Retailing in the Age of Amazon Will Not be Devoid of Human Contact

By now you probably heard or read about Amazon’s pending purchase of Whole Foods Markets, what business analysts are projecting as the tipping point in a retail revolution that may well transform consumer transactions into experiences almost devoid of human interaction. With your smart phone you will be able to circumvent dealing with store personnel, they say, resulting in massive layoffs of workers at the lowest rung of the labor force, many who are unskilled, or elderly, or handicapped, or immigrants with tenuous English language skills, or combinations of the above (https://nyti.ms/2sAPV2D).

Analysts point to the the example of Amazon Go, an experimental store for its Seattle employees. Customers scan their phones upon entering, sensors remotely monitor what they put into their shopping baskets, and exit without the need to stop at a checkout stand and interact with a cashier for their purchases to be charged to their accounts.  

It reminds me of a technology I witnessed back in 1990 at my first EuroShop exhibition of store equipment and technology in Dusseldorf, Germany. A shopping cart haphazardly loaded with products was wheeled through a box the size of a compact refrigerator. Presto, all the items were scanned and ready to be taken home by the customer. So here we are more than a quarter of a century later, nowhere near the promise of yesterday, much like the flying cars we expected to be riding had we believed the future as portrayed in color newspaper inserts of the 1950s and 1960s. Heck, we haven’t even been able to create the flying hover board Marty McFly rode in 1989’s Back to the Future Part II set in 2015. Our earthbound hover boards are fire hazards.

But I digress. The point is, despite Moore’s Law and its corollaries to the rapid adoption of technologies, we are decades away from widespread implementation of Amazon’s futurescan. For several reasons.

Not everyone who enters a store buys something. Not everyone wants their whereabouts and their identities known and cached in some unknown database à la Minority Report. Civil libertarians would have a field day if such technology becomes ubiquitous, implemented without the authorized consent of the public.

Perhaps most socially and culturally relevant, eliminating the human factor in retailing would exacerbate the bifurcation of society already underway. While smart phones are ubiquitous in most neighborhoods, checking accounts and credit/debit cards are not. 

Three times a week I drive into Manhattan along Fifth Avenue, from 142nd Street in Harlem to 98th Street, one of the tonier sections of New York. From 110 Street, where Central Park begins, to 98th Street, Fresh Direct trucks double park as drivers deliver groceries to the wealthy. Above Central Park, over nearly three years I have yet to see a Fresh Direct truck servicing the population.

When visiting a supermarket, I opt for self-scanning in Stop & Shop. Except, not all Stop & Shops in my sphere of buying offer self-scanning. Stores in less desirable neighborhoods do not. Hmmm. I don’t really need to wonder why.

At upscale stores, such as Trader Joe’s, where friendly, knowledgeable service, along with exclusive products, are differentiators, I cannot foresee management abandoning their unique service proposition. 

Stacy Torres, an assistant professor of sociology at the University at Albany, provides real-life examples of why robots replacing humans has its drawbacks as long as we remain social animals: https://nyti.ms/2tVmHbT

The most dynamic growth retailers are deep discounters in food and general merchandise. While Trader Joe’s concentrates on the upscale market, its sister company, Aldi, aims low. It is a German-based no-frills, generic low-priced grocer sweeping across our country. So is Lidl, another German discount grocer with aggressive U.S. expansion plans.

Dollar stores, among them Dollar General and Dollar Tree, though the former is not a true dollar store purveyor as its price points are not restricted to 100 pennies, are the growth vehicles of challenged America. They serve a class of customer that will always be handled by store personnel.

Just imagine going into a Home Depot or Lowe’s. Not that it’s easy to find someone to help you right now, but it is doubtful they will do away with sales floor assistance. Cashiers? Sure, they’ve already eliminated many. But don’t expect to be walking into cavernous buildings barren of staff. The same can be said for electronics stores.

For sure, apparel and department stores are prime candidates for downsized labor costs as long as technology inhibits five-finger discounting from destroying a retailer’s bottom line. Consumer affinity for off-price apparel stores amply demonstrates that help is not necessary on the selling floor. Even Macy’s is now finally embarking on a Backstage off-price concept in an attempt to prolong its corporate lifespan, having let Nordstrom Rack and Saks’ Off Fifth enter the battle with Marshalls, T.J. Maxx and Ross Stores decades ago. 

It has been noted that even as store-based personnel are vanishing the number of warehouse staff is multiplying. Amazon, if not already there, is the number one apparel retailer, with all sales coming from its warehouses or those of its vendors. The reduction of apparel outlets will continue. 

Some retail innovations take years, even decades, to catch on. Thirty-six years ago a retail industry guru named Alton F. Doody decided he had preached enough. During his illustrious career he had counseled such groundbreaking retailers as Walmart and Target, but now he wanted to test an idea for a store of the future: Investment Clothiers. It was a concept where men and women could try on samples of suits, jackets and pants, then leave empty-handed with the knowledge that their selection would be pulled from a warehouse and ready for pickup or delivery the next day. 

Doody chose Cleveland, where I interviewed him, as one of his test markets. Cleveland, after all, was a very corporate city back then. Lots of men and women needed affordable business wear. Alas, the experiment failed.

Doody was decades ahead of his time judging by the positive results enjoyed by Bonobos, a menswear retailer just purchased by Walmart. Begun as an Internet retailer, Bonobos has opened dozens of stores where goods are showcased, customers are measured and fitted, but product is shipped at a later date.

If you’re old enough you might remember a hot concept of the late 1970s and early 1980s—the catalog showroom. Sales from companies like Service Merchandise, Best Products and Luria’s ranked among the top 100 retailers. They displayed hard goods in showrooms, fulfilling customer desires on the spot from extensive behind-the-wall warehouses. 

Okay, sometimes, often actually during high traffic periods, the wait for your purchase to be pulled off the back room shelves was exasperatingly long. And small showrooms meant fewer model options could be offered compared to those available at a traditional discount store. So it was not surprising the catalog showroom concept disappeared when Walmarts and Targets, not to mention Kmarts, appeared at virtually every crossroad. 

What all this means is retailing is among the most evolutionary of enterprises. As The New York Times related in two articles on April 15 (https://nyti.ms/2oJWGwQ and https://nyti.ms/2odz8xo), retailing is evolving faster than perhaps in any previous time. It is too early to seriously consider mass retailing on a robotic scale, but there surely will come a time when a segment, too soon to say how small or large, will accept automated, non human service. I just don’t see its widespread implementation during my transactional lifetime.

Thanksgiving Need Not Be a Celebration of Consumerism

Just two more days until we “celebrate” the most repressive, exploitive, selfish holiday of the year. Yes, I’m talking about Thanksgiving. What was intended to be a commemoration of our national heritage and good fortune to reside in the country most people in the world aspire to live in has turned into a day of consumerism, a day when the retail industry chooses sales over family, when shoppers display crass, even criminal, behavior to snag trinkets and big ticket items before other desperate souls can get their grubby hands on the goods.

My antipathy toward the commercialization of Thanksgiving is long-standing. I railed against holiday store hours while publishing a retail industry magazine. I reasoned it was an anti-family imposition on retail workers and infused meanness and frenzy to shopping that consumers really need not endure. 

Perhaps you saw the article in The New York Times 10 days ago, “Spending Thanksgiving, Retail Stores Are Facing Off Over Closing or Opening On the Holiday” (http://www.nytimes.com/2014/11/15/business/some-retailers-are-promoting-their-decision-to-remain-closed-on-thanksgiving.html?module=Search&mabReward=relbias%3Ar%2C{%221%22%3A%22RI%3A10%22}&_r=0). Apparently, more retailers are coming around to my way of thinking. But the curve is a long one.

Consider the comments from Dan Evans, a spokesman for Nordstrom, a company that stays closed on Thanksgiving. He told The Times, “If our customers really wanted us to open on Thanksgiving, that’s what we’ll do. We used to be closed on the Fourth of July. We used to be closed on New Year’s Day, but customers wanted us to be open on those days, so now we’re open on those days. Our customers guide us. We don’t guide them.”

That last sentence says a lot about leadership in this country and our collective mores. Instead of setting a values standard, corporate America is willing to cede responsibility to a vocal group that, like the Queen song, screams, “I want it now, I want it all.” And I don’t give a damn how it inconveniences your workers. 

At the end of the day, is it really worth fighting over a few doorbusters at the expense of your dignity and the ability of mostly underpaid retail workers to spend quality time with their families? 

Enjoy your turkey. 

Wanted: Honest Customers

Whose customers are more honest, Wal-Mart’s or REI’s? Based on recent announcements from the companies, one might conclude shoppers at the discount store giant are more trustworthy than those of the outdoor gear retailer.

Already the nation’s largest seller of fresh fruit and vegetables, Wal-Mart wants more market share, so it has initiated new sourcing, quality control and employee training strategies for its produce section. The lynchpin of the program is a 100% money-back guarantee. What’s more, customers do not have to bring the offending produce back to the store to claim a refund. Their word will be their bond, or as Wal-Mart explained in its release, “If customers are not completely satisfied with Walmart's produce, they can bring back their receipt for a full refund. No questions asked and no need to bring back the produce.” 

No doubt Wal-Mart will keep tabs on customers to make sure the same ones are not abusing the privilege. Easy enough to do if the customer paid with a credit card. But many of the retailer’s patrons pay in cash, so it might be hard to track all who make returns, especially if there are multiple Wal-Marts in the local market. Still, it’s nice to see corporate America extending trust to the average citizen.

Seattle-based REI, on the other hand, has shelved its long-standing policy of accepting returns till the end of time. Because of a few bad apples taking advantage of the never-ending return policy, REI has put a one year limit on the practice, unless products prove to be defective. Outlet merchandise bought on REI.com will be returnable for just 30 days. 

In explaining the policy change to The Seattle Times, Senior Vice President of Retail Tim Spangler said, “What we found is that (a) small group of folks who are probably extending the policy beyond its intent, is getting bigger. And It’s not a sustainable thing long-term if we want to maintain this fantastic policy.” 

The Times also reported, “To reduce dubious returns, REI also has stopped accepting returns without question and is more insistent that there be proof of purchase. Some REI stores had been known to give store credit, if not money-back refunds, to customers without a receipt.” 

The newspaper noted that REI, which officially stands for Recreational Equipment Inc., had earned two dubious nicknames for its liberal return policy: “Rental Equipment Inc” and “Return Everything Inc.”

REI has reason to be more cautious. According to a report in The Wall Street Journal, the National Retail Federation “noted a newer trend of stolen goods being returned to stores without receipts for store credit in the form of a gift card. That gift card is then sold online or elsewhere for cash. The NRF's (ninth annual organized retail crime) survey reported that 77.8% of respondents had experienced some form of this gift card scheme.”

Accepting returns without making customers feel like criminals is a delicate balancing act. Reputations are burnished or tarnished at the customer service desk. Stories, some no doubt apocryphal, abound about retailers taking back suspect goods including some they didn’t even sell. Nordstrom has always been held up as the gold standard. It reputedly took back a set of four tires even though it never sold tires. Another of its legendary returns was of a wedding dress said by the mother of the bride never to have been worn by her jilted-at-the-altar daughter. Yet when the store staff took the dress out of the box after the customer left grains of rice came out as well. And then there was the story of the widow who returned a suit bought by her recently deceased husband. Store staff noticed the suit had an unusual odor. Turned out to be from embalming fluid. 

One of my favorite retailers is Costco because of its liberal return policy. But even Costco had to make accommodations because some customers were taking advantage. They would return consumer electronics items when newer models came out. So Costco, as did many other retailers, imposed a 90-day window for returns of electronics. Some, like Best Buy, even put a restocking fee in place.

One of my favorite examples of a rigid return policy gone wrong happened before my very eyes in a Child World toy store some 30 years ago. A distraught father was trying to return a plastic kiddy pool, only to be repeatedly told the store did not carry that brand. The customer screamed and screamed, insisting he bought the pool there, that he’d never shop there again if he didn’t get satisfaction. The store manager stuck to his guns. It was embarrassing to all who witnessed the extended exchange. 

No doubt the customer had conflated Child World with the Toys “R” Us barely a mile away. When I related the incident to Charles Lazarus, the founder and CEO of Toys “R” Us, he said his company’s policy was to take back any toy, even if it was not stocked by his chain. The overall customer experience was most important. The value of a customer telling his or her friends and relatives about a good experience, even one where they snookered the retailer, provided more long-term positive results than the negative publicity that same customer would generate if he or she went away angry. 

A few years later, Child World, the second largest toy store retail chain, closed down. Toys “R” Us is still in business.