The Lempert Report LIVE
The Lempert Report LIVE
The Backlash Against Self-Checkouts and the Rise of Surge Pricing
Did you know that self-checkouts lead to 16 times more losses for retailers compared to traditional cashiers? Get ready for an eye-opening conversation as we scrutinize the rising backlash against self-checkouts across UK supermarkets, including Booths' decision to remove them altogether due to a deluge of consumer complaints. Join us as we explore a petition urging Tesco to halt the replacement of human cashiers with machines - it's already garnered over 243,000 signatures!
We also lay bare the intriguing world of dynamic pricing, a trend that is rapidly reshaping the retail industry. Tune in to hear how AI is stepping in to personalize prices for individual customers – does it sound like science fiction? Well, it's real and happening right now! Additionally, we celebrate the appointment of Dr. Ruth, the honorary ambassador for loneliness in New York, and salute her transformative work around sex and relationships. To round off, we have a special nugget for holiday lovers, as we announce a unique contest by Truly, which is all set to make one lucky winner's festive season shine brighter than ever. So, sit back, relax, and let us take you on an informative journey through the cutting-edge developments in the retail industry and beyond.
Welcome to the Lempert Report LIVE. The demise of the self-checkout and why the link between fast- food location and health. Surge pricing in the supermarket. On #food not phones. Dr Ruth is just what we need today, is she? And on the bullseye holiday PR promotions are here, from Pop Torts to Hard Seltzers. Let's get started.
Phil:So, Sally, lots of controversy about self-checkouts. We actually did a segment with Inside Edition a few months ago, had over 3,000 comments from viewers about it and basically what we hear is shoppers hate it and they hate it for a bunch of reasons the depersonalization of it, the fact that they'd like to talk to cashiers, as well as some people actually getting arrested because inadvertently they didn't scan a package of Reese's Pieces. So lots of stuff going on. And in fact, in England there's a supermarket chain called Booths and what they've done is they've decided to take self-checkout out. Quoting from their press release. We believe, colleagues, serving customers delivers a better customer experience and therefore we've taken the decision to remove self-checkouts in the majority of our stores. Our customers, they said, have told us this over time that the self-scanned machines that we've gotten in our stores they can be slow, they can be unreliable and they're obviously impersonal. They go on to say that we like to talk to people and we're really proud of that. We're moving largely to a place where our customers are served by people, by human beings.
Phil:In addition, in London, Change. org has put up a petition that now has more than 243,000 signatures, calling for Tesco, the large supermarket giant there to stop the replacement of people by machines. And then just late last week, on Thursday, a new study came out from Grubongo, which is a checkout-free technology provider, and what they found is checkout systems have 16 times more shrink than traditional cash years. The shrink now totals 3.5% of sales. And when you take a look at what they did and it's really fascinating this experience they analyzed over 5,000 retail transactions, comparing the items shoppers picked up during their shopping trip with the transaction data to see what was actually purchased, and what they found is 6.7% of self-checkout transactions had at least some amount of partial shrink or loss, as compared to 0.32% with the cashier. According to FMI, an FMI report that came out earlier this year, self-checkout accounts now for just under 30% of total transactions and that again, fmi says, has a shrink rate of 3.5%. So self-checkouts basically a thing of the past. What do you think?
Sally:I have a lot of thoughts on this particular topic, Phil, but first I want to applaud Booth's because I'm with them. I am with them that I want that personal interaction with a cashier. They also talk about how it can be difficult sometimes for older people to handle the self-checkouts or people with disabilities. But also when you are talking about a store like theirs, where they sell a lot of loose items, like a lot of produce items, some people have a lot of difficulty distinguishing what they're looking up. Is this organic? Is it not organic? Because there can be a big price difference so it's difficult to accurately ring up these items. And then there is.
Sally:I'm not surprised that the Inside Edition episode that you were on got over almost 400,000 views and over 3,000 comments, because a lot of people are concerned about the fact that they may be wrongly accused of shoplifting because they just thought something scanned or forgot to scan something. In fact, yesterday, Phil, I was in my Kroger. I know I talk about going to my Kroger a lot and self-checkout. There are a lot of self-checkout stands there and I had this big bag of dog food underneath at the bottom of the cart. I did ring it up, but immediately when I started to leave the checkout, I was asked to show my receipt, particularly for the dog food, and then, as I was going out of the store, I was stopped by a security guard to once again prove that I had paid for this dog food. Had I just forgot to ring it up because I'm usually kind of in a hurry and scatter-brained at the supermarket then I guess I could have potentially been arrested, and that would have been a really bad shopping trip at Kroger.
Phil:Yes, and you know to your point. Those two incidences where people approached you really put a negative spin on that whole shopping experience. Another survey that came out from Lending Tree finds that 15% of people say they have purposely taken an item during self-checkout and 60% felt remorseful. 44% plan to steal products again from the self-checkout. I mean we've got a real problem. And McKinsey's study found that shrink has risen between 5% and 15% of revenues for ready-to-eat and ready-to-heat products. So people are stealing foods that are already prepared. We haven't seen that before. We've seen razor blades and those expensive items, but I've never seen prepared foods somebody stealing meatloaf and mashed potatoes before and it's a major problem. I mean, at Target, Brian Cornell said that they're going to lose $500 million this year about theft, not only at the self-checkout, but that's everything from the organized crime that's coming into their stores to employee theft, all of that. So what we're doing is we're starting to see more of these retailers putting in these plexiglass doors. It's amazing to me and I think that what we really need to do is basically talk about the fact that people don't like this, and if, in fact, we're going to make that shopping experience better, we've got to get back to cashiers.
Phil:So there's a new study from USC, their Information Science Institute, and what they did is they set out to ascertain whether smartphone mobility basically them tracking your smartphone where you're going could provide a way to measure people's dynamic food environments at scale. And what's so interesting about this is that basically, what they're seeing is a connection between how many fast food restaurants there are to as you're going through your car with your mobile device. I'll get to that in a second. But what they also point out, which I think is really important in the last decade or so, they say over $1 billion has been invested in public health interventions in home food environments.
Phil:This could mean building a grocery store in a food desert. It could be limited access to nutrition or stocking in the corner stores in that neighborhood with fresh food and vegetables, but they go on to say that there's been no measurable impact in increasing people's healthy food purchases or health outcomes for that billion dollars. So what they're attempting to do with this data is really identify what are those impacts that people have, those triggers, if you would, that people have in order to eat less healthy. So basically, they've said that your home neighborhood matters when it comes to risk of diet related disease, as well as your commute, and that the most surprising result, they said, is that mobility data works like an honest signal visits to fast food outlets were a better predictor of individuals obesity and diabetes than their self-reported fast food intake. What do you think Big Brother is watching us through our cell phones?
Sally:That is a whole other topic, but first let's talk about what the upsides to this type of data are.
Sally:As you mentioned, Phil, we've been talking about food deserts now for several years, and incentives have been created by some cities and counties to attract supermarkets or produce markets to open up in these areas where people are lacking access to fresh and healthy food. And, yes, the research is showing that it's had very little impact on people's diets. What was so interesting to me about this particular study is that they took the surveys from the LA Health Department that they conducted covering do you have obesity, do you have diabetes that data, and they used that along with this mobility data and were able to look at, like you said, what they were driving by and what was triggering them to not just in their home neighborhood, but back and forth to work, what fast food outlets were available there and what were the triggers in that. Now, this is interesting research because when we ask people what they're eating, we find a lot of times that they don't remember or they don't want to be honest about their life they're in Paris.
Phil:Everybody's eating healthy foods, yeah.
Sally:Yeah, so this could be really great data for public policies to determine what areas, what neighborhoods where we need to focus, how we need to help people have more access to better food or learn how to develop better diet habits.
Phil:So I'm all for using data properly. Let me start off there. What I am concerned about is that what we find is because of this technology, that, yes, we can be tracked. We can be tracked in a negative way. And you know we've talked about this forever that once we start tracking this data, is there a third party that they can then interfere and tell us a different direction to drive home, so that we're not passing all these food fast fooderies, so that you know we do eat healthier. What is that line? And you know I'm concerned that we don't have enough guardrails in place to protect the average human being from what's going on with our cell phones and when we go. And in talking about that, you know it leads us to our next story about surge pricing. And surge pricing is a thing. It's a thing not only in Europe but here in the US.
Phil:But I want to take a step back and talk about pricing in general. And in fact I had gone to school in Philadelphia, to Drexel, and Drexel's primary department store at that time was Wanamakers. And Actually John Wanamaker, who was a leader in many things, including advertising and promotion, actually revolutionized retail back in 1861 because he was the first one that actually added price tags to the goods that he was selling. Until before that, people would go into the store and either haggle with the shopkeeper over it or the shopkeeper would would look at you and say, hey, you know, here's a sophisticated woman, I'm gonna give her a higher price or a lower price based on what you looked at. They reserve prices, sometimes for their best customers or, you know, sized up, who they could rip off if you would. So Wanamaker changed that with fixed pricing and you know Tim Adams wrote this story about seven years ago in the Guardian in the UK about this and also pointed out that once they had fixed pricing, it was the first time that people came into stores without the obligation, as they would in a restaurant, to buy anything Before the fixed pricing. You know, if you went to a store it was expected you would buy. So that really changed the whole dynamic.
Phil:Let's fast forward to today with dynamic pricing. We we haven't seen it as much in supermarkets, but if you look at Expedia, you look at, you know, going on a train or a plane, that's all dynamic prices. Or shopping on Amazon and a lot of the data points that are there. Custom make a price for you, even Uber you know we've talked about Uber before. When they're busy, you know the the price goes up.
Phil:And the question is that now, as we're getting into the supermarket and the supermarket data is able to collect Information about what we've bought before, the brands that we've bought, are we buying more upscale foods? Is that going to generate the kind of information to allow them to customize your pricing in a positive or in a negative way? And what's spurring this on is, in England, france, japan and some other in Australia, what they have, and especially since the pandemic, they have what's called yellow stickers, and these yellow stickers signify prices that are lower, prices that have been decreased, and now what they're saying is that's going to go away, at least in England, because of this whole technology of dynamic pricing. So is this use of artificial intelligence really cheating and rewarding a whole bunch of customers that aren't even realizing that this is going on behind the scenes?
Sally:Yes, and I'm so glad you shared with me the story about John Wanamaker.
Sally:I really appreciate his philosophy about price tags and him saying that if everyone was equal before God, then everyone would be equal before price.
Sally:Yes, and as you mentioned in the last story, Phil, about data being put to good use, one area where this is put to good use for supermarkets in particular, is if we are using dynamic pricing to lower prices on products that are getting close to their sell-by or expiration date, then what studies are showing, what research is showing, is that these supermarkets are not only wasting less, but they're making more of a profit because they are selling these foods that would end up in the waste bin otherwise. So that is the upside of this data. The downside of this to me is that it opens up people who are vulnerable to discrimination and inequities to be targets. Let's say, phil. Let's say, Phil, that I make a lower income, but I just happen to splurge on something once in a while. Then maybe the data that has been gathered on me shows that something tells a different story, that I can afford higher prices when maybe I can't. So I'm not sure that this is fair.
Phil:I think you're right that it's not fair, that there is discrimination, both on a positive and a negative side of this, and if you take a look again back to the point where we need better governance of this, we need better guardrails for this. Just because the technology exists doesn't mean it's a good thing. For example, Facebook has about 100 data points on every one of their users two, three billion users and that includes the value of your home, your regular outings, your disposable income. Also, there's brokerage firms, financial firms that sell data to retailers, that provide more than 1500 data points on an individual.
Phil:If you recall, a few years ago, Orbitz, the travel site, came under a lot of criticism when they found that users of Apple Macs are prepared to pay 20 to 30% more for hotel rooms than users of other computers. So, based on the kind of computer you use, that's the price that's being served up, and I wish that we were going back to John Wanamaker's situation where every price was the same. And also because of the mobile tracking. When I go into a store stores that are very sophisticated as it relates to technology could then identify that it's me, and when I walk up to the shelf, my phone is talking to their shelf tag and says Phil is here and let's change the price Again. Whether it's positive or negative in my mind doesn't make a difference. The fact that they're targeting prices towards me gets very scary to me.
Sally:Agreed, and all the more reason for us to maybe put our phones down.
Phil:Right, exactly, especially Food Not Phones. I've been talking about Food Not Phones. This week we're going to talk about Dr Ruth. You probably remember Dr Ruth. Haven't heard about her for a long time.
Phil:Dr Ruth really changed TV with her show about sex that had come out I don't know, 30 years ago, maybe 40 years ago over a radio show, then evolved into a TV show. But the good news is that she has now been appointed the honorary ambassador for loneliness in New York by the governor there. It's the first time that this position has been created in the nation. The hope is that it's aiming to help New Yorkers with social isolation associated with physical and mental health issues, including cardiovascular disease, depression, earlier death that, according to the US Centers for Disease Control and Prevention, as we've talked about you know, probably 100 times at this point. Our Surgeon General Murthy, has described the prevalence of loneliness and isolation as a national epidemic. The question is do we think that Dr Ruth can pull this off? Can she help people that are lonely? Can she get the word out there to all generations, and will this have an impact?
Sally:It will be great to see what happens. I absolutely love Dr Ruth. It's hard not to love her. I learned so many great things about her recently, one being that at 10 years old, she was sent away to Switzerland so that she could be safe, because her parents were taken by the Gestapo and her parents did end up dying in the Holocaust. She then became a sniper for the Israeli army at 16 years old and then she moved to New York City and became a therapist, and it's just such an incredible story and she has really, really educated a lot of people in making human connections.
Sally:She's a great person, I think, for the job here. But what's even better is what the governor is doing in New York. Last year signed an executive order to create the state's first ever master plan for aging, to ensure older New Yorkers can live healthy, fulfilling lives while aging with dignity and independence. And, Phil, what these studies are showing us is that it's oftentimes the older people that we are seeing that are living with loneliness and isolation that need someone to reach out to them, to provide community for them, to help them with that human connection, so that they can live more fulfilling lives and ultimately experience less disease and not premature death.
Phil:And what I love about Dr Ruth is that she really is one of these iconic figures that spans the generations. That you might say that Dr Ruth only appeals to older Americans. I don't think so. I think, because of her nature, because of her character and caricature, if you would she really appeals to everybody. So I applaud what New York is doing, and what the governor said is there was a 2020 study by the National Academies of Sciences, engineering and Medicine that found more than one third of adults, to your point, age 45 and older experienced loneliness. One fourth of adults 65 or older are considered socially isolated. So if anybody can do it, Dr Ruth can, and my hope is that it's so successful that you know, hey, we have the Biden administration calling on her to help nationally as well. Wouldn't that be cool? So thanks, ali. On the bull's eye, the Christmas trees are being decorated, most lights are being put up and blow up. Reindeer's are popping up on lawns throughout the nation, so it's no wonder that our brands are starting to get in the act with their holiday promotions.
Phil:Now, the holiday season, especially Christmas, has a rich history intertwined with food-related promotions and traditions that have evolved, frankly, over centuries. Coming back the tradition of holiday feasting dates back to ancient winter solstice celebrations In pre-Christian times. Festivals like Saturnalia in ancient Rome and Yule in the Norse tradition involved lavish meals. With the advent of Christianity, these practices were incorporated into Christmas celebrations. In medieval Europe, Christmas was a grand affair. The wealthy hosted extravagant feasts featuring exotic meats like peacock and boar. These banquets were not just about food, but also about demonstrating their power and their wealth. Meanwhile, the church often provided more modest feasts for the poor. The Victorian era brought significant changes. The publication of Charles Dickens' Christmas Carol back in 1843, which depicted the joyous Christmas feast at the Cratchits home, popularized the idea of Christmas as a time for family gatherings that are centered around a lavish meal. Now, this era also saw the introduction of now traditional foods, including Christmas pudding and minced pies.
Phil:Let's zoom forward to the 20th century, where we see the commercialization of Christmas every day. Companies are beginning to recognize the potential of the holiday season for marketing. During the World Wars, however, food shortages led to more frugal celebrations and emphasized the value of family and togetherness over extravagance. Holiday food promotions are a major part of the season's commercial landscape, from those dreaded pumpkin spice lattes and, for that matter, pumpkin spice everything. These foods herald the start of the season to special Christmas menus and restaurants and make no mistake about it, these promotions are a significant business.
Phil:Pop Tarts and food brands compete to offer the most enticing festive products and promotion. Witness the inaugural 2023 Poptarts Bowl, which airs live on ESPN on December 28. Pop Tarts Agents of Crazy Good is their newest holiday campaign, where animated Pop Tarts are ready to challenge expectations for where it can show up next. The Poptarts Bowl mascot is in real life, a manifestation that runs around the stadium interacting with fans and when the final whistle blows, it transforms into a game-winning snack for the victors. The winning team celebrates by taking a bite of the giant pastry mascot, according to the company. Wonder what the cost of that is?
Phil:A promotion that I really do like is from Truly Hard-Seltzer, whose promotion Keep It Light covers the utility bills for festive holiday light enthusiasts. Through Truly Keep It Light holiday edition contest, one grand prize winner will be rewarded with what the brand calls an epic, energy efficient holiday lighting display upgrade that uses the latest and most state-of-the-art LED and solar technology. The display ensures their house, apartment or living room is the brightest and most efficient on the block through a custom build installed by their team of certified holiday lighting experts who specialize in keeping it light. In addition, 100 fans will score $350, paid to them through Venmo, to cover the cost of their holiday utility bills, their decor and even solar-powered lights to help cut future costs. This is a smart and timely idea. So if, in fact, you want to be into the holiday season, do something that's meaningful versus having a pop-tart running around a sports field. Thanks for joining us. We'll see you back here next week.
Sally:Be sure to visit SupermarketG uru. com for the latest marketing analysis, issues and trends. Also, join us back here next Tuesday at 2:30 pm Eastern for more.