- +++ S P E C I A L R E P O R T +++
"Retailing in 2023"
by George Matyjewicz
24 June2003
I recently saw a new concept car from General Motors
that was quite interesting. It had a frame and engine and bodies that could
be interchanged. If today you want to drive a sports car or a pickup truck,
you simply snap on a new body. Then tomorrow when you have the family, you
snap on a sedan just like changing your socks.
In celebration of the 100th anniversary of the auto, GM gave their design
team a clean slate and said if they were designing a car today, instead of
last century, what would they do. Well this concept car is very unique, and
is scheduled for production in 2010. The one I saw looked like it was ready
for the Indianapolis 500 auto race.
That got me to thinking. What will retailing of the future look like? Will
stores exist? Will consumers shop online? So, I put my imagination to work,
and decided to look at grocery shopping something we all need to do, yet
is not too exciting.
Homes Of the Future.
Homes need the same intelligence and controls that a business has
inventory, order processing, bills of material, customer service, budgeting,
financial controls, etc. I've had these concepts in my mind for years, and
strongly believe they are attainable with the technology available now and
what should be coming along in the new future.
There have been predictions identifying ten uses for computers in the home
control lights, heating, entertainment center, etc. An auto I recently
purchased has three remote control buttons built into the visor that allow
me to open gates or garage doors, and even turn on my entertainment center.
And there are systems that will control electronics in your home. Some
manufacturers are looking at self-diagnosing appliances, where your
refrigerator or washer can determine if there is a problem, and
automatically dial service, where a repair person can fix it remotely. Then
there is every bachelor’s fantasy where he turns the lights on and the
sliding arc-shaped doors open to reveal the bar and entertainment center,
complete with soft lights and mood music.
What about groceries? I see a Kitchen Intelligence Transceiver (KIT) with a
cupboard that has intelligence to know when you place groceries in and take
them out. That intelligence tracks your usage, and accumulates statistics.
For example, when you open a box of cereal, it knows the weight of the box,
and when you put it back, it determines how much was used (maybe even
calculate the calories) and, based on usage, knows when to reorder.
Refrigerators will need to have the capabilities of weighing produce, as
well as scanning the sensor device on products. Notice I didn't say bar
code. I believe bar codes will be a thing of the past, replaced by a radio
frequency ID code.
Dinner Party.
What happens when you have company, and plan a dinner party? You ask KIT for
help. You tell KIT how many people you are having, and what cuisine you
want. KIT comes back with suggestions, including matching your inventory
with the required groceries available, along with suggestions of what you
can prepare with what you have, and a listing of recipes, in order by the
least amount of groceries needed. Or maybe by price or exotic entrée, for
when you want to impress that special someone. Perhaps you would rather that
KIT discuss the alternatives with you , to which you can tell KIT the one
you want. Or, maybe you'll just say “surprise me” and let KIT do all the
planning for you. Don't forget KIT also has some built in expertise on
preparing meals intelligence he gained from you and from global chefs.
A dinner party doesn't only have dinner. What about wine? Music? Atmosphere?
By saying what theme you are seeking, KIT automatically selects the wine,
based on what you have in inventory, and with suggestions for others. Again,
the wine selection is done based on what you finally select as a recipe,
e.g., exotic entrée to impress that special someone.
KIT then talks to the Entertainment Center Transceiver (ECT) to select the
proper mood music from the vast selection it has at it’s disposal from the
millions of songs available, globally, online. If you want a special song
played for that special occasion, you tell ECT, and that is included,
including when you want it to play. For example, when the guests arrive, a
particular song should play. When you’re ready to pop the question, you need
that special song your song.
Keep in mind that KIT gathers his personality from you. So, you have to be
careful. Can you imagine KIT saying “you’re not going to serve that wine
with this meal are you?”
Retail.
What does this have to do with retail? For this concept to be successful,
your grocer needs to have online interaction with your cupboard, along with
the capabilities to react quickly. For example, when you discovered that the
recipe you selected for that special dinner lacked some ingredients, your
grocer needs to be alerted and be able to deliver quickly.
Under normal circumstances, KIT calculates your economic ordering quantity,
based on your usage, inventory space available and budget. It then alerts
your grocer when it is time to order, along with best times for delivery.
The grocer can then plan staff for filling orders and delivery.
Yes, online grocery ordering has been tried and it has failed a couple of
times. However, what was missing in their business plan was the fact that
the customer still had to place the order, which saved no time at all. If
they were smart, they would have provided the consumer with a scanner which
they could then use to scan the barcodes into an inventory system, which
could then be managed automatically. And reordering can be just as easy as
described herein. The software is not that difficult. Give or lend a scanner
which links to their computer which links to your store. Think about the
lifetime value of the customer!
Of course, the ordering of music is much easier, since it has a vast online
selection to select. That technology is available online today, e.g., Kazaa
which is a peer-to-peer network that allows you to search millions of
computers worldwide to find songs that you can download. And Apple Computer
introduced a new service that allows subscribers to download music from a
vast collection. If the record industry would get their act together, they
would capitalize on this market and offer music download services. What does
it cost them? Bandwidth, a collection of music and software to control the
process. It’s a cheap investment.
Retail Store Of The Future.
Let’s say you don't want automatic delivery, and would rather shop like
in the old days, to see what new products are available. In the store you
select the goods and put them in the shopping cart, where the Grocery
Intelligence Transceiver (GIT) scans them and matches against what you have
at home. How many times do we buy because we can't remember whether we have
that product at home? Well this intelligence alerts you if you already have
that product at home.
When you pass certain new products GIT alerts you to something of interest
based on your likes and budget. For example, if you like exotic entrées or
spicy cuisine, and a new product that you never tried is available, it
alerts you. If you have a budget, and that product is too pricey, it skips
the alert.
As you select items, GIT is calculating what you have, and the cost. When
you return an item to the shelf, it deducts it from your cart total, and
adds it back into store inventory.
The shopping cart is nothing like we know today. It has compartments for
your goods, i.e., frozen foods, refrigerated items, cleaning supplies,
cupboard items, etc.
When you are finished shopping, you press a button and the money is
automatically transferred from your bank account to the merchant’s. If you
try to go through the door without paying, alarms go off, or perhaps the
payment transaction is completed automatically. If your funds are short, it
automatically goes to credit for those customers who have good credit with
the store (like the old grocers who sold goods to local customers “on the
arm”). I guess GIT could go to extremes and throw a net around folks who try
to leave without settling the transaction, but that wouldn't be nice
customer service.
Notice, nobody packed the goods into bags? That’s because of these new
shopping carts. Close each compartment, and put them into your car. And
these units detect the temperature needed for the goods, and adjust
accordingly, e.g., keep frozen foods frozen and refrigerated items cold.
Back Home.
Back home you unpack the groceries and put them away, where your
inventory is adjusted accordingly. Unfortunately, we still haven't solved
that one major problem that bothers everybody putting the groceries away!
Summary.
What happened here?
At the store:
1. Grocers no longer need POS devices and the
staff to check out and bag goods.
2. Inventory is more accurate, and is based on
projected usage. Hence stores don't run out as often and they don't stock
items that don't move.
3. Since there is a reduction in staff, and better inventory control, the
cost savings can be passed on to the consumer.
4. Manufacturers gain valuable information on the buying habits of
customers.
For the consumer:
1. Savings with grocery shopping since the intelligence is calculating your
lifestyle needs.
2. More efficient use of groceries, since the recipes are planed based on
what you have in house before ordering.
3. Better use of time. No longer do you have to spend the couple of hours a
week preparing an order and shopping.
4. Savings all around, plus more efficient ways of living.
I won't touch the security issues, as I assume they will be nonexistent when
this concept takes hold.
Will it happen in my lifetime? I hope so.
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About the author:
George Matyjewicz, PhD is Global Strategist of GAP
Enterprises, Ltd. His dissertation “Just In Time Payments And The New Global
Currency For Conducting Business In A Global Economy” was compiled from 3+
decades experience in the business world. He was formerly President/General
Manager of a global digital currency company with customers in 190 countries
and Chief E-Commerce Officer for a global giftware company where he
experienced risk management issues first hand. He was a Principal/Partner at
a top 20 U.S. CPA/Consulting firm. He is regularly published as an expert on
global business, finance, technology and implementation and writes and
publishes E-Tailer’s Digest online and in print, which reaches retailers in
37 countries worldwide.
