Author: David Esparza

Marketing Specialist at Engage3
14 Feb 2019
Falling Prices

Falling Prices Store in Sacramento: A Review

The latest store turning heads in Northern California isn’t known for its purchase-tracking cameras or smart shelf tags—-it’s drawing crowds to its particle board bins. Engage3 visited Falling Prices for a full report on what the discounter has to offer.

Falling Prices, a store based in the Sacramento-area city of Carmichael, serves as a liquidator of Target and Amazon goods. The store is attracting customers through word of mouth and local news coverage, touting a unique pricing model. Though the store is only open 5 days a week, prices fall—as the store name suggests— from $6 to 25 cents throughout the week.

If any goods are left in the store by the end of Saturday, when everything is priced at 25 cents, they are thrown away. Interested shoppers have to balance savings and selection throughout the week before the store is restocked.

First Impressions

When I arrived in the parking lot, the thing I immediately noticed was the sign hanging from the storefront. “Falling Prices” was printed on a white banner held up by four ropes. It was a Thursday, or a $2 day at the store, and there was still a variety of items to search through.

Falling Prices Parking Lot
A full parking lot, largely due to the new Falling Prices store

Outside, one of the windowed walls displayed the price schedule and a list of the product types that the store carried. While standing outside, I noticed a steady stream of customers going in and out of the store, despite it being an ,early afternoon on a weekday.

Falling Prices Sign
An explanation and disclaimer outside of the store, as well as a category list

When I stepped inside, what caught my eye was the furniture in the store. Every piece of furniture, from bins to shelves to the checkout counter, was made from particle board. The shoppers paid no mind to the decor, and instead were busy sifting through the various bins.

The particle board bins were filled to the brim with shelf-stable food products and toys, among other items.  I could see dozens of shoppers wading through the bins, uncovering hidden objects, and placing them in their carts. Here, a four-pack of chocolate almond milk; there, children’s Halloween costumes of every size.

On the far end of the store was a section dedicated to holiday decorations. Wrapping paper, string lights, and home goods made up the bulk of the items here. Immediately next to this area was a bin full of showerhead replacements. Signage was unnecessary, as everyone in the store knew it was $2 Day at Falling Prices.

I continued through the aisles, stopping to search through the bins and pick up odd items. In my cart I carried a collection of bobbleheads, canned sparkling water, a pair of headphones, and a showerhead attachment from an earlier bin.

Showerheads at Falling Prices
Dozens of showerheads, all priced at $2

Despite the appearance of the store, I could feel the excitement of the shoppers around me. The combination of discounted items and a treasure hunt vibe made the store enjoyable to explore.

After taking a few pictures and retracing my steps through the aisles, I was ready to check out. The wait was on the longer side, but this was mainly from the sheer amount of items that customers ahead of me had picked up in the store. Each cart had 20 or more items inside, and I was tempted to go back and pick out a few more items.

I walked away from the store with more than I expected, both in purchases and in opinion. According to a news interview, the owner of the liquidation store is looking to expand to a second location. Bargain hunters may find stores of a similar kind popping up in the area, but competitors will struggle to find a pricing strategy clever enough to outdo Falling Prices.

Local news stations featured Falling Prices during its second week of opening, attracting a larger crowd of shoppers and more items to liquidate. In the video below from the KCRA 3 Facebook page, you can see a larger variety of the products available.

Falling Prices in Carmichael

😱 BARGAIN ALERT: 😱A new store in Carmichael is selling retail items that could otherwise be expensive for $6 and below!Get the details >> https://bit.ly/2sxw7Mm

Posted by KCRA 3 on Wednesday, January 16, 2019

This article is part of the Engage3 Visits series, where we explore concept stores and innovative retail technology. To learn more about our earlier visit to Sam’s Club Now in Dallas, you can read the blog here. For more information on our visit to Amazon 4-Star, the retailer’s customer-curated offering, you can click here.

11 Feb 2019
Winsight Grocery Business

Winsight Grocery Business: Engage3 leads in precision pricing

New visibility illustrates precision pricing on ‘known value items’

In an article detailing the looming tensions in the retail industry, Winsight Grocery Business cites Engage3 as a leader in precision pricing technologies for retailers.

The publication, analyzing the aggressive pricing strategies being put in place by various retailers, points out that there is one common thread in the price war. Winsight writes, “Today, retailers are monitoring prices with exacting precision, right down to the store level.”

This observation was fueled by a blog published by Engage3 co-founder, Tim Ouimet. In the blog cited by Winsight, he clarifies the trend towards dynamic KVIs that are reevaluated much more often than once a year. Technology is playing a larger role in competitive pricing as a result: “The analysis needs to come down to the store level, down to the shopper level, down to the daily level, and have items coming in and out of the KVI list at those lower levels.”

To illustrate the heightening competition in the industry, Winsight references a study published by Engage3 on the “Aldi Effect,” and also notes the growing tension between retailers and the supply chain. The modern retailer faces pressure not only from their competitors, but from suppliers and vendors as well. Tariffs may be a driver behind this pressure.

Pricing battles are becoming the norm, but we may see much more wide-reaching effects from an automated retail industry in the near future. To read the full article by Winsight Grocery Business, you can visit their site here.

28 Jan 2019

26 Million Americans May Have Food Allergies: Retailers React

More adults are developing food allergies, and grocers are struggling to keep up with the needs of this food-sensitive group. In a study published by JAMA Network examining 40,443 individuals, researchers concluded that more than one in ten adults are food-allergic. Of those that were allergic, 45.3 percent were allergic to multiple foods, and nearly half reported developing their allergies as adults.

Health-focused grocery stores have long listed potential allergens on shelf labels, and the FDA requires that the “big eight” allergens be listed on packaging. However, as more adults develop allergies, these warnings may not be sufficient. Allergy-aware consumers are eager for clear labelling and warnings, whether they or a family member are the ones with the allergy. Their concerns are valid and urgent, as the number of people hospitalized from allergic reactions to food increased 350% in the last decade.

Show Trumps Tell

In a 2017 paper published in “Allergy, Asthma & Clinical Immunology,” scientists found that consumers preferred the use of symbols over words for allergen warnings. In the same study, people were asked if they were willing to pay extra for allergen information on all food packages. The results were overwhelming: 75% of respondents said they were willing to pay for this, on top of their monthly grocery bill (NCBI).

Shelf Labels with Gluten-Free warning
Gluten-Free shelf labels at a Texas retailer

“In terms of their willingness to pay, the majority of consistent respondents were willing to pay up to $10 extra per month for groceries for the inclusion of allergen labels on food,” reports the study. In other words, consumers are ready and willing to spend more for ease of shopping and peace of mind.

Beyond this, a significant number of survey-takers were willing to pay in the $10-50 range and even over $50. Consumers are willing to pay for the increased cost of food labelling, and may additionally improve their perception of allergy-conscious retailers.

Shelf Labels

Confusing allergen labelling presents an opportunity for retailers to fill the needs of their shoppers. Color-coded shelf labels and warnings make shopping simple for consumers with allergies and dietary restrictions. For this group of customers (which grows larger every year), clear allergen information contributes to their purchasing decisions.

Guide to in-store dietary labels
Shelf labels for dietary restrictions

Customers buying gluten-free products are even more discerning, as gluten doesn’t fall under the Food Allergen Protection Act in the United States. There is an added layer of difficulty when shopping, as food labelling for gluten is lacking compared to other allergens. The FDA only requires the identification of “ingredients that are — or contain any protein derived from — peanuts, tree nuts, shellfish, milk, eggs, wheat, fish or soybeans” (FDA).”

Retailers like PCC Natural Markets, based in Seattle, have taken the initiative ahead of the FDA by labelling gluten-free products with orange shelf tags. The color-coding system makes it easier for consumers with food sensitivities to navigate their aisles.

Current Methods

Whole Foods search filter
Whole Foods product search feature

Whole Foods recently increased their website functionally to account for allergies and dietary restrictions. Online shoppers can filter through products based on gluten-free, keto-friendly, and other attributes. The Amazon-owned grocer is one of the first major retailers to implement a product search system with dietary restrictions in mind, but other food-focused sites have had similar features for years.

In 2014, Pinterest users could start searching for recipes on the website based on their diet and  to exclude certain ingredients. The update made it easier for allergy-conscious home cooks to find recipes, but shopping for allergen-free products was still a cause for concern. Retailers have been comparatively slow to adopt the technology and filter through ingredient lists on a large scale, but health-forward stores like Whole Foods and Earth Fare are warming up to the idea. The Whole Foods website change will likely lead to future app development that allows consumers to search in-store.

What’s Next

Black and White sesame seeds
Black and white sesame, dangerous for those with the ninth most common food allergy

As allergy concerns continue to rise, consumers will be turning to retailers to help keep track of what is safe to eat and what is not. The increased number of sesame allergies is already affecting the market–the FDA is considering adding sesame, the ninth most common food allergy, to the list of necessary ingredient warnings. In the meantime, retailers have the ability to label these “fringe” allergies on shelves and websites. For the consumer with a sesame allergy, this means having a much safer shopping experience.

Frank Scorpiniti, CEO of Earth Fare, recently talked with Ken Ouimet of Engage3 on food allergies as well as many other topics. In addition to product searching, the two CEOs envision a store with full app integration to help consumers navigate aisles and avoid specific ingredients. To learn more about the future of app integration in retail, you can watch the video here.

26 Jan 2019

Nuro: Kroger’s Self-Driving Delivery Ace

Self-driving vehicles are set to transport more groceries than passengers, if Kroger continues its efforts. With the deployment of automated delivery cars in Scottsdale, Arizona, Kroger is taking steps to make grocery delivery easier than ever. The self-driving R1 vehicles, built by Nuro and working to bring Fry’s Food & Drug products to customers in the trial area, are indicative of a growing trend towards convenient grocery tech.

Fry's Groceries inside a Nuro R1
Fry’s and Nuro partnership

However, most consumers aren’t ready to take the leap of trusting self-driving cars, at least as passengers. In a recent survey by the Brookings Institution, only 21% of the thousands of respondents said they were willing to ride in a self-driving car. Much of the hesitation comes from moral concerns and how the vehicles should react in car crashes, but the technology is still appealing.

Self-Driving Versatility

Cooler-sized Amazon Scout
Amazon Scout robot

By bringing self-driving cars into the grocery space, tech companies can test and demonstrate the vehicles with minimal safety concerns. Consumers also have a chance to interact with this tech on a regular basis and grow to trust the delivery vans. Companies besides Kroger have started to integrate automated vehicles into their supply chain as well, most notably Amazon. The retailer recently deployed delivery via cooler-sized robots in a Seattle neighborhood. According to Amazon, though the carts require human supervision for the first stages of testing, they will eventually be able to deliver items on their own.

Still, the R1 cars in Scottsdale are the most advanced grocery delivery vehicles in use, and it’s easy to see why. Nuro, a company founded by former principal engineers at Google, has gathered an impressive team from tech giants and universities around the world. From the Nuro safety guide, we see a glimpse of the future to come: “Our custom vehicle is engineered to make delivery of everything more accessible — from groceries to pet food, prescription drugs to dry cleaning.” By partnering with a team on the cutting edge of self-driving technology, Kroger has set themselves up to be a leader not only in the grocery industry, but in automation as well.

The Nuro Ecosystem

The electric vans travel at a maximum speed of 25 mph and were originally accompanied by human drivers. The supervising employees traveled behind the Nuro R1s in their own vehicles as a way of monitoring the new technology. Since launch, the company has taken steps toward making the delivery fully autonomous.

What differentiates this kind of delivery from the competition is that the customers in Scottsdale can schedule the Nuro vans for same-day delivery, done through the Kroger app. Once a van arrives at a shopper’s home, they unlock a locker compartment on the vehicle with an in-app code. The speed and ease of delivery sets Kroger up to compete with heavy hitters like Amazon and Instacart, even if the range of the electric vehicles is limited.

The added consumer appeal of having groceries delivered via self-driving car is worth noting, as well. Nuro’s R1 fleet is fully electric, and the company frames their self-driving cars as an environmentally-friendly solution to errands. Their focus is on fewer emissions, safer deliveries, and less traffic congestion. It’s unclear how soon Kroger plans to expand their service with Nuro, but the technology is drawing interest from all over the retail industry.

Opportunities

Though consumers are slow to trust self-driving vehicles, Nuro’s R1 vans and similar delivery services may be able to win them over. The R1 is designed to be self-sacrificing and prioritize human safety on the road. Delivery vehicles are free from the ethical debates that have accompanied self-driving technology in the past.

Kroger has aggressively expanded their services in the past months, starting with their acquisition of U.K.-based Ocado. In November, the retailer announced plans to build an automated warehouse in Cincinnati. In combination with the Nuro’s vehicles, as well as a pilot to pick up Kroger groceries at Walgreens stores, the retailer is building an impressive infrastructure to compete with Amazon.

We recently attended GroceryShop and were able to see future developments in the retail industry. To learn more about retail tech innovations, watch this video of Tim Ouimet discussing the rise of agent-based shopping.

09 Jan 2019
Sam's Club Now

Sam’s Club Now: A Review

sams club now signageIn response to the opening of new Amazon Go stores, Walmart and Sam’s Club are doubling down on its retail technology with an experimental store location in Dallas.  At the end of October, the retailer announced its latest venture: Sam’s Club Now. The shopping experience is similar to Amazon’s cashier-less convenience stores but with a larger focus on customer engagement. Engage3 visited the Dallas store to see what Sam’s Club Now had to offer, and we were surprised by how similar it was to the retailer’s traditional locations.

Compared to the tech-forward Amazon Go stores, Walmart seems to put the human experience first, aided by technology. According to the Sam’s Club press release, “Our associates are key to bringing this experience to life…we’ve known for a long time our associates make the difference, and that won’t change just because shopping preferences evolve.” 

This latest offering by Sam’s Club is about one-fourth the size of its traditional stores and includes electronic shelf labels. The retailer suggested the possibility of camera technology in the future as well. Purchases are done through the Sam’s Club Now app which tracks the items in a customer’s cart. Once the app is downloaded, a shopper can make grocery lists, search for items throughout the store, and use augmented reality features on certain products.

 

The Sam’s Club Now Experience

sams club parking
Sam’s Club Now Parking

On arrival, the first thing we noticed was the curbside pickup spots outside of the store. Apart from smartphone integration, it seems that Sam’s Club is focused on ease and accessibility with this experimental store. 

Once you enter with your club membership, you encounter a large charging kiosk with instructions on how to shop in the store. In order to make any purchases, you would need both a membership and a smartphone capable of downloading the app. There were no cash transactions in the store, so we had to rely on the Sam’s Club Now app. Thankfully, it was easy to set up. After opening the app and creating an account, we were ready to start shopping.

Sam's Club Kiosk
Sam’s Club Now Information and Charging Kiosk help you get started

 

From the entrance, we made our way around the store, noticing the electronic shelf labels that were set up throughout the aisles. It resembled the larger warehouse locations, but with a focus on items that could be easily picked up and scanned. However, products were still displayed and stored in the traditional Sam’s Club warehouse style. The pallets, bulk items, and stacked shelves made it clear that this was a Sam’s Club store.

 

Amazon Go Store and Sam’s Club Now Comparison

We compiled some photos of AmazonGo (left) and Sam’s Club Now (right) to give a side-by-side comparison.

 

Beyond the center store, there were separate areas for dairy, meat, and produce. These refrigerated sections featured a more limited assortment than the retailer’s larger stores, but each area had enough space to add more products down the line.

Sam's Club Departments
Center Store is separate from the refrigerated sections

For checkout, the retailer is relying on its experience with the Scan & Go app introduced two years ago. The app we downloaded allowed us to scan each item in our cart and track its total. When we were ready to check out, the transaction happened in the Sam’s Club Now app. Once it was complete, the app generated an e-receipt which we had to show upon exiting. Associates near the exit scan a QR code generated by the Now app, putting the checkout experience somewhere in the middle of the spectrum from tracking cameras to human cashiers.

 

sams club ereceipt
Showing your e-receipt on your way out

Sam's Club Now Electronic Shelf Labels
Sam’s Club Now Electronic Shelf Labels

We were thoroughly impressed by the app integration and electronic shelf labels, especially with how large the store is compared to an Amazon Go convenience store.

Amazon Go and Sam’s Club Now are operating different store sizes, but the smartphone-focused technology looks to fill the same need for shoppers. Easier navigation in stores and convenient, secure payments are featured in both. While Sam’s Club Now may be a much larger space, this experimental offering shows that retail technology is exploding in popularity. With the recent announcement of Kroger and Microsoft’s partnership, the trend towards smart shopping continues to grow.

To read our review of the Amazon 4 Star Store in Berkeley, California, click here.

 

 

08 Jan 2019
Gartner

Gartner’s Market Guide for Unified Price, Promotion and Markdown Optimization Applications, Update 2018

Now more than ever, pricing based on solid data is necessary for retailers to succeed in this increasingly competitive market. This latest report from Gartner gives an overview of the different levels of pricing automation, and finds that most optimization service providers aren’t keeping up with the needs of retailers.

Gartner Curve
Tiers of Integrated Price Optimization by Gartner

Unlike most vendors in the space, Engage3 has developed a platform capable of bridging the gap between pricing models and algorithmically-driven pricing. Uniquely, Engage3 starts with the cleanest competitive data available, making sure that your optimizations are based on a solid foundation. Check out our cross-channel Competitive Intelligence Platform offering here.

We also combine decades of expertise in retail pricing with strategic insights made possible through data science. Our Competitive Price Response lets you manage your price image goals vis-a-vis your profitability goals. For more information on the theory of Efficient Frontier, the science behind our optimization schemes, watch the video here.

You can find the rest of Gartner’s report and their review of Engage3’s offerings here.

To learn more about how Engage3 leverages big data and machine learning in the UPPMO landscape, request our White Paper here.

17 Dec 2018
Grocery Bill

What’s Driving Up Your Grocery Bill? The Costs Explained.

Food Costs on the Rise

USA Today recently came out with a report about which grocery item costs have risen the most in the last ten years. The increases ranged from 26 percent to 92 percent during the period, and affected a wide variety of products – from shelf-stable to frozen items to fresh produce. The causes identified for the price increases are shortage, demand, and regulation, and each has an impact on your grocery bill.

Shortage

The most drastic price change in the shortage category included oils and fats, particularly peanut butter. Since 2008, the category has seen a 34.9% price increase, and coincides with peanut shortages throughout the U.S. The combination of smaller yields and consumer preferences has caused many families to reconsider buying peanut butter.

According to an investigative report by NPR in 2011, peanut butter manufacturers were paying almost double what they were before the shortage. Farmers were trading in their peanut fields for cotton, and droughts that year had peanuts soaring to astronomical prices. Trader Joe’s even pulled their private label peanut butter from shelves for a short time.

Organic Peanut Butter

On top of this, demand for the pantry staple rose sharply. Tiffany Arthur from the U.S. Department of Agriculture noted in the 2011 article that, “Peanut butter consumption…jumped by 10 percent since 2008. Usually it goes up just one or two percent in a regular year,” she said.  The shift in preference was an economic one. Peanuts are an inexpensive source of protein, and the U.S. recession shifted consumer tastes towards shelf-stable peanut butter. Though farmers have recovered from the shortages since that time, peanut butter hasn’t returned to its pre-shortage price.

Demand

Himalayan Salt

Salt and food seasonings went up by 36 percent, marking a change in the way people are cooking at home. One of the most significant additions to shoppers’ kitchens is Himalayan salt, which has recently grown in popularity. Supermarket shelves today are filled with different brands of this gourmet pink salt.

 

 

Canned VegetablesCanned vegetables have become a staple, partly due to the increase in food-borne illnesses and recalls. The latest Romaine lettuce scare, among other outbreaks, could be contributing to consumers buying more canned goods. Health-conscious shoppers are also buying and cooking more vegetables at home, and prices for canned green beans, corn, peas, and the like have gone up 26.9 percent as a result.

 

Demand for seafood has put pressure on the fish farming industry, as seen by the 41.4 percent increase in shelf-stable seafood prices and 28.7 percent increase for frozen products. Poultry and beef shortages have also contributed to higher fish consumption. On top of this, new diets focusing on healthy fats and meat-centric meals have helped this trend along.

Regulation

Apart from supply and demand, government intervention has played a large part in the increased cost of goods. The number one increase over the last ten years was for cigarettes, nearly doubling their price in the United States. From 2007 to 2017, cigarettes became 92.2% more expensive, primarily due to federal taxes on tobacco products. Research shows that a pack of cigarettes that, on average, sold for $4.91 in 2004 increased to $8.41 ten years later (24/7 Wall St.) The bulk of the cost is due to cigarette taxes like California’s, which raised the cigarette tax by 2 dollars per pack last year.

Cigarette Taxes

We may see more tobacco taxes in the near future because of mounting health concerns. The Campaign for Tobacco-Free Kids, an advocacy group, claims that every 10 percent increase in cigarette prices could lead to as much as a 5 percent decline in cigarette smoking, a statistic that contributed to support for the 2017 California tax. Out of all the grocery items whose prices went up in the last ten years, cigarettes and tobacco products are the most politically charged. Regardless, the costs and taxes show no signs of slowing down. According to the U.S. Bureau of Labor Statistics, prices for cigarettes were 171.55% higher in 2018 versus 2000, resulting in a $8.58 difference in value.

Effects On Your Grocery Bill

Though the cost of groceries has gone up at a higher rate than inflation, there is now a much greater variety of products to choose from. Organic foods have grown in popularity and specialty grocery stores are thriving in the current market. Apart from some items that have increased a dizzying amount such as cigarettes and prescription drugs, prices have remained relatively stable. In addition to all this, the private label trend in recent years has allowed for prices to remain at the level of inflation. For detailed information on private labels and similar categories, you can read our Q1 2018 Pricing Report here.

30 Nov 2018
Tariffs

Pricing in a Post-Tariff Market

Pricing in a Post-Tariff Market

As the markets closed on September 17th, the United States announced another round of tariffs against Chinese products. The tariffs, this time consisting of $200 billion worth of goods, were implemented on the 24th and will increase from 10% to 25% over the coming months. In return, China fired back with a list of 5,207 U.S. imports to be taxed, totaling $60 billion. National retailers like Walmart have responded by voicing concerns to US Trade Representative Robert Lighthizer and addressing potential costs to American consumers (CNN).

What started as a way of bolstering American business has become an all-out trade war between the two countries, with retailers in the crossfire. In such a situation, it can be difficult for affected retailers to implement new strategies quickly and effectively. Thankfully, with some insights into their competition and the national price leader, the most prepared retailers can come out on top.

 

Effects on Price Image

The prime question is this: who is going to pass on the cost to consumers first? Every retailer in the nation is waiting with bated breath for the answer. Private letters from Walmart and Target, among many others, have hinted at increased costs on the horizon, but there is no certainty of the first retailers to implement them (CNBC). The issue is that whoever passes the cost first hurts their price image the most. Items that were not hit by tariffs may still drop in sales because of the price adjustment, making the threat far greater than anticipated.

Still, this is only the beginning. The first retailer experiences the largest effects of the tariffs, but the next retailers to pass on the cost to consumers are also affected. This is where real-time competitive data can make a difference. Imagine that competing Store A raises the cost of a certain tinfoil to $8 in a market, and you are able to monitor that increase. From there, you can raise the price on that same product at your store to a lower price point than Store A. Though both products are affected by the tariff, your price image for tinfoil is maximized because 1) you were not the first in the market to raise the cost and 2) you are selling that product at a lower price than Store A.

 

Sliding Scale Tariffs

What makes these observations more crucial is the nature of the tariffs themselves. The increased cost for the latest affected products will go from 10% to 25% by January 1st, 2019, meaning that these small-scale retail battles will be happening on a weekly or even daily basis. Having up-to-date information on your competitors—both on a local and national scale—will translate to more victories.

The reality is that most retailers will face losses in the coming months because of tariffs, and stores hit especially hard by the increases have already taken steps to address them (USA Today). Accurate and timely competitive data can help to mitigate losses, especially when monitoring the national price leader. This is where store-level pricing is most important, because some price zones will be more heavily affected than others. Competitive data can inform a retailer when their competition is responding to tariff costs and how they can respond effectively. Implementing enterprise-level decisions in stores and going down to the local level can translate to a significant competitive edge in a post-tariff market.

 

A Watchful Eye

With the tariffs increasing to 25% by the end of the year, the market is racing to recover losses—the earlier a retailer can adopt a competitive strategy, the better. Because most retailers operate on low profit margins per item, an increase of even 10% on a product adds up quickly. In the case of a KVI, the increased cost to the retailer could negate any profit on that item, or even come at a loss. Figuring out a competitor’s pricing strategy and how often they update prices makes for valuable insights for decision-making.

At any point in the timeline, a strong price image is necessary to drive traffic to your stores. As we get further into the year, keeping an eye on the local effects of tariffs will be as important as pricing on a national level, and accurate competitive data can make all the difference. With the right insights, the tariffs present a unique opportunity for retailers in the coming months. Click here to learn more about Engage3’s automated price monitoring and register to receive information.

27 Nov 2018
4-star

Amazon 4-Star Review

November 8, 2018 – BERKELEY, Calif.

With the launch of the latest store, Amazon now has three Amazon 4-star retail locations in the United States. The second store opened last week in Lone Tree, Colorado, surprising consumers that expected the Berkeley, California location to open first. Engage3 took a trip to the opening last week to see it in person, and here are some of our observations.

The Amazon 4-star in Berkeley opened its doors on November 5th to a short line of people, but soon the store was full of shoppers and press eager to see the products available. In the weeks leading up to the launch, I had read comments from small businesses in the area expressing their concern, but seeing it in person made it clear that the 4-star experience is not directly competing with these business owners.

Online Goes Offline

Compared to Amazon’s other retail ventures, 4-star is fairly tame; the concept of the store is to offer well-reviewed products from the online site in a brick-and-mortar location. No tracking cameras are set up and no cashier-free checkout is offered, making the store more like a traditional retailer than a cutting-edge convenience store competitor (Business Insider). We were allowed to openly browse the selection of products once inside.

What makes the store unique is how it approaches brick-and-mortar selling. Customer reviews are the basis for which items are sold in the store; if something is for sale, it means a large amount of online customers enjoyed the product. Amazon 4-star is also localized to the surrounding area, displaying a selection of products popular with Berkeley customers. These curated collections are available in the Lone Tree and Manhattan as well, and we will likely see this trend continue as more stores open.

4-star Welcome
The products in stock are all highly rated, pushing for quality over quantity.

4-star Books
Books and recommendations make up a large portion of the store, similar to Amazon Books.

4-star Trending
Items are curated for the surrounding area and based on popular orders.

Aside from the tables lined with trending purchases, the majority of items in the store were hanging on the walls with little separation. As soon as I left the table area, the number of items became overwhelming and difficult to sort through. If found myself looking at the curated collections more than anything else, and the shoppers around me were doing the same.

Compared to looking for gifts on the Amazon site, the experience of looking through seemingly endless shelves felt lacking. The categories were clearly displayed, but I had no interest of going row by row to look for something specific. A large Roomba vacuum exhibit dominated the back half of the store where the electronics were kept, and few customers were venturing into that territory. Shoppers focused on the curated tables and book displays instead. The scene reminded me of another brick-and-mortar bookseller in a condensed format.

To recreate the online shopping experience, recommended and related items appeared next to each other throughout the store. Online reviews and short descriptions accompanied many of the store’s products, but these when afterthoughts when compared to the Amazon Prime integration.

Gifts and Presence

While I went through the store, I noticed that many products have two price points: one for Prime members and one for non-members. The e-ink displays clearly tell a shopper the online rating for the product and how much they are saving with their membership. Every item had an Electronic Shelf Label that the employees could change when necessary.

The labels caught my attention, because they displays the online rating and number of reviews. Amazon was meticulous on this point, making sure every single item in the store had a dynamic label.

Many shoppers and news outlets are comparing the 4-star experience to existing “everything under one roof” retailers. The store has even been called a Millennial Brookstone (Forbes). However, what sets Amazon apart from these retailers is a focus on membership and community interaction.

The Berkeley location seemed more welcoming than Amazon’s other physical stores, especially compared to Amazon Go. Most of the customers in the store were curious families and couples, and it is refreshing to see the online retailer focus on more than their usual tech-savvy demographic.

Overall, the Amazon 4-star favors a traditional layout over revolutionary tech. It shares a target demographic with the retailer’s convenience stores, but offers a more reserved shopping experience. Even though the store was overwhelming at times, it felt warmer and more human than any of Amazon’s previous brick-and-mortar attempts. With its wide product selection, I can see holiday shoppers close to these stores turning to 4-star for their gift-giving.

20 Oct 2018
grocery

A History of the Grocery Cart

“The wonderful thing about food is that everyone uses it, and they only use it once.” – Sylvan Goldman

The grocery cart, now a retail standard, originally looked nothing like it does today. In 1936, Sylvan Goldman and a young mechanic by the name of Fred Young invented the first commercial grocery cart. It was humble at first, but the pair’s invention went on to change the retail world forever.


The First Cart

original grocery cart
The original design was two metal folding chairs stacked on top of one another with wheels at the base of the legs to roll the cart around a supermarket.

In 1934, Goldman bought the grocery chains Piggly Wiggly and Humpty-Dumpty, both based in Oklahoma City. Around this time shoppers were buying new, heavier kinds of products but still using hand baskets to carry them. The increase in canned goods and refrigerated items inspired Goldman to make shopping easier for his customers. He grabbed his handyman Fred Young and a few supplies, and the two spent a night coming up with a prototype of a rolling grocery basket.

At first, Goldman’s plan didn’t succeed. Women compared the cart to a baby stroller and refused to push around the cart while they shopped. “I’ve pushed my last baby buggy,” they told him. Men were offended at the idea that they could not carry all their groceries around the store, and worried that the carts made them seem weak. Still, Goldman persevered.

He hired young women to model the carts and push them around his supermarkets, demonstrating their utility. This strategy immediately converted a few people. He then recruited male and female actors of all ages to advertise his grocery carts, and suddenly his stores were filled with happy shoppers unburdened by their groceries. Goldman began selling his carts to competitors, and quickly turned his former folding chairs into a booming business.


Trouble on the Horizon

Watson's telescoping cart design
Watson’s telescoping cart design

The grocery industry, however, would soon be introduced to a landmark invention: telescoping carts. In Missouri, business owner and machinist Orla Watson came up with a design for a grocery cart that improved upon Goldman’s basket-carriers. The cart allowed for space-saving convenience in supermarkets and parking lots by nesting multiple carts together instead of disassembling them. Watson filed for a patent in 1946, but had his invention contested by Goldman. In the meantime, Goldman produced replicas of the nesting carts to compete against the new challenger. Goldman sold his new carts for three dollars less than Watson’s, using his manufacturing resources to effectively drive his competitor out of the market. Finally, after an extended legal battle, Watson was granted the patent in 1949. Goldman was required to pay him royalties for each nesting cart produced.

The design of the grocery cart would remain the same for decades, but minor additions helped to shape the cart into what it is today. Most notably, carts were outfitted with seats for children beginning in the mid-1950s. These seats cemented the grocery cart as a supermarket necessity.

The shopping cart can be found today in any website with a product to sell, but its history is rooted in a late-night idea and some tinkering in an Oklahoma supermarket. In the next installment of this history of the shopping cart, we’ll be looking at some of the modern additions to grocery cart design, ranging from security devices to complete redesigns and the jump to online shopping. We’ll also look at where cart-less retailers stand in the market today. Click here to subscribe to our newsletter, and stay up-to-date on future videos and publications.