Podcast featuring Dr. Gary L. Deel, Ph.D, J.D., Faculty Director, School of Business and
Dr. Kevin Forehand, Retail Management
When the barcode was introduced, it marked an incredible technological advancement for retailers. In this episode, Dr. Gary Deel talks to retail management professor Dr. Kevin Forehand about his 20 years of experience working in retail and entertainment. Learn about the adoption of technology including the growth of self-checkout lines and the testing of shopping carts equipped with technology that automatically calculates a customer’s purchase. Also learn how COVID-19 has accelerated the adoption of many of these technologies into the retail environment.
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Dr. Gary Deel: Welcome to the podcast, Intellectible. I’m your host, Dr. Gary Deel. Today we’re talking about modern innovations and technological advances in the retail environment. My guest today is Dr. Kevin Forehand. Kevin is an associate professor in the Dr. Wallace E. Boston School of Business at American Public University.
Dr. Forehand’s industry background is primarily in retail management and sales management, having managed and operated stores for over 20 years. Dr. Forehand has held many different positions during his time in retailing, from sales associate all the way to vice president of store operations. Kevin, welcome to Intellectible, and thank you for being our guest today.
Dr. Kevin Forehand: Thanks, Gary. It’s great to be here.
Dr. Gary Deel: I appreciate it. There’s a lot to talk about in this sector, and obviously, you’re the retail expert, so I’m not sure where best to get started. We’re recording this, of course, in May of 2021, so I think it’s fair to say that our society is coming out of the COVID pandemic catastrophe. We have most of the population vaccinated at this point, or are on our way there, but this has affected the retail environment in a great many ways, so I want to get to that at some point.
But before we do, I’m just curious to see if you can set the stage for what else is happening long-term, trend-wise in retail operations, that the average consumer who shops in a Walmart or a local grocery store may be unaware of, but that’s changing the landscape of the industry that you cut your teeth in.
Dr. Kevin Forehand: Well, if you go all the way back to, I believe it was 1973 when the barcode was invented, that was a huge invention, and a change in the industry. So there have been inventions like that, that really changed the scope. And so when you fast forward all the way to today, and, of course, I’ve said this many times in the past, you may have even heard me say this in our conversations, that there’s an evolution in retail.
Where we are today, which is what we’re going to talk about, that what we see today and into the future is, look at the self-checkouts, for example. That was the start of the continued evolution, in my opinion, because this prepared the consumer for what was to come.
In other words, you are taking care of a lot of those tasks yourself. Some people like that, some people do not. But ideally, I believe what the retailers were preparing us for was no cashiers, or at least very few. That has been going for several years now, and it has taken hold in many retail establishments.
But then there again, there have been others where their customer base pushed back against that. I believe it was Kroger who actually had installed them, them being the self-checkouts, and then they actually removed them. If you take that and you say, “Okay.” Well, as I said, it’s an evolution, so it has continued to evolve and look at where we are today.
Where we are today, of course, you mentioned the COVID-19 pandemic, I’m just going to jump in there for a second and say, I believe fully that we were headed in this direction anyway, but it’s certainly hit the fast-forward button. Probably advanced this forward probably 5 to 10 years at a much greater pace.
If you look at Amazon Go, I’m not sure if you’re familiar with Amazon Go, but that was the invention of Amazon small convenience store-type format, and the idea which they tested it with their own associates. It’s very small format. It operates through the Amazon app. They can go into the store, get what they need, snacks, whatever. And through the app, it automatically, as you take an item off the shelf, it collects that data through cameras and sensors that are located in the ceiling, primarily.
And as you take one item and then another item, it is creating a digital receipt in conjunction with the app. And then if you put an item back, it takes it off. But ultimately the goal is, when you leave the store, it automatically charges you and you just walk out.
For Amazon, that’s been the start of this continued evolution, in my opinion. Because now where we are is they have the Amazon grocery store, which is called Amazon Fresh. It’s roughly a 35,000-square-foot box, but again a full-line grocery store. And so now, again, the evolution has moved toward, it does work with and in conjunction through the Amazon app, but they have smart carts, smart shopping carts, and so they call them Dash Carts.
Again, it just continues to move forward and get better, because the Dash Cart, how that works. Again, you’re in a much larger grocery store, and credit to Amazon for stepping that up and moving it forward. But as you use it, you take an item off the shelf, you put it into the Dash Cart, and again, the sensors are in the shopping cart. It scans the items as you put them in there. If you take one out, you change your mind, you take it out of the cart, it takes it off, out of your digital receipt, which there is a digital display screen on the handle of the shopping cart where you push it.
And otherwise, it’s very much the look of a standard shopping cart. It looks very similar to one like you’d see at Target. And again, it operates through the Amazon app. You walk out through the front of the store and it charges your credit card, so it’s a huge change, but one that I personally saw coming.
Dr. Gary Deel: I definitely agree. I wrote recently about how I think COVID, to your point earlier, has accelerated the timeline to self-service retail operations. I mean, it’s accelerated the timeline, arguably, to self-service, everything, but specifically in the retail operation, like you said, we were forced to adapt. And the self-service retail environment was pitched as it was no longer just a cost-cutting mechanism for retail, it was a way to provide a safe shopping environment for customers, and for employees too, because you didn’t have to have that close, intimate person-to-person contact at the checkout counter.
But I’m curious because I know you said accelerating the timeline by maybe 5 to 10 years. In your view is there a, as I would think, there’s an end point to this where you walk into a Target or a Walmart or really conceivably any store, and there are just no checkout clerks, no human beings operating that function? There may be someone supervising the upkeep of the machines so that if there is a failure, they can step in and intervene. But I see a future in my mind where there are just no traditional checkout stations anymore.
Do you see that as an endpoint, and if so, how far away are we from the point at which Walmart flips the switch and says, “Okay, we’re completely done with this human checkout situation, we’re going self-service across the entire front of the store?”
Dr. Kevin Forehand: I don’t think we will ever get to where it is 100% full service. I think that it will be extremely scaled back at some point. But even with Amazon with the grocery store, I mean, you still have associates on duty. You still have to have someone there, an associate that can help customers who either need the help, or would like that level of assistance.
I don’t think we’ll ever get there fully, but I do think, again, that it will be maybe where you have one or two associates maybe at the front of the store. And that’s just a guess on my part, but I think we will see that, because you’ll need someone that can assist the customer. You’ll need someone maybe for returns, customer service desk, so you’re going to have that. But I do think it’s going to be extremely scaled back. And actually, that’s a pretty good segue into what Walmart is testing right now. If you’d like me to talk about that, I could share that.
Dr. Gary Deel: I do, but I want to make sure I understand your projection on the industry. I would agree with you that there’s going to be a human involvement in the store for stocking and for troubleshooting and for, like you said, for returns and for customer service issues. I don’t think they’re going to just walk away and leave that, at least for the foreseeable future. I would wager to say maybe even a century or so, so it might be beyond the scope of our lifetimes.
It hinges on the technology, in my view, being adaptable enough and intuitive enough that a lot of those corner cases where you have situations that are unique and odd, that it can account for those and not require a human being to intervene every single time a barcode doesn’t scan correctly, or something needs to be updated. Does that mesh with your understanding of the challenges that self-service faces as it moves into a more dominant role?
Dr. Kevin Forehand: Yeah, I mean, to your point, I mean, I agree. I think that over time we’re going to get there, so it is fewer number of associates as possible that deal with front-end operations. However, I don’t believe that we will ever get to the point, and I know that’s a hard one to say that I think we’ll ever get there, but I believe there will have to be someone managing the front end, because you’re managing exceptions, right?
You can say 99% of those customers will self-checkout. Or even if a store the size of a Walmart Supercenter gets to the point where it uses the same technology, or a similar technology as the Amazon grocery store, you would still need one or two associates present. I think we’ll get there. Now, the timeline, I think it has advanced. I’m thinking you’re probably going to see that within the next 10 to 20 years. I’m thinking about generations. That’s what’s in my mind.
Dr. Gary Deel: Sure. And I think that is what struck me about the challenges that in my view are inherent with a model like Amazon Go, because I’ve seen the exposé on that, and how they reveal the limited interactions of the technology, like you said, cameras and sensors and things to identify what you pick up, and what you don’t pick up.
And instantly what entered my mind from an engineering mindset is corner cases. How do you account for someone who okay, I go into the store, I pick up a sandwich. I put it back, but I don’t put it back down in the same place where sandwiches belong, I put it on another shelf where the cookies are. Is the software and the technology intuitive enough to understand what I did, that I did in fact put the item back, I just didn’t put it where it belongs? Now you have an item on that shelf that isn’t supposed to be there that someone else could conceivably pick up. It complicates everything in that ambiguity of the retail environment and the unpredictability of customer behavior.
Dr. Kevin Forehand: Yeah, it does. And that’s actually one of the things that I had in my mind is when you think about a large scale rollout, and you think about it for a larger box, a larger square footage store. The larger the store, you expand the number of problems, potentially.
And to your point with the product if it’s not placed back exactly where it goes, am I still charged for it? Does it create a problem? We all know that that happens in terms of we know that customers they’ll place an item back onto a shelf, but it’s the wrong shelf. It’s not the correct location. I don’t think the technology is there to manage that exception yet, but it will advance to the point to be as good as it can possibly be.
But again, you’re going to have issues where in your example I was charged for something, I put it back. Okay, I made a mistake. I did not put it back in the correct location. I’m charged for it. How does that get rectified? I don’t want to be charged for something that I did not purchase, that I did not receive. So it’s one of those issues where probably a human being has to help you, human-to-human, to correct that error. There’s always going to be a need, in my opinion.
Dr. Gary Deel: I think it is interesting though from a psychology standpoint how much of the population, myself included, to be completely candid, is willing to adopt the extra work involved in self-service and still pay the same prices for the same products while affording the company that adopts that technology a major break in cost reduction by being able to reduce the headcount associated with labor being one of the biggest expenses of all businesses.
There’s a comedian, and I forget whether it was Bill Burr or somebody else, who had a skit about that. How they said how offensive it is to their sense of personhood that a store would now say, “Okay, welcome to, for example, Walmart. You get your stuff, you scan it, you bag it, you pay for it, and you get out. We don’t do anything anymore.” And yet you’re paying the same prices. Now, I’m not knocking Walmart or trying to criticize, this obviously was part of a comedy routine, but it really shines light on how interesting that paradigm is.
It’s interesting how we’re willing to adopt that with no pushback whatsoever from a pricing standpoint. We’re taking on the extra work in a pro bono sense.
Dr. Kevin Forehand: Well, and I think the pitch, we’re going back to the psychology that you spoke about or mentioned, the thought is, “If I do this, it’s helping to keep costs down.” Right? The retailer has invested into the technology, they’ve invested into the equipment. Obviously, they are looking for cost savings and labor over time. And obviously, through their research, they know that they’re going to recoup the cost of that equipment over time, and they believe that there’s a significant cost savings in doing that.
And then the pitch is to the consumer, we’re working to keep prices low. We’re working to keep prices down as much as possible. And so you use that in conjunction with, there are those of us that we would just rather do it ourselves, right? You shared, so I’ll share.
I don’t go in stores that often to be quite honest, I spent my time working in stores, and so I’m not a big shopper, that’s my nature. But what I do, if I’m at the front end, I’m gauging. I want to know. I’m looking at the standard cashier-lead checkout lane versus the self-checkout. Which one is busier? I’m gauging the traffic.
And you take all that in very quickly to make a decision, and it’s probably 50/50. It’s the luck of the draw. But when you take all that into account, and you look at where we are headed, the technology is going to take that away, meaning you don’t even have to worry about it. Because if, again, you go back to the Dash Carts, no cashier, no waiting in a line.
You just use the technology, everything is scanned within the cart. And once you go to leave the store, it charges your credit card, which is on file through the app. All you have to do is if you want to bag the goods, you can or you may have some sort of a storage container in your vehicle, right? You may not even do that. And so that’s even more environmentally friendly.
Dr. Gary Deel: That’s an interesting observation. You just raised the purported explanation that, from the retail industry, the argument is to the consumer, ostensibly, that if we don’t make this investment in self-service technology and allow you to do it yourself, the prices will go up, and they’ll be higher than they would otherwise.
Now, to be perfectly candid myself, and perhaps a little cynical, I don’t know that I’d buy that. I don’t know that the industry is going to eat a profit margin that they don’t have to if the consumer market would not notice a difference. In other words, I’m not sure that the prices would be so much drastically higher today than they would be otherwise. I mean, maybe there is a capitalism element at work there where competition is forcing these prices to rock bottom, and they’re accounting for the savings that are enjoyed from self-service technologies.
But, I’ve done quite a bit of research, investing time and homework on self-service technologies from my own industry, which is hospitality. And through that research, I’ve learned that the ROI on these machines and the software and the development that goes with them, is incredibly fast.
Because when you stop to think about all of the savings, one machine in a 24-hour operation, like you can imagine a Walmart that’s 24 hours. That machine is not replacing one human being, it’s replacing three because there are three shifts. And arguably, it’s replacing more like 3.4, 3.7, because you have relief. If you account for an entire week’s worth of shifts, it’s not just three employees, it’s three and their reliefs that cover their days off.
That one machine that can run 24 hours a day, seven days a week with no breaks whatsoever, no lunches, no days off, no vacation, no sick time, none of that, replaces between three and four employees on a line. And so you start looking at the salaries associated with those employees, and then wash it against whatever that machine costs. Even if the machine is $100,000 bucks, you’re making your money back in less than a year, which is incredibly attractive for any business that is trying to obviously increase its profitability.
Dr. Kevin Forehand: Yeah. And again, I wasn’t trying to say that the research supports that. I’m saying that it’s perspective. And at the same time, human nature, all of these things, these elements come into play. And I’ll give you an example. I have no problem using a self-checkout. It’s not a big deal. But my mom, won’t happen. It’s a generational thing, in my opinion. I think that as we evolve, right? And as time moves on, my generation and those even younger than you, our generation, the technology is not as much of an issue. Let me say it that way.
Dr. Gary Deel: Right. We’re a generation away, or a generation’s lifetime away from a consumer environment where everyone’s completely comfortable with some level of technology involved in that process. And I think the other point to notice, and correct me if you disagree, is that I think the technology is helping to bridge the gap as it gets better.
And it’s getting better faster than we are moving on from the antiquated times that, again, are associated with people’s comfortability levels from, as you said, older generations, our parents’ generation, and so on and so forth.
I’m amazed almost every day at the things that I see in retail technology, as it gets better to the point where it’s, in some context, virtually indistinguishable today from human contact. I had an Amazon problem the other day that I, of course this is online shopping, it’s not in-store, but the package never arrived at my door for whatever reason. I think it got lost in the mail.
So I went on my app, and I went to the customer service chat option, and I’m explaining what I need. And the “person,” I’m using air quotes around that, on the other side says, “How can I help you? What happened with your package?” And I said, “Didn’t show up, or it got lost or something.” And they said, “Which package was it?” And they pulled up a list and I selected it. And it took maybe a minute and a half, and by the end of that process, in the easiest possible way of getting there, Amazon said, “No problem, we’re sending another one to you. It’ll be there tomorrow before 4 PM. Thank you very much.” And only at the end of that process, did it fully become clear to me I was never actually talking to a human being.
I was interacting with an AI that entire time, who they’ve become so good at intuiting what you need from the common cases of your package got lost, or it was damaged, or I need to return something, that they’ve automated all that in a seamless way that passes what we call the Turing test. It’s totally indistinguishable from human contact.
For those generations like your mom and my parents and grandparents out there, I think that’s going to make the process a little easier, because at some level, you’re not going to be able to tell in certain contexts whether you’re even interacting with technology or a human being.
Dr. Kevin Forehand: Yeah, I absolutely agree. And that is the goal. You hit that nail square on the head. I mean, the goal is that it is a seamless experience for the customer. And, yeah, it speaks to the investment that Amazon has put into their technology. And they have deployed to be able to solve that problem, and it was fast and efficient. And you’re a happy customer, right?
Dr. Gary Deel: Absolutely. I remember actually commenting to my wife at that moment after the interaction, because I was expecting to have to be connected to a representative and wait on hold to be told that they needed some information from me that clearly Amazon already had, something like an order number or something. But I could not have engineered it any better to be the minimal process for getting what I needed from Amazon at that moment. I mean, it took the minimum amount of time and the minimum amount of energy from me to achieve the goal, which was just to get my replacement order on its way.
Dr. Kevin Forehand: Yeah. And again, I mean, that’s ultimately, for the retailer, I mean, that’s what they want. I mean, they want you to get what you ordered. And that’s where omni-channel retailing comes into play, by the way. I mean, that’s the whole point is for the customer to get the product that they need or want as quickly and efficiently as possible. To provide the customer with options, and if there’s a problem with the purchase, to solve that problem, again, in an efficient and timely manner. And in your example, that’s exactly what happened, and that’s what the retailer is looking for. As consumers, that’s what we are looking for.
We want what we want or what we need, and we want it as quickly as we can get it. Whether I purchased it online and it is delivered to my home, like in your example. Or if I purchased it online and then it arrives at the store and I go there and pick it up, which is what BOPUS means. That acronym, Buy Online, Pick Up in Store. And it’s all about convenience these days, because you mentioned that you were all crunched for time. And so when you’re crunched for time, and we’re all so busy or at least in our minds we’re totally busy, right? I mean, we stay busy doing whatever. We’re looking for convenience.
Dr. Gary Deel: That happened to me yesterday, I was just reflecting on, coincidentally I was at Target, this is a true story. I was buying a television and I had looked online to find that the television was on sale, and that there was inventory at my local Target, so I went to the Target. I picked it up off the shelf and only at that moment did I notice on my phone on the Target app that it said, “Not available for in-store purchase. Online ordering only.” Or something to that effect.
And so I geared up for a fight, I went and asked for a manager and created a problem that didn’t need to exist, because I went right to the store manager and I said, “Look, I’m here, please don’t waste my time and make me go home and order this and wait for it to come in in shipping. It’s right here in my hand, it’s in the box. Can you just honor this online pricing?” Because on the shelf, it was listed at a different price.
And she had this confused look in her eyes as I was proactively on the offensive for no reason at all. She said, “Of course. Yeah, we do that all the time, and we will honor the online price whenever there’s a difference between what’s on the shelf and whatnot. So no problem when you go to checkout, they’ll update it for you no big deal.” And sure enough, when I scanned at the self-service checkout, by the way, it reflected the online ordering price automatically.
I felt silly at that moment, because I was expecting some pushback, lest they would have it on their website as something else, but it had said online ordering only, so I assumed that they would not honor that deal, what kind of special they had from the store purchase. But they had already worked that out and avoided a point of conflict that would have become one had it not gone the way it did. So I think that’s a great example of how that plays out in real life if the technology infrastructure and the policies of the store are designed to be flexible like that.
Dr. Kevin Forehand: Well, yeah. And with that example, something that popped into my mind was, because I’ve seen that too, right? Not available in store. So you think, “Well, okay, this price is not available.” Either the product is not available in the store or the exact same product, I cannot get it at this price in the store.
And maybe that is by design. I mean, that’s again, what thought that is being placed, or put forward. And many people, maybe even most people, they won’t challenge that. They just take it at face value, right? But you didn’t take it that way. You were going to challenge it and ask for an exception. And “Oh, yeah, we do this all the time. No problem.” Well, that’s great. It’s awesome that the manager made that decision and that that’s what they do as a company, that they take care of their customer. But how many sales did they miss out on because of how that’s worded? That’s a question in my mind. How many other customers would have made that same purchase that you did, or some other item?
That could be hurting the stores a little bit. Now I understand, or to some degree. I mean, we understand that at that store you have a different structure, a different overhead, and a lot of that is labor, and also the cost of maintaining that brick and mortar store. Again, probably by design, but you also have to ask yourself, “How many sales are we missing because of this?” So I don’t know. That’s a good question.
Dr. Gary Deel: Absolutely. We’re going to go to a quick break, and when we come back I’m going to ask you more about the psychology of store design and orientation. We’ve been speaking with Dr. Kevin Forehand about modern innovations and technological advances in the retail environment. Before we left, I mentioned that I wanted to talk about some psychological nuances to the store design component of major retail outlets like Walmarts and Targets.
I read a book during my doctoral work at UNLV in Vegas a few years ago called “Why We Buy.” And it was the story of a consulting firm, I believe that the name was Envirosell, if I’m not mispronouncing it. And the book focused on their research to a very nuanced and incredibly detailed level in the retail environment looking at where buyers go, what they look at, what they touch, how long they touch it for, what they’re comfortable with, what they’re not comfortable with it, and all of just the minuscule observations of every conceivable movement of a buyer in a store like a Walmart.
And they build this incredible archive of data that allows them to then advise major corporations like Walmart and Target, Home Depot, what have you. Things like where should your product displays be? And what’s the lighting? What should it be like in the store? How wide should your aisles be so that people feel comfortable stopping to look at product without people passing behind them being so close that it would be uncomfortable for them that they wouldn’t feel comfortable standing there and debating over which product to buy?
I wanted to ask you, in terms of your experience in the retail environment, what products were most popular and did you see a lot of attention put to design and layout and aesthetics in stores to get people to buy more, which would be the obvious goal of any retail company?
Dr. Kevin Forehand: Yeah, as far as having people there in the store taking down that information, in the specific stores where I was located, or assigned to, I do not recall ever seeing someone doing that. But I don’t doubt the fact that it happened.
I’m not really surprised by that, but I never saw that. But, in terms of store layout, there are a number of things that we take into consideration. And part of that is the overall layout of the interior. In other words, when you walk in to the store, what is the first thing that you see? And even going way back, I mean, with Sam Walton inside of a Walmart store, one of the things that Sam Walton wanted to make sure of was that when customers walked into the store, the first thing that they smelled was popcorn popping. It’s attacking the sense of smell, not just the sense of sight, because then when you smell the popcorn, you’re going to seek it out, potentially, right? So, of course, you have to go to the snack bar, back then.
Dr. Gary Deel: It’s a very impulsive sense. And just to add to that, that’s interesting. I didn’t know that about Walton and the Walmart company, but Disney does the same thing with their theme parks and Main Street cookies. It’s a manufactured smell, but it is an olfactory impulse that causes people to want to eat cookies, or in this case, popcorn.
Dr. Kevin Forehand: Right. Yeah, and it’s a big thing. And of course, it’s not now. It’s amazing to me some of the things that have changed. That was one of the ones that stuck out to me that I felt, okay, this will never change as part of the culture. But it did change.
Of course, the store size has changed. We moved from what we called division one stores back then, to the super center, right? One of the stores that I was in was 65,930 square feet. And then you move on to super centers that are over 200,000 square feet, so you get away from some things.
But going back to the layout of the store, when you first come in, yes, there is an area that you don’t want product right in front of the customer right as they walk through the door, but you’re going to have some product pretty close, because you want to set the stage. And it depends on the time of the year. It depends on what is the event, or what is the holiday that is upon us, or that is upcoming?
And so that is usually what you’ll see when you come in the store. If it’s around Easter, you’re going to see something that has to do with Easter somewhere up in the front of that store, so it sets a theme and a tone. Or if it’s around the holiday season, you’re going to see something. You might see some lights on a shelf up front, or if it’s around the Superbowl you’re going to see bags of chips and dip and soft drinks and flat-screen televisions. That’s the thing that you see now.
So you’re planting those seeds, it’s actually twofold. One, you’re planting the seed for those who they haven’t even thought about it, right? Or it could be those that that’s exactly why they’re coming in the store, so you want to make it easy.
Dr. Gary Deel: People don’t think much about the layout of these stores, or assume that it was just a matter of efficiency, or maybe just random layout. But there is a lot to that in terms of, for example, I think about every time I go to get anything dairy-related, which is one of those staples of, it’s never an impulse buy, it’s something you’re going to go if you need milk, you need milk. You need butter, you go get butter.
But those are always in the furthest places in the store, which requires you to trek past all of the impulse stuff that you might not otherwise see. Versus if they put the milk at the very first shelf when you walk in the door, and that’s all you went in there for, then you wouldn’t have to walk past the potato chips and the soda and everything else that you might grab as just a convenience thing on your way through the various aisles to get to the milk.
Dr. Kevin Forehand: Yeah. And then interesting point along with that, because you’re absolutely right, but again, it depends on demographics, it depends on location. Let’s think about well, your state. Let’s talk about Florida, for example. There was some research done, and you could speak to this more than I can, but I know that there were some stores, some companies they were doing research because of the higher number of elderly population, the population for elderly people was greater. And so they looked and said, “Okay, what are these customers coming into the store for?”
And so dairy, that’s one of them. Pharmacy, that’s another. So some of these items that, if you have a 200,000-square-foot store, elderly people, if they’re in great shape, yes, okay, no problem. But sometimes that’s not the case. And so it needs to be convenient. And so the layout of the store can change based on the demographics, and that’s important because the store is there to serve their customer base.
Dr. Gary Deel: That’s interesting. Yeah, as I think about the Walmarts and Targets around me, the pharmacies are closer to the front. But I do think about smaller stores, convenience stores like CVSs and Walgreens and their pharmacies are always in the back. Now, granted, it’s not a very big store to begin with, so I guess if you’re going in there to pick up a prescription, they want it all the way back there, because you’ve got to pass everything else on the way to it.
But I also think about with children, you always put the bright, colorful Froot Loops and Cocoa Pebbles and stuff on the bottom shelf with the cartoon toucan and everything else, because you’re likely to get that impulse buy for what kids want, rather than, they dictate the purchase behavior of their parents.
Dr. Kevin Forehand: Yeah, yeah. And for my son, I know that Froot Loops, that’s one of his favorites, so you’re spot on with that one. So one other thing I wanted to mention, I read about this, and this has been, gosh, it may have been two years ago, Gary, but there was a retailer, I’m not going to name the name.
They had instituted shopping carts that had trackers installed on the cart, and it worked in conjunction with the app. So basically, when a customer enters the store and they take a shopping cart, it tracks their every movement, so they know who that customer is, because most of us, we stay logged into our apps, right?
As they move about the store, you gather that data of okay, this shopper went to, and I’m just going to make this up, they went to candy and foods first, and then they went to electronics, and then they went to toys. And so they gathered that data, and so that also helps in future store configurations.
Dr. Gary Deel: Absolutely. I think about that in the context again, going back to my industry perspective with Disney, just like they do the manufactured smell, they now have what they call Fastpass+ system for helping and creating convenience with all of their guests throughout their park operations from ride wait times to dinner reservations. Everything is done with these RFID wristbands that they provide for you.
But what people don’t necessarily appreciate is that they’re doing the same thing that that retail establishment is doing where, so far as I’m aware, and again, I believe, I don’t want to say this as fact, but it’s my understanding that those, even if they’re not tracking physical locations from one step you take in one direction to the next, they’re at least able to identify what your patterns of movement are within a theme park.
Because if you visited the It’s a Small World ride, and then the next thing you got on was Big Thunder Mountain at Magic Kingdom, well, we can do process of elimination and say, “Well, how long was it between the time that you clocked in at Small World and Big Thunder Mountain?” And if it’s just enough time for you to get there, then you know you didn’t probably make any stops along the way, so that tells us that that was part of your movement.
And it allows you to aggregate that data and identify trends and what’s popular in the parks and what people enjoy the most and where you have to worry about traffic flow and congestion, especially when you’re dealing with what could be 80,000, 100,000 people in a given day. So it’s a lot, but yeah, people don’t always realize that kind of data is being collected, even passively.
And it draws into the conversation all kinds of privacy implications, and should you at least have to disclose it or make it blatantly aware? Is it in the fine print somewhere, or is it not at all? I don’t know with respect to the retailer that you identified, and to be fair, I don’t know the specifics of, again with the Disney Fastpass+ system, if they’ve identified disclaimers or something that they’ve provided for their guests. But it is a hot topic today in terms of what are you allowed to collect and what’s fair game?
Dr. Kevin Forehand: Yeah. And adding your Disney example, because I do have experience with that when it was, I think we went there when my son was three. Boy, they make it easy for you. They have that down to it’s an art and a science, and it’s great.
I mean, you talk about an immersive experience, and the wristband, like you mentioned, and anything that you want inside that park, all you have to do is have the wristband and you want this, you want that, you buy it.
I know with our experience you didn’t pay for it until checkout. You got a credit card on file, right? When you checked in. And it was a great time, no doubt about it. It was a wonderful vacation and we had a blast. But then when you check out and you realize how much you spent, it becomes real, because while you’re there, all it is is real fun. But they have it down.
Dr. Gary Deel: Yeah, you lose sight of it through the lack of tangibility to it. And to be clear, I wasn’t implying any ethical criticisms of Disney. I mean, I worked for Disney on the College Program going back 16 years, give or take. And that was pre-Fastpass+, and that was if you wanted a Fastpass for a ride, you went up to those clunky ATM-looking machines and put your card in and it would spit out a paper ticket that you would show up with in a couple hours, and they never worked. They always broke down, they ate your tickets, and so I would spend hours in that position, that post as part of my job, just fixing machines all day long.
I would open them up and fix the paper jams and all that good stuff that went with them. So the Fastpass+ system is enormously superior in terms of convenience for guests. But to your point, yeah, people lose sight of what they’re spending and all to the benefit of companies like Disney. They’re certainly not the only ones. Cruise lines do this. You just charge everything to your room and your ship card, and then you only find out when you go home what the bill is.
Or casinos is another great example. They give you the player’s card and they just say, “Sit down at the table and play till you’re done playing.” You don’t realize how much money you have left, because all you’ve got is your little player’s card. So that lack of tangibility and real hard currency and cash, you lose sight of what you’re actually spending until it’s all over.
Dr. Kevin Forehand: Yeah. And again, to your point, there was no knock there or criticism on Disney by me, because I was impressed at how seamless the experience was. And it made it an even nicer experience. I mean granted, I didn’t carry a calculator with me and add up every purchase, right? And at the end when I checked out, I was like, “Wow, I think we did spend more than what I thought we would.” And that’s debatable as to whether that is by design or not. But the convenience factor of it and how that affected the enjoyability of our stay and our time there, in my opinion, as a consumer, it greatly impacted in a positive manner. And we’re looking forward to going back one day.
Dr. Gary Deel: Yeah, it creates a layer of opacity that makes it harder to keep track of the accounting and the bookkeeping during something like a vacation. I think we covered a lot today, is there anything else you wanted to cover topic-wise before we wrap up?
Dr. Kevin Forehand: I just wanted to shift gears for a couple of minutes if we can. And we talked a lot about the technology, and we talked a lot about Amazon in terms of their Dash Carts being smart carts and that sort of thing, but I just wanted to offer a different approach.
And that is what Walmart is testing right now, or to the best of my knowledge. And what we’re accustomed to, and it is true in standard grocery stores, Walmart stores and Target, it’s just across the board, is the standard checkout line. You have a number for the checkout one through however many, 1 through 34 sometimes in these large format stores. And you’re in the line waiting to be checked out. And the person there, the cashier, and they’re waiting to assist you.
But what Walmart is working on, basically, is a more open format, so to get away from the checkout lines, and even really, the term cashier. Because the term that they’re using or they’ve introduced is hosts.
When a customer wants to check out, the associate basically greets them, and the customer has the option of whether they would like to self-checkout, like we spoke about earlier, or if they need assistance, then the host will assist them by scanning the items like always, and bagging the purchases.
It’s a much larger, more wide-open format that they are testing. And so the technology is there, but it’s a combination of the technology with the human element, so according to what I read, it was a quote from one of Walmart upper management, they’re looking to build relationships with their customers.
Again, the technology is there, but they want to combine the personal element with the technology. And going back to the pandemic, having a much larger, more open area where people can distance themselves is attractive. So this new format that they’re testing, it’ll be interesting to see how that plays out, and if it’s implemented on a large scale.
Dr. Gary Deel: And I think this also speaks to the rate at which technology and the self-service environment is improving. Because I remember the very first machines that went into those environments, and there was like two of them, and there was one customer service person, you want to call them a host or a cashier or what have you, then it went to four, and then this is in Walmart and Target. And then it went to six.
And now in my local Walmart Supercenters, there’s a section at the end of the checkout aisle on both sides of the store. And it’s probably 20 self-service checkout machines deep on each side, with just again, one person supervising. Occasionally, someone purchases alcohol, and they need to verify an identification and that that person’s of age, or someone has a problem with a barcode or what have you.
You’ve gone from one for every two machines to one for every four machines to now one for every 20 machines. And you’re seeing the situation where, as the software gets better, the technology gets better and fewer and fewer personnel are needed to supervise that experience.
And like you said earlier, I think we’re going to see more of that preference, maybe not a preference, but just an indifference as to whether I work with a human being to checkout, or I work with the technology.
Dr. Kevin Forehand: Yeah. And I think that we touched on the fact that a lot of changes at retail that we’ve experienced during the COVID-19 pandemic, a lot of those changes that have taken place for safety reasons, they’re going to stay in place. And other than trying to change it and make it more user friendly, I think that’s the purpose of this format to, again, better equip the stores for spacing.
It’s a new fresh approach, and people now, we’re more programmed to want that space. And that’s what we’re thinking. And it’s fresh in our minds, that’s what I’m trying to say. But, again, to your point, you can check yourself, no problem. There’s someone there to assist you if you need it. Otherwise, it’s just, I think, more of a comfort, warm and fuzzy feeling, right?
Every checkout lane is not confined, it’s all one big wide open space. Really and truly, in a way, it connects the front checkouts to the rest of the store, whereas before it was kind of like a division. And I think that’s probably the goal, is to, again, it’s one big, immersive experience for the customer.
Dr. Gary Deel: It’ll be interesting to see how that changes other elements of the checkout environment, like the impulse buys, the candies and the little sodas that are usually accompanying every checkout aisle. Whether that will stay or will still be a component of the checkout area of the store at all. It’ll be interesting to see how that evolves along with this movement.
Well, this has been wonderful. I really want to thank you for joining me today, Kevin. Thanks for sharing your expertise on these perspectives, and for joining me today on this episode of Intellectible.
Dr. Kevin Forehand: Yeah, it was great, Gary. Thanks for having me, and maybe we can do it again one day soon.
Dr. Gary Deel: My pleasure, and we definitely will. And thank you to our listeners for joining us. You can learn more about these topics by visiting the various American Public University-sponsored blogs. Be well and stay safe everyone.
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