Why Robots are Strolling the Aisles of Walmart

Since most people do their grocery shopping at normal hours during the day, they don’t see the overnight stockers that come out late at night and work until the sun comes up. They’re distinguishable by the box knives they carry around in their aprons, the scar tissue all over their hands from being cut by said box knives, and (at least for 24-hour grocery stores) the thrill they get from chasing people down who are stupid enough to try and make a dash out the door with beer they haven’t paid for. The 512,690 people around the nation who stock shelves don’t get paid very much, on average about $12 an hour. Those jobs aren’t being threatened yet, but the notion of night stocking may be coming to an end for other reasons.

In our recent article on Artificial Intelligence and Dividend Growth Investing, we talked about how the only way companies like Walmart (NYSE:WMT) will realize meaningful future growth is by adopting disruptive technologies – like artificial intelligence (AI) – which they’ve committed to spending billions of dollars on. That’s just the tip of the iceberg though when you realize that we now have robotic forklifts and commercial floor cleaning robots. How long will it be until a Walmart store can be fully automated with only some token humans remaining?

Night Stocking to Day Stocking

With almost 12,000 stores, Walmart is the largest private employer in the world with 2.3 million employees. About 1.4 million of these employees work in the United States, and that number is likely to go down before it goes up. There was some interesting information posted on the Walmart corporate blog in September about how they plan to switch those night stockers to daytime stockers. Here’s a quip from the article (our emphasis in bold):

In more than 430 of our Neighborhood Market stores that are already closed overnight, we are moving more associates closer to the customer – shifting overnight stocking hours to the daytime and using technology to make the inventory management process easier.

This means more people on the sales floor to help customers, but it also means a changing role for Walmart associates. In the past, one task that daytime associates occupied their time with was checking stock by scanning the shelves manually. If you think about how massive a typical Walmart store is, you can easily see how laborious a task this would be. This may help explain why taking stock only takes place about a twice a week. If they could only automate the process of stock taking, they could then free up those associates to stock shelves instead – and help customers when approached – increasing the ratios of employees to customers during store hours and improving the customer experience. Then we see last week’s announcement that Walmart is rolling out shelf scanning robots like these:

They’ve already tested the technology in three U.S. states, and now plan to expand it to 50 additional locations. The announcement goes on to say:

This new shelf-scanning technology frees up time for our associates to focus on what they tell us are the most important and exciting parts of working at Walmart – serving customers and selling merchandise.

And stocking shelves apparently.

While this makes us all warm and fuzzy inside thinking about our Walmart dividend checks that arrive in the mail every quarter (and have been increasing every year for 44 years now), it also makes us extremely interested to know who is behind the technology. Let’s take a closer look at the company that’s freeing up Walmart associates everywhere to (say it with us everyone) focus on more value-added activities.

Robots that Take Inventory

Click for company websiteFounded in 2005, San Francisco startup Bossa Nova Robotics has taken in just over $23 million in funding to become “the leading developer of robots designed to help store employees keep track of their shelves”. Other companies playing in this space that we’ve talked about before include Simbe and Fellow Robotics, but Bossa Nova has leapfrogged the lot of them by securing a placement inside the single best retailer you’d ever want to be associated with. Their robots operate with a Level-5 autonomy, at least when it comes to navigating grocery store aisles without knocking over grandma’s walker. They scan shelves in order to help employees with restocking and simultaneously build a catalog which contains the location of every single item in the store.

While the basic use case is pretty straightforward, the data being collected here is immensely valuable and probably what Walmart sees as the real value add in implementing these robots. In order to understand what sort of data the robots collect, we need to look past all the computer vision technology and deep learning algorithms being used. We need to look at the bar code itself, and how bar code technology is being reinvented.

Invisible Barcodes

The ability to quickly and accurately scan a shelf isn’t just confined to Bossa Nova. In our article on 11 Examples of Grocery Store Technology, we looked at a startup called Trax that’s doing some pretty cool things with just software and a basic smartphone. While we were really impressed by Trax, they’ve got nothing on this next technology. If you’ve ever seen a grocery store associate manually scanning bar codes with a “barcode scanner”, you won’t be seeing that anymore if a company called Digimarc (NASDAQ:DMRC) has their way. Check this isht out:

This explains a lot. At first, we were wondering how the robot could put the barcode scanner in its little robotic hands and then reach around everyone in a busy aisle trying to scan all the codes. Turns out it doesn’t need to. While Bossa Nova’s robots autonomously scan store shelves for out-of-stock products, planogram compliance, and correct pricing, this new technology lets them do a whole lot more. In January of this year, Bossa Nova announced a collaboration with Digimarc. The announcement goes on to say:

By reading a Digimarc Barcode, Bossa Nova robots provide retailers with time-sensitive data to help them make real-time, fact-based decisions to prevent product shortages and practice Just-in-Time (JIT) inventory management to increase efficiencies.

When you can scan and relay individual product information to the supplier, that sort of real-time information can prove to be tremendously valuable – or at least that’s what one of our MBAs who took Intro to Supply Chain Management said.

Digimarc has essentially made the traditional barcode obsolete. All that robot has to do is just roll down the middle of each aisle at a leisurely pace and it can read everything with an almost perfect accuracy. Then there’s the statement from Bossa Nova about how they “collect terabytes of data that retailers use to increase on-shelf availability and improve the shopping experience”. Think about all that big data they are generating which can then be aggregated by various dimensions and then fed to some hungry artificial intelligence algorithms. All those insights will be valuable to suppliers and distributors not to mention additional supply chain efficiencies Walmart can identify as a result of those insights.

In June of this year at the 47th Annual Shareholders’ meeting, Walmart’s CEO said: “we will compete with technology but win with people”. It’s probably safe to say that all that winning is going to happen with a lot less than 2.3 million people.

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