When Retailers Can’t Afford to Be Strategic

By Evan Schuman  |  Posted 05-07-2005 Print Email
Opinion: A prototype drive-through supermarket and an experimental Wal-Mart robot illustrate what’s wrong with retail technology today. Let’s call it a customer-non-centric strategy.
There are tons of practical definitions of how using technology in retail is strategic versus tactical.

One definition we're fond of is quite practical: Using technology to truly help your customer is strategic, in that it will make those customers more likely to repeatedly come back and spread favorable word-of-mouth endorsements. Using technology to address a short-term problem—or to help your bottom line but not the customer's—is tactical in that it is unlikely to improve revenue or profits for the long-term.

Such platitudes are easy to say for most verticals—and especially easy to say for a columnist, who gets paid to blather on about such things—but how easy is it to execute in a business with razor-thin margins such as retail?

I bring this up because I've been thinking recently about a drive-through supermarket prototype being built in New Mexico. The idea was straightforward enough: create a supermarket that eliminated the most unpleasant parts of shopping, including finding the (constantly relocated) items; pushing around a squeaky shopping cart; and standing in line to pay for it all, bag the items, refill the shopping cart with the bags and then repack all of those bags into your car.

But what turned the drive-through shopping mall from a good idea into a revolutionary idea is also what may prevent the idea from being an economic success. Namely, it completely flips the business model of the typical grocery chain.

Regardless of how non-intuitive it may seem, the typical grocery store today is not designed to cater to its paying customers. On the contrary, its entire business operation caters to the businesses to which it pays money: suppliers. After the suppliers comes the retailer's bottom line. Customers rank a distant third.

Customers don't want merchandise to frequently shift locations. Retailers and suppliers do, so that consumers have to be tempted by new items as they scan myriad aisles searching for the Scotch tape dispensers. Parents don't want candy in the self-checkout line to tempt children; candy makers do. Nor do those parents want sugar-laden cereals at their kids' eye-level in the breakfast food aisle.

Some grocery contradictions help the customer, but in a contradictory manner. The oft-cited express lane is the best example: Why reward your worst customers with the fastest checkout? Why not make that a reward for those who buy the most?

Back to our drive-through grocery store. Customers can electronically submit a shopping list of what they want, with no temptations to buy unneeded items. No more trying to figure out where an item is housed.

This approach virtually eliminates the time-honored approach of buying impulse items and makes the experience much more efficient. Will customers flock to this approach, forcing much of retail to catch up? Or will the industry pressure the drive-through into conforming?

The grocery segment of retail is more comfortable with using technology to feign customer convenience, rather than to actually deliver it.

Next Page: Telling customers to go check themselves is a bit rude



 

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