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+++ 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.

###

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.


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Last modified Sunday, July 13, 2003