What Schnucks Learned From Robots

Schnuck Markets’ experiment of introducing a robotic co-worker to certain stores has at times been “operationally overwhelming” but ultimately a boon for efficiency and effectiveness in helping the St. Louis-based grocer attack an unseen plague of out-of-stock items and provide a better understanding of the impacts of the COVID sales surge while providing a boost to sales and the in-store experience for customers, employees and contract shoppers, officials told WGB.

Schnucks, which kicked off the test of Simbe Robotics’ Tally units in 2017 and expanded to 16 stores two years ago, this week said it was expanding the rollout again to an additional 46 locations, or more than half of its stores. In an interview, Dave Steck, VP of IT infrastructure development for Schnucks, told WGB that stores with Tally are detecting stockouts up to 14 times better than stores that do so manually, and have reduced out-of-stocks overall by at least 20%, but the value of technology in keeping ahead of a changing world has been “immeasurable” for the relatively small grocer facing competition from tech-enabled giants like Amazon and Walmart.

“In today’s world, you’ve got to innovate or you’re going to die,” Steck said. “Nobody can out-Walmart Walmart. But anything that shows a return on the investment and can help keep you in front of competitors is vital.”

A product of San Francisco’s Simbe Robtoics, Tally is a 6-foot tall rolling robot that traverses store aisles two to three times per day, autonomously capturing inventory for about 35,000 products per store on each trip. Steck said the company began the test using Tally three times a day at stores but found the volume of information it provided was almost too rich for workers to address effectively so most stores now use it twice a day. That’s plenty for most Schnucks’ stores, which over the test period have in turn developed ways to change employee routines to take advantage of the data, he explained.

“It was operationally overwhelming to the store teams to have Tally running three times a day; it collected so much data they could never get ahead of it,” he said. “We don’t want to give store teams actions they can’t address.”

Operationally, it’s changed the roles of workers, specifically at Schnucks, the PI, or product inventory clerks, whose jobs used to begin by manually scanning the stores for inventory holes before pulling product from the back room to fill them. Tally now does that first step for them, and more effectively, Steck said, so these workers now report directly to back rooms to work on an “inventory pull list” autonomously generated for them, saving valuable hours every day. “It’s done a lot for efficiency but also for effectiveness,” Steck noted.

On a chain level, the robots have taught Schnucks a simple but sobering lesson: “Our shelf holding isn’t what it needs to be,” Steck said. Though Steck declined to cite a specific sales figure tied to the better inventory levels at Tally-enabled stores, he said that considerably less levels of out-of-stocks at these units is having an effect, “because as we say, ‘You can’t sell air.’ ”

The ‘Tally Effect’

Frenzied consumer shopping accompanying the onset the coronavirus pandemic in March “decimated” stores, Steck said, “and our perpetual inventory systems got off very quickly.” The dilemma was that the volume surge was so unusual that automated reordering systems built on a normal flow of goods didn’t trigger reorders despite emptied backrooms. Tally also helped to quickly resolve this with more accurate real-time data and set perpetual inventory levels to “zero” for affected items.

Fixing these issues manually, he said, would take weeks. Tally did so overnight.

“There were tens of thousands if not hundreds of thousands of cases of product that probably would’ve delayed if they didn't have the timeliness of our supply chain data to rectify some of those challenges,” said Brad Bogolea, CEO and co-founder of Simbe, in a separate interview.

Inventory and replenishment, Steck is quick to add, was just one benefit of the richer data the robots are producing for Schnucks. Precise location data it made available—within 2 centimeters of the actual item locations—is being applied to wayfinding, providing a useful tool for shoppers to find items in stores using the Schnucks app. That’s an important way the chain can encourage shoppers to use the app, which helps to build loyalty sales, even if the data presented in the app isn’t quite as precise as it could be, as Schnucks has been careful to encourage shoppers to pursue categories and not specific items to encourage shopping decisions.

The same location ability is also a benefit to contract shoppers at Instacart, who can shop for items more effectively and increase fill rates and satisfaction for Schnucks as an option for e-commerce deliveries—another aspect of the business that’s grown wildly and more effectively since the COVID onset.

And even where Tally “misses” an item—this happens infrequently, but can occur where items are placed deeply onto the highest shelve, for example—can provide a lesson in basic merchandising for Schnucks. “If Tally can’t find something,” he said, “what gives us any idea that our customers can?”

Bogolea said the expansion with Schnucks illustrates the benefits technologies can bring to level the playing field between regional grocers and industry leaders, provided they represent a return on investment and support a focus on the consumer.

“I think what's really exciting about this opportunity is seeing how a really remarkable regional grocery chain, that’s very customer-centric. Seeing them leverage this type of technology, has to have a transformational business case and a transformational customer experience for them,” he said. “Organizations at this size do not have the balance sheet of an Amazon or a Walmart, so the value has to be there. And what we call the ‘Tally effect’ has been really transformational around freeing up labor to focus on more meaningful things, and being a big driver for more efficient online grocery transactions.”

The mobile Tally robot traversing aisles can be a striking view for customers at first but Bologea said it was the superior means of checking large stores with big inventories and long aisles like supermarkets vs. other developing technologies ranging from shelf- and ceiling-mounted cameras to drones.

“We believe strongly for large-format stores, the mobile platform is the right solution because the cost of fixed infrastructure is just so complex. And that every time your shelf changes in the environment, these sorts of things are affected,”  Bologea said. Overhead cameras often cannot read barcodes or see as deeply into shelves, he said, while drones are more effective in non-consumer outlets such as warehouses.