By Paul Schlossberg, president, DFW Consulting, veteran food and beverage marketing consultant
Last week, the media was buzzing about Bodega, a self-serve convenience kiosk that will allow shoppers to access and pay for products using smartphones. The reason for the buzz was the alleged cultural insensitivity about the system's name. Many observers noted the technology itself really wasn't anything new.
I could certainly relate to this observation. It's been 21 years since my first encounter with Shop 24 in Belgium, one of the first automated retailing systems. My team was introducing it in the U.S. in 1998 when the parent company pulled out of international markets due to technical issues. Later, others launched Shop 24 here again, achieving only very limited penetration.
Many other companies have entered the automated shopping business since then. Almost all have failed. Most of those failures were self-inflicted — mistakes and problems which should have easily been predicted and thus avoided.
But the concept, despite the challenges and past failures, just won't die.
The recent activity made me stop and go back through my files. In just the past 12 months, there have been a number new and/or revitalized entrants in automated shopping.
10 new automated retailing systems
There are 10 new concepts that I have counted in the last 12 months from the U.S., Europe and Asia, including Bodega:
1. The CVS Pharmacy vending machine is in test in New England and the New York City area.
2. Walmart has deployed 20 Pickup Towers, so far, in stores to make it easier and faster for shoppers to pick up packages shipped to the stores.
3. Lisa, a new vending machine which can sell snacks, beverages as well as H&BA and OTC products, has been introduced by Accelerated Retail Technologies.
4. Feast sells healthy foods at locations in Toronto, including subway stations.
5. Colesseo from MagexUSA, an Alps Innovations Group company, has introduced "The Big Store" which can hold as many as 1,480 products.
6. Uniqlo, a retail clothing brand, has begun selling through vending machines at airports.
7. Moby Mart, a mobile convenience store, has launched a prototype in Shanghai. The parent company is Wheelys based in Sweden.
8. Foodles, a food merchandiser from a France-based company. The primary target market for deployment is business and industry locations. Lunch is provided, either free or on a subsidized basis, at many French companies. Foodles is offering their services and products versus established providers to B&I sites.
9. Coop, an Italian supermarket chain, launched what they describe "the supermarket of the future." It is far too large to be a kiosk or a vending machine or even an automated store. There is, however, an automated warehouse beneath store. For shoppers, there are sophisticated interactive features which will be very meaningful for future deployments across every retail segment. If you plan to compete in automated retail, make reservations to go to Milan and visit this innovative store.
All of these new developments are exciting signposts on the road to a completely different retail universe. New tools and technologies will facilitate the learning curve for retail brands and the shoppers they serve. Capabilities such as remote machine monitoring, interactive touchscreens, near-field communications, robotics, identity verification, video surveillance, facial recognition, etc. are becoming more affordable. Traditional retail, meanwhile, becomes more capital intensive, largely on account of rising labor costs.
Which concepts will survive?
Which one of these new automated retail concepts will be a winner?
Pay very careful attention to Amazon, especially since the acquisition of Whole Foods Market. You can bet that there will be unattended kiosks selling food in locations apart from their retail storefronts. My expectation is that Amazon will use very sophisticated algorithms to plan and manage those deployments in Whole Foods Market.
There are very few companies with the ability to match Amazon's smarts. They will likely be exceptionally good at curating product selection, managing pricing and maximizing merchandising.
This is the right time for automated retailing. The technology is far more advanced than in the past. Millennial shoppers are now the key demographic group, and they prefer not to deal with people when shopping unless it's absolutely necessary. Smart phones let them shop and shoppers connect. And, some really smart techies are on the frontlines of the new entrants.
My prediction is that there could be as many as 100,000 automated retail stores in the U.S. in the next 10 to 20 years. It's possible that the number could exceed 250,000 ACS deployments. That can happen if the brands, OEMs and retail locations move forward with innovative strategies and tactics — based on meeting the needs of the 21st century's shoppers.