I, Robot Retailer

Discussion
Feb 28, 2006
George Anderson

By George Anderson


It’s a brave new world. According to a San Francisco Business Times article, Safeway and Macy’s West are testing futuristic vending machines that sell high-priced gadgets delivered to consumers via robotic arms. The company’s founder says the 28-square-foot systems generate revenues between $1,500 and $15,000 per square-foot.


The devices, developed by Zoom Systems of San Francisco, let customers order goods using a touch screen and credit card. A robotic arm inside the machine then delivers the product to consumers. Zoom monitors each transaction as it takes place and keeps tabs on the inventory, as well.


“We’re very encouraged so far by consumer adoption of self-serve, automated retail … and our ability to be a new channel for these popular brands and products,” said Gower Smith, founder of Zoom Systems. “Automated retail makes sense. We made a significant investment in technology and the last year has been enlightening. We’re getting real data from the marketplace.”


Mr. Smith’s company currently has 100 of its automated Zoom Shops in operation and sales have grown in double-digits for each machine, every month in operation. The company is looking to have 10,000 shops operating within five years.


Moderator’s Comment: What do you see as the biggest benefit to retailers using a system such as the Zoom Shop? How do you see vending and robotics helping
to shape (or not) retailing environments in the future?

George Anderson – Moderator

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10 Comments on "I, Robot Retailer"


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Len Lewis
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Len Lewis
13 years 6 months ago

Vending machines have been used extensively in Japan for years, dispensing everything from books and cameras to $150 per pound Kobe beef. It’s also been used for some food and general merchandise items by chains in Europe, such as Auchan.

The proposed sales per square foot is very impressive and the new generation of vending machines is far superior to what was out there in the past. But people still like to play touchy-feely with the merchandise–even if they know what they want. And the American mindset for vending is still focused on cigarettes, candy and freeze-burned ice cream pops.

I think the technology should be explored but I would reserve judgement on its success–particularly in venues like Safeway.

Ben Ball
Guest
13 years 6 months ago

There are plenty of current precedents for vend sales of higher ticket items, many outside the U.S. as noted above. But there are at least two reasons this should be a good idea for Safeway.

First, these units are generally located in a way that turns dead space into selling space. In most outlets, that means beyond the cash register — which is also the location with 100% foot traffic.

Second, consumers are proving to be perfectly comfortable with interacting with automated vendors. One could argue that the experience is preferred to human exchange by some. Not hard to fathom when you think of no waiting, no “human error” (other than your own!) and no attitude. Perhaps a sorry commentary on the state of what we traditionally think of as customer service — but when was the last time you bypassed an ATM to talk to a bank teller?

Jeff Weitzman
Guest
Jeff Weitzman
13 years 6 months ago

Not exactly on topic, but the Apple Express Stores and the Apple Stores are trying interesting methods for optimizing floor space. The Express stores have checkout and inventory stations built into the wall. When you want a computer or other item, they can have it brought out via an opening in the wall, a keyboard and credit card station flips out of the wall, and they complete the transaction at this ‘kiosk.’ It leaves the entire floor area open for product display and inventory can be stored more efficiently in back. At the regular stores, they have started using handheld wireless checkout devices, allowing them to keep the number of cash register stations low without causing huge lines, again maximizing the space available for product selling.

These techniques won’t work for all stores, obviously. Registers are good places for impulse buys if that is the type of inventory carried. But the point is that retailers who understand their business and their customers can try a lot of innovative techniques to maximize their revenue.

Mark Lilien
Guest
13 years 6 months ago

It’s not clear whether these machines would be a reasonable investment to staff an entire store instead of limited assortments. I’m sure it wouldn’t be great for their image, but if an entire liquor store could be run this way, a remote “manager” could run a dozen simultaneously using internet based closed circuit video. If that concept was expanded to other specialty store categories, customers could see substantial parts of a mall or strip center run by robot machines. There are numerous specialty stores with very few daily transactions, and other stores whose categories have higher than average security issues. Customer questions could be answered by the remote “video manager”. Any why not use this concept to replace live pharmacists? The rare counseling needed could be done by interactive video.

Bernice Hurst
Guest
13 years 6 months ago

High priced gadgets from Safeway? Who goes to the supermarket expecting to spend a lot of money on such items and why would they buy them there rather than a specialist place either off or online? As for clever clever robotic vending machines, all that says to me is break in, help yourself to my inventory. Please, someone, explain why this is a good idea or how a retailer could benefit?

Kai Clarke
Guest
13 years 6 months ago

Yes, they should test these, but reserve judgement until the test is completed. This is a an old concept with a new twist. Vending machines aren’t anything special, however, offering expensive products from them is different. The real test is how much ROI the machine can deliver compared to other items in the store. The measure of ROI vs. opportunity cost is very important, especially in a low-margin operation like a grocery store. If there isn’t a substantial amount of ROI, Safeway and Macy’s should focus on their key products in their store offerings and continue to sell these products in a way which makes financial sense. Perhaps the real question here is why Safeway is offering such expensive products that couldn’t be sold behind their existing customer service counters.

Edward Herrera
Guest
Edward Herrera
13 years 6 months ago

It will come down to time and efficiency of the buying experience. Most become a little more methodical and robotic every day. For me, shopping becomes more of a check off my to do list. The retailer would love to see more products being paid for before it is touched. I think it is inevitable and we will see more resources budgeted against it. We worry too much about robotics when WE are becoming the robots.

Warren Thayer
Guest
13 years 6 months ago

I wish they hadn’t made that silly and self-serving boast about bringing in $1,500 to $15,000 per square foot, vs. $200-$500 for average retail. Come on — iPods and high-tech electronics vs. potato chips and hosiery. I wonder which will do better on a square-foot basis? Duh. Just throwing that in turned my BS detector on and shot their credibility with me. Maybe it’ll work, maybe it won’t. Venue and SKU selection will make it or break it, and it’ll be an interesting experiment to watch. But with “used car salesman” tactics in their marketing mix, if it were my money, I’d tread carefully.

James Tenser
Guest
13 years 6 months ago

The projected sales per square foot for the Zoom devices seems impressive – until you compare apples to apples. Store aisles generate $0 in sales per square foot, while product displays and service counters may generate several times the store average. An automated display set within a larger retail space would seem highly productive when you consider only its footprint, but the real test is how much incremental revenue and profit it attracts to the store, versus whatever it replaces.

Automated vending of small electronics and other small, high-ticket goods may be a boon in convenience and supermarket locations, where they may bring new types of revenue. In a department store environment that already offers such items, I’d be concerned that they add little to the existing rate of sales while sending a negative message to shoppers about the store’s overall service level. How many iPods is a store’s image worth?

Mark Burr
Guest
13 years 6 months ago

Macy’s? Well, maybe. But Safeway? I won’t call it a blunder and I could be proved wrong. However, it’s a far stretch to think that this is either a customer expectation or an enhancement to the experience. Seems to me Safeway has lost its way.

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