Retail

How MicroWarehouses Make The Grocer

Building the better consumer experience has become retail’s rallying call these days — though what exactly the “better experience” consists of is very much up for grabs. Better merchandising, more personalized experiences, high-tech upgrades, order ahead, buy online/pick-up in store, retail events, mood lighting, robots — there are innumerable whiz bang ideas for building the customer experience of the future.

Dr. Nadia Shouraboura and the team at Hointer certainly bring a tech-focused perspective to the retail world they are working hard to re-invent, through a novel way of looking at how to build the future of commerce. As Hointer’s CEO, Shouraboura isn’t so much focused on the next as she is by the now — and specifically fixing what is wrong in the experience for both the consumers and merchants of the world.

“For a customer, it is intuitive to pick an item; it is intuitive to point to an item; it is intuitive to touch an item. The goal is to make it completely obvious what it is the customer is supposed to do — and to make it take less time.”

Hointer got its start in apparel sales in Seattle and has now moved on to grocery with its unique showrooming model and a specific set of problems to solve: Grocery stores are too big with too much overhead.

“If you look at the statistics on grocery stores, 10-20 percent of items are frequently bought, and 80-90 percent are bought less than once a week.”

Shouraboura told Karen Webster in a recent conversation that grocery stores — because of how consumer preferences have evolved — have to be massive, because they need to offer lots of selection, and they have to fill in those massive spaces, because customers don’t like the look of bare shelves. But that is wasteful given the strict expiration date on most grocery products, which means that a lot of products are going into the trash.

Hointer does it differently. Consumers shop in a small space where they pick out items on digital screens or by physically handling them in displays.

“That is your showroom. Everything then gets picked in the back of the house, which is what we call our microwarehouse. And that is happening at the same time customers are selecting items in the front. By the time you as a customer are done, your basket is already put up and ready to go. The customer can inspect and have us take it to their car, or we can ship it directly to their home.”

Payment, Shouraboura said, is also handled fairly seamlessly. Because the baskets are built in the back as customers are picking items, there is no need to scan and tally at the end. Which means it once again becomes about giving customers more choices. They can skip the point of sale (POS) entirely and just settle up on their phone, or they can go to a traditional POS and pay cash.

“The process is much simpler — we already know what you have, so it is just a matter of accepting your cash and running a transaction.”

And though the process is simpler, Shouraboura noted, the goal is to make it no less rich an experience than normal in-person shopping. The flaw with shopping online, she noted, is discovery: Customers can easily get what they are looking for but often forget to get other things they may want or need. The Hointer front room — because it is freed up from stocking the shelves in a big space — becomes a much more curated space.

“I still leave room for displays with jams and teas and ketchup bottles. It is good to see displays physically because it reminds consumers want they need to buy. The bulky ugly items — paper towels are great for screens — which frees up space to merchandize products in an attractive way.”

But more than building a more attractive store – and one that is a much better experience for customers – Hointer has also built a much more efficient store.

“We have algorithms that tell us what to bring in a store and what to put in a microwarehouse and what to put on display. And because we really follow the inventory, in-store [inventory] goes down by a lot. If you don’t have to fill the shelves up to give [the] impression you are full, you can let math decide how much inventory to bring in purely on customer demand.”

Margins go up, and stores have the chance to offer consumers a better experience that also happens to save them a lot of cost.

Shouraboura imagines much of retail will make a shift — like the one Hointer has already made — over the next five to ten years. In some ways, she told Webster, they won’t have a choice: Amazon has signaled its intention to not only enter physical retail, but to change it an awful lot with automation.

But, she noted, that change will likely not happen overnight.

“I think that … many existing retailers are going to start changing. The good thing is that you can actually change a store section by section. You don’t have to close the store; you don’t have to completely revamp the store. You have to make the incremental adjustment to slowly transform to the better experience.”

But a change is coming. The sensor-based, back-end-dependent, payment-on-demand model is something that she expects will “become part of the normal shopping experience at the local Kroger’s or Wegmans.”

Because, Shouraboura said, whether traditional retailers like it or not, change has arrived, and the time to start adapting is now.

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