • Safeway for example at least in the USA and Canada was or still is using OS/2 to operate the tills. As recently as six months ago I remembered watching a manager reboot a till and on a 17 inch LCD screen it looked like OS/2 rebooting then bringing up their own till software.

  • by macraig (621737) <`mark.a.craig' `at' `gmail.com'> on Sunday June 09, 2013 @12:12PM (#43953573)

    How any of these allegedly high-tech supermarkets have backup generators to keep the food from perishing during a power outage?

    Two days ago a Wal-Mart SuperCenter had an extended 16-hour power outage. Rather than act quickly and donate the imperiled food to the local food bank or even have a parking lot sale, the store management decided to "comp" all of it instead, destroying all of it so the suppliers would reimburse them in full.

    All for lack of a backup generator that would have cost no more than the business they lost in those 16 hours. High-tech, you say?

    • by Jmc23 (2353706)
      Sounds like good business practice no? Spend less and not have to depend on customers to get paid for everything in your store.
    • High tech is sometimes advanced probabilistic models. I know a fellow who works for Kroger on the east coast, and when there's a power issue he's uot busting his tail to allocate the generator resources he has to keep the food stock viable. Thing is, there are so many stores and so few extended outages that it doesn't make financial sense to equip all stores with BUGs. They have a number of mobile generators which can be dynamically allocated as needed. If there's a superstorm they are short handed and some

      • by Ostrich25 (544788)
        They can also send a refrigerated trailer (reefers), which they did for several stores on the east coast last year when we had that derecho come ripping through. You and I might know the same fellow.
    • And then there's the other side of the coin - Ralph's in SoCal is building a biofuel generator at one of their distribution centers to generate on-site energy to power the refrigeration plants by using expired produce from stores. If it works the way it should, this may become the standard - turning shrink into an expense reduction.

  • Bagging Area... (Score:4, Insightful)

    by CohibaVancouver (864662) on Sunday June 09, 2013 @12:34PM (#43953699)
    please place your item in the bagging area thank you please place your item in the bagging area thank you.
  • "There's a lot of technologies out there right now that are being introduced into the retail space to understand what consumers are doing in the store, and heat-mapping is one of those technologies--using cameras in the ceiling to actually track where the consumer's going. What this information tells the retailer is where a consumer is, how they're moving around the store, whether they're dwelling in certain places, like checkout or in front of specific merchandise."

    I'd bet most, if not all, their investments are going into this area. We need to ask ourselves if we really want to live in a world like this. Where you walk into a store and the placement of items, the color of the walls, even the music they are playing has been psychologically profiled to affect you in a way that makes you spend your money foolishly. Casinos already pump oxygen into the air to keep you awake longer and provide free drinks to make you do stupid things.

    At some point in the not too distant f

    • by Ostrich25 (544788)
      Ever go into a Kroger store and see those televisions hanging from the ceiling at the check out area? The ones with the big yellow circles and numbers? That's QueVision. Infrared sensors at the doors track how many people come in and out of the store, and sensors over each checkout line track how many people are waiting. All that gets processed, and the system tells the front end supervisor how many lanes they need to have open right then. (and predicts how many they'll need soon, too) This system doesn't
    • the trick with the free drinks is to play slow on the $00.1 games some have bets as low as $0.01. I once hit a like a $30 win on $0.09 bet.

  • Or chocolate ready to spread frosting, only strawberry and vanilla, the crap that no one wants. Once that is finally gone (it takes a long time) the shelves are restocked with equal amounts of each.

    Once again I show up at the store to find a mountain of coca-cola products stacked to the ceiling with an empty space in the middle where Diet Coke used to be. And there beside it is a tall obelisk of caffine-free diet coke. Still there from last time.

    The only time caffine-free diet coke is sold is when someon

    • by jonwil (467024)

      It may be the case that there is a general shortage of the out-of-stock item.
      It may be that the supplier was unable to deliver the item for some reason (e.g. recently I was looking for milk and the store was out of the brand I wanted because the supplier had not made a delivery. Ended up buying from another store the next day).
      It may be that the trucks only deliver product on certain days.

  • self-checkout, heat sensing, etc. etc.

    I don't know where you are from but these were "live" in grocery stores in my part of the United States years ago.

  • Why is there not a Store Google? It takes forever to find something.

    • they want you have to hunt for stuff and pass by other stuff that you may want to buy.

      • by Tablizer (95088)

        If one market does it, then they'll take business away from all the other markets. Most guys hate shopping, we want to get in, pay, and get out fast.

        • But they won't do that. They want you to be in there as long as possible. They want you to get hungry from the in-store bakery's fresh baked bread and drop a shitload of cash.
  • by folderol (1965326)
    I have a piece of technology that totally wipes out their tricks. It is called a shopping list. I buy what's on it, and that's all. I have no store or loyalty cards and tell them I don't want a tracking card if they ask. I also frequently pay with cash. Finally I won't use the self checkouts. When they try to direct me to them I say something like "I'm in no hurry to put you out of a job".
  • One of the key advantages any established grocery store has is its location. Often grocery stores were build on cheaper land that has now grown significantly in value. The result is that it is very hard for a new chain to acquire the huge prime tracts of land required for a modern grocery store chain. This is why most of the last 20-30 years has seen the most activity in "Power Centers" that are way outside of town. In some cases again town has reached out and surrounded these power centers but typically y
  • My son recently worked as a supervisor at Kroger. He says that the system knows how many people are entering, exiting, and shopping in the store at any time. It knows how long the typical customer shops, and uses this to estimate when the next surge at the registers will occur. Before the surge happens, a display tells the supervisor when he needs to open another register, or two.

    It also watches each line, to determine how long people are waiting for a cashier. The goal is a maximum of two minutes. If

  • by Anonymous Coward

    Re. Bush at the grocery store:

    According to snopes.com [snopes.com], "Moreover, Bush had good reason to express wonder: He wasn't being shown then-standard scanner technology, but a new type of scanner that could weigh groceries and read mangled and torn bar codes."

    snopes.com then says that The New York Times and several other major news organizations reviewed a tape of Bush's conversation at the grocery store. Only The New York Times writers thought Bush was really impressed. The writers for Newsweek, Time and NCR thoug

  • How can you call self-checkout the next logical step?

    Self-checkout systems are commonplace. Even the elderly and tech-averse use them. Heck, I've even seen them in just another random supermarket somewhere in Poland, and that was in 2009.

  • Some organized monkey-wrenching would be fun. "Flash fuckery"

    "Your assignment this week - every time you are in the grocery stop in aisle 6 and stare at the capers for 45 seconds, then move on. Extra points if you don't actually buy anything at all"
    "Your assignment today is to move one can of tomato paste to the beer section"
    "Tomorrow please run quickly through aisles 2 and 7, then stop to pace back and forth in front of the adult diapers for 10 seconds"
    "This week, wear heat-shielding on just the to

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