February 24, 2005

A Drive-Thru Supermarket

By Evan Schuman, eWEEK

In the middle of Albuquerque, N.M., sits a 170,000-square-foot chunk of land that is slated to be the site for a new kind of retail store: one where customers can buy a week's worth of groceries without ever having to set foot outside their car.

On paper—and, thus far, that's the only place this grocery store exists—this proposal seems to have plenty to offer both retailers and customers. And that's why Steve Beardsley, the president of the company that is trying to create these stores, thinks it's more than worth the $12 million initial investment.

The initial Albuquerque store is slated to open by the end of March 2006, with Beardsley projecting the opening of "1,200-1,500 stores in the next 15-20 years."

Beardsley, president of AutoCart LLC, says customers will benefit from sharply lower prices along with less time spent shopping and a more pleasant shopping experience.

Beardsley estimated that it takes at least 45 minutes to purchase the typical American's average 21-item shopping list at a traditional large grocery chain, compared with about 16 minutes at an AutoCart facility. Some of those time savings are a result of using professionals who are just locating products all day long, while other savings come from having about 65 loaders strategically positioned throughout the warehouse. It's akin to doing the family shopping with 65 helpers linked through a wireless network.

For retailers, the initial advantage is that using such an unorthodox approach would attract a lot of curious customers. But there are other practical advantages, Beardsley said, from slightly reduced insurance costs to reduced need for floor maintenance, fewer losses due to shoplifting and fewer robberies (no cashiers to rob and no cash to steal).

The way it's slated to work is that customers will pull into one of 30 order stations, all of which are housed under a roof. Right next door is about 100,000 square feet of warehouse space and about 70,000 square feet of drive-through space. To put that into context, Beardsley said the average size of an Albertson's store is about 120,000 square feet.

Here's how it works. Upon arrival, a driver reaches out to the order kiosk, grabs a 15-inch touch-screen computer and brings the tethered unit into the car. While parked, the consumer makes selections from what the screen says is available in inventory at that moment. (No more spending time trying to find a specific product that isn't there.)

Beardsley is preserving a touch of impulse shopping, as the display will gently mention specials when a customer is searching for a desired item. The customer might select "milk," and the list of selections would flag a special.

Customers will also have the option of e-mailing, faxing or using a Web site to select their groceries, which theoretically will accelerate their shopping trip even more. How many customers could an AutoCart facility handle? If all purchases were preordered, Beardsley said, about 7,000 cars a day could make pickups. If everyone does their shopping with the computer on-site, he estimated that it could handle "somewhere in the 2,000-to-4,000 car-a-day neighborhood."

Beyond groceries, AutoCart will also feature DVD/game rentals, florists, pharmacies and full-service banking services, complete with the bank drive-through pneumatic tubes.

After an order has been placed, the customer is directed to a pickup station, where the experience starts to resemble a distant ancestor of AutoCart: the drive-in movie.

"When the car gets to one of the pickup stations, a large screen comes down in front of the car and customers can watch CNN or Fox News" while listening to the audio through their car radio, Beardsley said. But they are also envisioning much more futuristic uses, such as two-way video links with a nearby pharmacist or banker.

"We're trying to make it very interactive, even entertaining," said Beardsley, adding that buttons on the nearby kiosk would provide a way for customers to speak with the video pharmacist or even to ask a technical sales rep "a question about what printer cartridge you need to buy for your HP printer."

Back in the warehouse, as the customer places an order for each item, the software identifies what warehouse zone it's in and sends a wireless voice message to the worker in that area. Every product has a barcode license plate on it, and the conveyor takes the products to a consolidation area, where groceries are combined.

All of that happens in a warehouse out of sight of the customers. Will there be any employees at all near the customers? "You won't see anybody. Maybe you might see the guy sweeping the parking lot. Other than that, you're just dealing with the machine," Beardsley said.

Beyond the greater efficiencies in this sort of warehouse-based setup, the fact that the warehouse is smaller than the typical larger retail store also means that it will carry fewer products, which cuts inventory costs.

"Instead of carrying 20 brands of shampoo, an AutoCart would carry three, but they'll be the faster turning items," said Al Jervinsky, the national accounts manager for FKI Logistex, which is helping with AutoCart's launch. "This will be a store where a person can shop for the fastest-selling brands."