If you would like to watch displacement by a new technology coming into your life, just watch at your local supermarket.
James Lyman BSAE, BSEE, MSSM
I do our weekly grocery shopping, each Wednesday morning like clockwork, and in the last year or so I’ve seen these multi-shelf wire carts being pulled through the store by young kids, seemingly absorbed by the screens of their smart phones, appearing to be oblivious to all about them. Up and down the aisles they go, stopping occasionally to pick an item or two off the shelves to fill plastic grocery bags which rest on these wire shelves. In actuality, they are doing the physical shopping for HEB customers. The customer uses an app on their smart phones to compile their shopping list, which then goes to one of the young shopper’s smart phone to be gathered up. At a later time, the customer pulls up to a delivery door on the side of the store, gathers up the order and is off for home in just minutes.
This is the newest innovation in retailing, both dry goods and foodstuff. Attempts are being made by a number of different retailers to further automate their store operations, thereby remaining competitive and not becoming another Sears and Roebuck chain. Trouble is, it’s too labor intensive! Automation means doing more with fewer people, so how can this be an example of new unfolding automation technology? Quite simply this is the start, not the end of development, and right now, HEB and other retailers are feeling out the market, researching just how best to develop it for their future.
To reduce their labor cost, companies like HEB need to go to a central location for filling orders, where warehouse automation systems can be used to fill those orders. This is an area of technology which is highly advanced and proven. Modern warehouses require far fewer material handling people to operate than just a decade or two ago. Since the customer orders are electronic, they would automatically go to the central warehouse to be filled. I envision using plastic impregnated corrugated tote boxes like the Post Office uses, which are cheap yet durable. Each tote box has a unique bar code, so once scanned with a hand held bar code reader, the tracking software knows which order that a tote box is associated with. These tote boxes could be color coded, blue for cold stuff, white for general dry foods, pink for cleaning chemicals, green for produce and so on.
A person would go down an aisles making stock pulls for a tote box, then at the end place the box on a powered conveyer. Having bar codes, the tote boxes can be automatically sorted to which truck (store) that tote goes to. The totes may be set on a multi level rack with wheels, so a truck is loaded merely by pushing these rack carriers into the truck, then closing the trailer doors. Each of the carrier racks also have unique bar codes and so the computer network knows which tote box is on which rack. Cold and frozen food stuff goes by separate trucks. The truck then delivers to the designated store to be later picked up.
Once at the store, the racks are rolled out of the truck, sorted and checked to ensure all the totes for an order are present, then when the customer arrives, the clerk only has to push the cart of totes out to the waiting car. The previously used totes are scanned and a deposit charge for each tote (2 to 3 dollars) is deducted from the customer’s account. Then the new totes are loaded into the car, each scanned a second time to ensure completeness of order, while the deposit charge for each tote is added to the customer’s account. So in just a minute or so, the customer is off to continue driving home, the grocery shopping chore now done.
So just how does such a system reduce labor cost? Well, to start with, the central warehouse works directly off pallets and such, so there’s no labor involved in stocking shelves as with conventional stores. With a well designed automated warehouse, the stock pullers fill more orders per day than presently done by in-store pullers walking around the store with their carts, while also getting in the way of customers. Now if 30 to 40% of the shoppers are using the automated shopping service, then there’s a reduction of the number of shoppers the store has to process, which in turn means a reduction in the number of cashiers, the number of people sacking the groceries, the number of support people and fewer man-hours spent stocking the shelves. Suddenly, there’s a very significant savings in labor which translates directly into monetary savings and therefore increased profits.
In practice, the customer would use the smart phone app to note items are needed as they are found, much like writing a conventional shopping list. Say you’re running low on plastic trash bags, then just whip out the phone and check it off. Then just as with a written shopping list, the evening before going shopping, the customer sits down and checks off what food items are wanted for the next several days or week. Once done, the order is placed, as well as the time for pickup, then next day after work, the customer swings into HEB’s pickup station on the way home (or uses one of the emerging delivery services) and presses a button on the app to signal he has arrived. A unique bar code appears on his smart phone, which the clerk scans to make sure it’s the right customer, then in less than a minute has the order loaded into the car. Payment is electronic and has already been made and approved.
And now that you know what to watch for, you can observe the process of a new technology moving into your life and the displacement that follows. This is a very serious business that spells the difference of life and death for a retailer, whether there is going be an HEB or another Sears and Roebuck. Years ago, when WalMart brought their super stores to San Antonio, someone made the snide remark to the newspaper that HEB should just fold it up and let WalMart take over, just like so many competitors had done in the past! They didn’t realize that WalMart’s advantage has always been they were so highly automated . . . and that HEB was just as automated as WalMart. For once, WalMart was taking on an equal, and this time there wasn’t the easy pushover they were expecting.
I just read an article that WalMart has acquired Jetblack, a personal-shopping company which WalMart intends to use as a teaching device for their new AI system they expect to have operating in the next 5 to 7 years. To WalMart, Jetblack is a research tool instead of a business enterprise, this is how serious technology development is for ALL retailers. For them, it’s a matter of life and death! HEB and other retailers have no real choice whether to automate or not, because their only alternative is the decline and then demise of their company.
That’s the primary driving force of automation for any business.
As millennials and generation-Z face increasing challenges of new technologies and displacement, they need to realize there’s no stopping or controlling those technologies. Even if a nation’s government was to restrict the growth of technology to preserve jobs, the baton of advance technology would just pass to another country leaving the ‘restricting nation’ to wilt on the vine. So the millennials and generation-Z have no alternative but to also advance technologically.
1) The Democrats have introduced HR1644 or ‘Save the Internet Act’ reportedly to restore their Net Neutrality Rules, although the text of the bill has not be released as yet. These FCC rules were rescinded by the Trump administration. There are rumors that the bill will lump data communications (internet) into voice (telephone) communications which will then allow the internet to be taxed. Some consider this an attempt to circumvent the Internet Tax Freedom Act of 1998, which explicitly exempted the internet from any taxation by any American government.
2) Bayer AG has lost a second trial over cancer causes by their major herbicide Roundup, resulting in a $80 billion dollar award. The jury found defect in Roundup, citing that Bayer failed to warn of product’s risk, but Bayer plans to vigorously defend Roundup in the future, and to also appeal the decision.
3) More retail stores are closing in 2019. In the first weeks of 2019, 23% more stores closed than the start of 2018. Expectations are for 5,000 stores to close in 2019, by 27 different retailers including Kohl’s, Target, Macys, Winn/Dixie and JC Penny.
4) 28 MAR 19 Stock market closings:
Dow 25,717.46 up 91.87 Nasdaq 7,669.17 up 25.79 S&P 500 2,815.44 up 10.07
1) Eviction crisis is starting to look a lot like the sub-prime mortgage crisis. Housing is increasingly out of reach for many Americans, which is resulting in increased incidents of evictions. This is an indicator of housing being priced out of reach for many people.
2) There has been another incident with Boeing’s 737 bringing further doubts to the design. Soon after a 737 MAX-8 took off, it developed an engine problem forcing it to return. Boeing announced that they were completing a software fix for the MAX-8 series, and are close to submitting it to the FAA sometime this week. The new software is reported to now use the inputs from two different sensors, which must agree before the program will accept the input.
3) Prime Minister May has announced her willingness to step down if Parliament will past her Brexit plan, but didn’t give a specific date. Parliament considered eight proposed strategies and voted on each one, with all eight being voted down. This leaves Britain right where she started, with time quickly running out.
4) 27 MAR 19 Stock market closings:
Dow 25,625.59 down 32.14 Nasdaq 7,643.38 down 48.14 S&P 500 2,805.37 down 13.09
1) British parliament voted to take control of Brexit for one day this Wednesday, to try their hand at resolving Britain’s dilemma of departing the European Union. If the division running through the British public is any indicator, then it’s rather unlikely parliament will reach any consensus on a solution.
2) Airbus of France announced a $35 billion dollar sale to China for 290 of their A320 airliners plus another 10 of their A350 wide body airliners. This is another blow to Boeing in addition to the grounding of their best seller, the 737 MAX 8, which is comparable to the A320. The grounding of the 737 MAX 8 coupled with the fallout from the US-China’s trade war is a serious impediment to Boeing. China is the world’s largest aviation market.
3) Apple sales in China has declined due to demand for domestic products. Apple products have become too expensive, so the Chinese people are turning to domestic products which now have most of the same features as Apple for much less.
4) 26 MAR 19 Stock market closings:
Dow 25,657.73 up 140.90 Nasdaq 7,691.52 up 53.98 S&P 500 2,818.46 up 20.10
1) Study finds that Generation-X and Millennials are disillusioned and worried about their careers and future. They are working hard and long hours with little to show for it, worried about layoffs and no longer being needed, and therefore having to start over again. Also fears of little for their retirement.
2) This week may well be the most significant week since Great Britain went to war in World War II. The Prime Minister admits to not having enough votes for the exit plan. Parliament is working on its own exit plan, while the British people are now deeply divided as a ‘exit crash out’ is quickly approaching.
3) The laws of economics threatens to doom many American coal electric plants, amid claims that it’s cheaper to do renewable energy technology than to update coal plants. These doubtful power plants represents 211 gigawatts of power generation, or about 74% of coal fired plants in America.
4) 25 MAR 19 Stock market closings:
Dow 25,516.83 up 14.51 Nasdaq 7,637.54 down 5.13 S&P 500 2,798.36 down 2.35
1) The English pound has had its biggest single day drop because of Brexit. Brexit will be delayed until May the twenty-second if the British Parliament passes the exit deal.
2) Boeing has experience its first cancellation of its 737 MAX with Indonesia canceling a huge order of 49 aircraft. Boeing is rushing to complete its new warning system since the 737 MAX is its biggest seller.
3) Pinterest files for its IPO, releasing its prospectus this last Friday showing a $53 million dollar loss. Presently, the software has about 265 million users. Uber also plans to list its IPO on the New York Stock Exchange, the largest so far this year.
4) 22 MAR 19 Stock market closings: Dow dropped over fears of a global slowdown.
Dow 25,502.32 down 460.19 Nasdaq 7,642.67 down 196.29 S&P 500 2,800.71 down 54.17
1) Walmart has plans to compete with Amazon in the future, by using Jetblack personal shopping service to train AI systems. Jetblack has an army of human agents that can use in training Walmart’s AI system which can power an automatic personal shipping service in the next 5 to 7 years. This makes Jetblack more of a research facility.
2) The Chinese telecom company Tencent’s stock is down after the Chinese government imposed regulations designed to limit online games. They have suffered their largest decline in ten years with a 32% declined. Since smart phones is the biggest part of their business, this drop wiped off $100 billion dollars of book value.
3) The Prime Minister of Britain is trying to obtain a short extension of Brexit by going to Brussels. The major members of the European Union said they would endorse a short extension, but only if the British Parliament approves the exit plan. But British political parties are splintered over what should be done about Brexit.
4) 21 MAR 19 Stock market closings:
Dow 25,962.51 up 216.84 Nasdaq 7,838.96 up 109.99 S&P 500 2,854.88 up 30.65
1) Fears of climate change is causing some retired seniors to pull up and move out of Florida, which for many years has drawn the ‘sixty plus year olds’ demographics for a life of peaceful retirement with its low cost of living, no income tax and nice warm weather. But the threat of hurricane damage from flooding and rising sea levels is also making the associated insurance cost soar, in turn causing retirees to reconsider and move more inland, the result some are claiming from global warming.
2) Losses from the flooding in Nebraska is estimated to be over one billion dollars with more flooding forecasted. But even worst is the anticipated impact on farmers. Last year, 19% of Nebraskan farms filed for bankruptcy, and many more are now anticipated to file as the consequence of the flooding pushes more farmers under.
3) The Feds have elected to not raise interest rates again this year, expecting an economic slowdown ahead. There isn’t any need to guard against inflation coupled with indicators of slower growth from household spending and business fixed investment. The GDP was 2.1% instead of the expected 2.3%.
4) 20 MAR 19 Stock market closings:
Dow 25,745.67 down 141.71 Nasdaq 7,728.97 up 5.02 S&P 500 2,824.23 down 8.34