Will Fewer Employees Become the Norm?

Fran Duskiewicz
Fran Duskiewicz
Fran Duskiewicz

In the pursuit of efficiency, c-store operations are changing. But, is it for the better?

By Fran Duskiewicz

Near where I live, the Target and Walmart stores have installed self-checkout sections with scale scanners, payment systems and bagging units available 24 hours a day.  They’re always busy and customers seem comfortable with the process, handling scanning, paying and bagging everything themselves with apparent ease.

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Whereas there might have been eight or 10 open register lanes before, there are now three on most days, primarily for large grocery purchases. Meanwhile, the self-checkout area is manned by one person who helps by answering questions or assisting first-time users.

The decrease in labor hours in these stores has to be tremendous.

The casual dining restaurants where we go for lunch and sometimes dinner have touchscreens at each table. We order what we want as soon as we are seated and the food is brought to the table when ready. We pay right there at the table and then leave. During this experience our only actual interaction with people comes from the host/hostess and server. My guess is that back at headquarters, they are working on ways to eliminate both of those positions, too.

Again, I have to imagine that the labor hours in these restaurants have been scaled back by a large number.

HOT-BUTTON ISSUE
My friend, David, complained to me the other day that his favorite coffee place always gets his order wrong when he goes through the drive-through. He doesn’t understand the person talking over the intercom and he doesn’t think they understand him.

When David picks up his order the size of the cup is wrong, or they added sugar instead of Splenda, or they give him iced coffee when he wanted hot coffee. Something is always amiss. David, who is 62, wants to know why he can’t order what he wants via a touchscreen, much like a drive-through ATM at a bank. He believes that would make his buying experience better.

Is the institution of self-serve technology at our favorite shopping and eating places just a cynical way to get a jumpstart on avoiding the huge minimum wage increases coming our way?  It would not work if shoppers were not already used to touchscreen technology and possibly fed up with poor service and lengthy lines.

The quick adoption of these devices in c-stores, big boxes and restaurants indicates that customers are ready for them.

CHANGING LANDSCAPE
In the end, is this how operational efficiency will affect the convenience store industry, which is quite possibly the industry most at risk from swirling wage increases and other economic pressures?

Other changes in how we do business will eventually become normal. Food prepared in a store will be made to order only. We simply cannot afford to pay people to make grab-and-go, prepared food in the store. Grab-and-go will have to come from a commissary. If a chain is too small to benefit from a commissary, then the opportunity is there for the industry’s wholesale chains to become the industry’s commissaries. That business is there for the taking, if done properly.

Direct-store-delivery companies will be asked to do more deliveries and more stocking of shelves. Both beer and drink coolers will become walk-in caves open to customers, reducing the number of labor hours required for stocking traditional cooler doors. Delivery people will make sure cases are open, marked and accessible to customers.

In a more competitive wholesale market, premium wholesalers will offer a service where merchandisers follow the trucks and put away deliveries for retailers. The fee will be substantially less than the labor costs of the retailers’ own employees.

Instead of three or four registers in a store usually sitting unmanned while one is open with long lines, new front ends will have four self-serve checkouts overseen by one person who will assist and check IDs. Lines will move faster and, who knows, shrink may actually decrease.

History is littered with industries whose employees priced themselves out of jobs or were replaced by technology.

Consider also that labor is an ongoing real expense. Technology is an investment with a return on investment that will depreciate and be amortized. In an era where EBITDA is king, that fact alone is hugely important.

Can anything really replace a smiling face and a cheerful hello?  It’s beginning to look like technology can.

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