Robots are on the verge of transforming everyday grocery shopping into something more sci-fi. From shelf-scanning robots to self-driving delivery to your door, the food retail biz has been surprisingly aggressive in its moves to modernize.
Albertsons is not immune to this wave of automation. The grocery giant is piloting a robotic micro-fulfillment center built into the back of one of its stores through a partnership with the startup Takeoff. These robot centers will drastically shrink the amount of time it takes to process online orders, allowing for faster delivery or curbside pickup.
Narayan Iyengar is the SVP, eCommerce & Digital at Albertsons, and he is among the luminary speakers we’ve lined up for our upcoming ArticulATE food robot and automation summit in San Francisco on April 16. You should get a ticket and join us! To give you a sense of the great conversations that will take place, we did a brief (and lightly edited) Q&A with Iyengar to get a sense of how Albertsons is weaving robotics into their overall retail experience.
What is Albertsons looking to find out with this robotic fulfillment center pilot that you’re doing with Takeoff?
Iyengar: I think the space is actually quite exciting and evolving very fast and to me, there are a couple of different ways of thinking about this for grocery home delivery in general. There are multiple models of grocery, there is the big central fulfillment type model that works in some pockets and some cities in the US. Then there is a store-pick model, which we and several other third-party delivery services pick from our stores and deliver, let’s called that model two. But as volumes increase, we have to find a model that makes economic sense as well as uses the existing supply chain, “cool chain” and the merchandise to be able to serve customers same day or early next day.
So when we all look at the models that are available out there, does it cut across all three things: One does it use the existing flow for fresh [food]? Two, does it use the existing supply chain? Three, will it drive down the price for picking and packing?
So, as a part of this pilot they’re trying to test the three things: One, prove out that this model would work. That is to say, we collect the order, we have an automated system that picks and packs the groceries, and then we deliver it to the last mile. Second is to see if this particular technology vendor is the best at executing this model for us. And the third one is to test out the integration, because the robotics, it’s just one part of it. The rest of the model needs to work as well: the website for the app, the inventory management, all of that needs to get integrated.
How does Albertsons view automation overall? How are you learning to design a workforce that includes both humans and robots?
This particular Takeoff technology, yes it’s robotic, yes it’s automated, but when you look at practical solutions that work, they tend to be a lot less “sexy” than you think. They are very practical, it’s got a bunch of conveyor belts that bring totes of items that humans pick from. So, it dramatically reduces labor hours required to do a certain task. It’s robots and automation helping humans be faster.
Automation has been the standard thing in the retail and grocery industry for many, many years now. And so this essentially is technology that miniaturizes that and puts that within a store in a smaller footprint. Broadly speaking, I think everybody is in the process of testing and learning at the store level to see what does automation and robotics look like. Many of them will not be ambulatory robots that resemble the sci-fi movies, they’ll be much more mundane and down to earth, but extremely practical.
So our approach to testing all of this from a labor management perspective and so on is we have a design a new system for Takeoff, for this solution that they are piloting. We are going to design a new process, a new way of working which includes aspects of what the automated system does best, and how do you build the workflow around it? How do you manage the ordering process around it? How do you pick and pack? And how do you do the layout of micro-fulfilment centers in a way that maximizes the value of this automated system? So the layout, the labor process — all that needs to be thought through and redesigned, which is a part of what we hope to accomplish in this pilot.
What are the specific needs for grocery as Albertsons consider automation?
I mean it’s no surprise here really, but there are three or four broad things. The first one is the fact that you are dealing with fresh produce, it has its own set of logistical challenges that need to be addressed. The way you pack it is different, you cannot pack a hot rotisserie chicken along with ice cream, for example. You have different zones that you have to consider not just for transportation, but also when packing. The cool chain becomes important because the quality of items you’ll receive will be heavily determined by temperature staying within the relatively narrow zone throughout: from the time that fish is caught all the way to the time you’ll cook it. So the fact that you’re dealing with fresh and the cool chain needs to be considered and that makes grocery very different.
The second challenge that needs to be considered is that grocery is often a very large number of SKUs. Traditional e-commerce, you go to buy one item. You end up with a couple other things [in your] cart so you end up having three, four, five item tops when you buy anything. You buy a television, you probably buy a couple of cables next to it and maybe a speaker; a pair of shoes, you buy a couple of pairs of socks… For grocery, the average basket it 30 to 40 items, and many of those items cost $2 or $3. It’s a high number of items, so you’ve got to design a system that works towards a set of items that can be picked in a high degree of repetition.
And the third one is the repeat nature of purchasing. Grocery shopping is a habitual thing. People are used to doing it in a certain way because unlike other items that you often buy once in six months, once in three months — I mean, how often you buy a pair of shoes that or a television set, right? — food is something that you buy multiple times a week. You keep running out of milk or eggs or other things and end up going to grocery store and reordering very, very frequently. So the entire chain, both the interface as well as the delivery system, lends itself very well to habit formation.
How are Albert and customers treating online shopping and have you noticed them trending towards delivery or pick up?
Well, it’s a bit of both — I mean, we’re seeing good traction for our home delivery, both our own home delivery as well as Instacart partnership and so on. We are also seeing ‘drive up and go’ grow in all the centers that we offer it. I think the grocery market is so large and basically everybody has a stomach, and you have absolutely as many different preferences as there are people.
So, we are seeing there’s a certain section of the population that wants immediate delivery, and [is] willing to pay a premium for it. There’s a certain set of people who are more methodical and do the stock up trip, they plan a couple of days in advance and they order in bulk, we have solutions for that. And there is another set of people that want to order online but they don’t want to be tied to being at home at a certain point in time. So for them drive up and go works fine because you order and then you can pick it up any time after two hours from the time you order, so it fits well with that schedule.
What is your favorite fictional robot?
Giant Robot (from Johnny Sokko) is really cool!
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