Running supermarket checkout with a single queue

Way back in the early days of this blog, Gady had a post about queuing innovations at Hannaford Supermarkets, a regional chain of markets serving the Northeast. One of things Gady mentioned was that they were experimenting with having a single line for those waiting to checkout. Having now visited Hannaford’s relatively new store in West Lebanon, NH, I can show you what that looks like:

As Gad’s original post notes, a single checkout line is not a completely new idea for supermarkets. Indeed, Wholefoods’ Columbus Circle store has gotten all sorts of press for its single queue system. I would argue that this is a little bit different. At Wholefoods, a single queue is as much about packing many, many registers into a tight space as it is about efficiently moving customers through. That’s not really true in West Lebanon; this is pretty much your standard, large, suburban American grocery store. In West Leb, a single queue is — as the signs suggest — all about reducing customer waiting times.

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Bagging process design

So what is it worth to reduce the use of bags at your local grocery store? OK, so for one store, it may not be worth too much, but if you have over 1,000 stores like Supervalu does, saving a few bags here and there can be real money. Thus the chain has instituted a “rigorous” program to reduce the number of bags used (At Supervalu, Cost Cuts Are in the Bag, Wall St Journal, Mar 23).

The new rules are part of a training program that Supervalu Inc. believes will save it millions of dollars a year by putting more items in each bag or skipping the bag altogether. Plastic bags cost about two cents apiece and paper bags cost five. The Eden Prairie, Minn., operator of Albertsons, Acme Markets and Jewel-Osco stores uses more than 1.5 billion plastic and paper bags a year at about 1,100 stores, not counting its Save-A-Lot discount stores, where customers bring or pay for their own bags. …

Some of the Supervalu guidelines reinforce familiar bagging rules, such as starting the packing at the corners and moving from the outside in. But others break with common practices: No double-bagging. No bags for large items or items with handles, like one-gallon orange-juice containers. Never ask, “Paper or plastic?”—just use plastic bags. The rules can be broken, but only on request. …

The chain averages three to five items a bag, whether the bag is paper or plastic, and sells about 10 billion items annually. Since mid-2009, it has boosted its average items per bag about 5%, saving $4 million to $6 million annually even as prices for plastic bags have climbed, Mr. Siemienas says.

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Why do heritage turkeys cost so much?

It’s Thanksgiving so it is time to revisit the question of why heritage birds cost so much more than your standard supermarket bird. This year’s lesson in turkey economics comes from The Atlantic with a post by Bill Niman and Nicolette Hahn Niman of Niman Ranch fame (Heritage Turkeys: Worth the Cost?, Nov 18). Like good locavores, they emphasize that the industrial methods of factory farms result in birds that are in a sense under-priced. Yes, they are cheap on the supermarket shelf, but that doesn’t reflect the full cost they impose on the environment.

But the reason heritage cost so much is largely operational.

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Tracking where food comes from

What is it worth to have visibility in a supply chain? When the consequence of screw ups can be catastrophic and deadly (think pharmaceuticals), it is worth tracking everything from raw materials through to consumption. So why are agricultural products any different? If anything, contaminated spinach or eggs can affect more people than any one prescription drug problem. Why then not trace produce and farm products the same way drug makers follow their products?

The Los Angeles Times reports that a number of tech firms are working with large growers to make such detailed tracking possible (Amid mounting safety concerns, technology helps track food from farm to table, Oct 3).

In general, such trace-back systems work in a way that’s similar to how Federal Express tracks its packages. On the farm, animals and crop sections are given a “smart” label with a unique identifying number. The label is then attached to a bin, crate or container used for transport. Workers then can use a hand-held computer or smart phone to scan the labels and record key information, such as date and time, location, workplace temperature and which truck hauled the food away. The information is usually uploaded to a central online database, where it is stored and can be accessed via the Web. Each time the food moves or is handled by someone new, the data can be updated and recorded.

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Operations strategy & Trader Joe’s

At one point or another, we have mentioned nearly every major food retailer in the US. One that has thus far escaped mention is Trader Joe’s. According to an article in Fortune, that’s how the company likes it (Inside the secret world of Trader Joe’s, Aug 23). The company is privately held and generally prefers not to talk about itself. I guess that makes writing an article on the firm a little harder than usual. The story that emerges, however, is pretty interesting. It depicts a firm that has tied its operations very closely to its strategy.

For those unfamiliar with Trader Joe’s, here is how Stephen Dubner (the New York Time’s resident Freakeconomist) put it:

[T]he world is divided into three sets of people.

1. Those who have never been to a Trader Joe’s, and perhaps have never heard of it.

2. Those who love Trader Joe’s more than they love their own families.

3. Those who love Trader Joe’s more than they love their own families and are incensed that there isn’t one nearby.

So Trader Joe’s is more than just a grocery store. It is something special that inspires loyalty. What is interesting about that is that as grocery stores go, it is pretty limited. As the article notes, a typical family cannot do all its shopping here even if wanted to. Being a loyal Trader Joe’s shopper means having to go to some other store as well. The question then is how does the firm offer enough value to justify coming in on a regular basis? First, somewhat counterintuitively, it limits its selection:

Trader Joe’s has a deliberately scaled-down strategy: It is opening just five more locations this year. The company selects relatively small stores with a carefully curated selection of items. (Typical grocery stores can carry 50,000 stock-keeping units, or SKUs; Trader Joe’s sells about 4,000 SKUs, and about 80% of the stock bears the Trader Joe’s brand.) The result: Its stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods’. The company has no debt and funds all growth from its own coffers.

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The logistics of India’s food

Here is an interesting supply chain challenge. India has a billion mouths to feed and a large agriculture sector but the process of getting food from field to consumer is hopelessly inefficient.

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Internet groceries redux

If you have been reading this blog for a while, you might have concluded that we have a thing for grocery stores. In some ways it’s an occupational hazard. It is a low-margin, high-volume business that touches millions of people. Consequently, it is a setting where even small operational innovations have big payoffs. Thus an article on Ocado in the current Economist caught my eye (Keep on trucking, Jul 15). Ocado, for those who missed Gady’s earlier post on the firm, is a British online grocer that is on the verge of going public. They have built a honking huge automated warehouse outside of London that features 10 miles of conveyor belts (according to the article)  and sells as much as 25 supermarkets do. Unlike 25 brick-and-mortar stores, however, Ocado doesn’t yet make money.

Online grocers that lose money are about as unusual as Cubs’ seasons that disappoint. What makes the article interesting are some of the numbers it gives about why they lose money:

Grocers, on the other hand, sell perishable products that have to be kept frozen or cool and that must also be delivered at specific times. To make matters worse, online grocery shoppers tend to want their food delivered at the beginning or end of the week, leading to a crush of orders.

All this is expensive. Some analysts reckon it costs £20-25 to deliver groceries to a British house. In large parts of America, where population densities are lower, it would be much costlier. And although customers currently bear the expense of going to stores themselves, they are reluctant to pay for their shopping to be brought to them instead. Nielsen, a research firm, found that the two most common reasons Americans gave for not buying groceries online were delivery costs and the desire not to have to wait for a delivery.

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Shopping for groceries in England from France

There appears to be no end to European innovation in grocery shopping as this BBC video makes clear:

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Grocery stores, supply chains & the weather

How much does weather affect supermarket sales?  Apparently, quite a bit.  At least enough to justify British retailer Sainsbury’s investing in supply chain improvements to allow faster reaction to unexpected changes in the weather (Sainsbury’s tests new technology to trim food waste, Jun 11, BusinessGreen.com).

Sainsbury’s has invested in new technology that will allow the retailer to make real-time supply chain decisions aimed at reducing food waste caused by unexpected weather.Weather plays a big role in consumer buying patterns, according to the company, such as driving purchases of comfort fare when it is cold or lighter foods when it is warm.

Unpredictable weather, however, wreaks havoc on the plans of its company buyers, often resulting in perishable food left languishing on shelves, uneaten. There were six periods of unexpected weather last year, Sainsbury’s said. The supply chain technology will give Sainsbury’s the ability to make real-time decisions on where to send food from its warehouses, rather than changing course overnight. It has the potential to reduce food waste by 15 per cent during unexpected weather, while also reducing its carbon footprint by an estimated 1,400 tonnes.

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More supermarket innovation

So it turns out that craps games are not the only things that float:

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