Expected Labor Cost Increases Continue to Drive Grocery Stores Toward Automation

January 18, 2019

Forbes Contributor Article

Western Beef Supermarket recently accelerated their plans to continue integrating Toshiba Self Checkout Systems at 5 of their locations in New York. These systems are designed to improve the customer experience by reducing wait times. As a benefit to Western Beef, the shift to automated check outs will reduce staff and help the supermarket keep costs down despite rising minimum wage hikes. Many of the store’s personnel will be reassigned to support customers and improve customer service satisfaction.

While nearly half of the supermarket’s customers have used the automated checkout, the system can be appealing to consumers who prefer to avoid the human interaction and go at their own pace. Younger consumers who are tech savvy and prefer to manage a process on their own will prefer the option which allows them to have greater control over the experience.

While the advantages for the store are reduced labor cost, there are some challenges facing this transition. First, the opportunity for point-of-sale impulse purchases is reduced. Sales of items like candy bars, magazines and beverages which are strategically positioned near the cash register will suffer as space around automated checkouts are limited. Frustration with scan and price errors, item lookups and staff overrides can also be a negative experience without someone on hand to solve the problem. Lastly, loss prevention will need to be better managed as some consumers may inadvertently miss scanning an item or deliberately place more expensive items into their bag without scanning the UPC.

As I See It, the consumer experience has shifted dramatically toward screen-based ordering. Amazon has made online ordering and delivery a breeze. UberEats, Door Dash and Grubhub have made online restaurant ordering simple and convenient. Netflix and Hulu have created a stay-at-home experience more enjoyable with a vast variety of on-demand entertainment. With more younger consumers opting to leverage mobile devices to order everyday items, the routine will push them to experiment and likely enjoy the automated checkout systems. I would expect to see continued adoption of technology and automation in the food and foodservice industry as it catches up to other sectors of business in becoming less labor intensive.