NEW YORK — Starbucks and Kroger, two retail brands that have been at the forefront of
Both companies are taking drastically different approaches to updating their checkouts, but with the same goal: cut down on the time consumers spend making a payment by reducing the points of friction that are in the store's direct control.
In Starbucks' case, that means tallying every second the barista spends on mundane tasks, and finding a way to automate those chores. With Kroger, that means loading a digital copy of its front end into a computer simulation to spot customer bottlenecks in current and future layouts.
Each company-owned Starbucks store has a 15-year lease and grows 4% to 5% a year, according to Venkat Venkatakrishnan, senior vice president of partner and customer solutions at Starbucks. As business grows, the company has to find a way to serve its customers faster to avoid creating more friction.
It can't do this by streamlining its menu — 60% to 70% of Starbucks beverage orders are customized, and that's something the company wants to encourage, Venkatakrishnan said in a presentation at the National Retail Federation's Big Show this week.
"That means we can't premake, like other food service providers. We can't make it and keep it," Venkatakrishnan said. "The order [and] the clock starts when you walk in the store."
What's brewing at Starbucks
Starbucks has a long history of innovation. It debuted what was arguably the first widely successful retailer mobile wallet in 2009 — five years before Apple Pay launched — built on top of the popular prepaid Starbucks Card.
The Starbucks Card app (which is now merged into the Starbucks app) did more than just shift payments from card to mobile; it removed a key point of friction from the point of sale by allowing customers to
Starbucks was also extremely savvy about what devices its customers used. It brought its app to BlackBerry devices before Android ones because it observed that many of its customers were office workers using their company-issued BlackBerry handsets to pay.
The company's mobile strategy was so successful that its CEO at the time, Howard Schultz, chose to
"As we sit today, processing almost 5 million mobile payments a week, we are so far ahead of any other national retailer with scale," Schultz said in 2014. "That has garnered the attention of the leading tech companies, all of whom are chasing with great fervor who's going to be able to create the standard, de facto, of mobile payments."
But for all of Starbucks' success at the front of the register, it still has work to do behind it, according to Venkatakrishnan.
"We serve 100 million customers every week and every customer is, on average, ordering two items. So there are 200 million items. Every time there is an order that comes through, my barista is going and pushing a button on a [food or beverage] machine," Venkatakrishnan said. "A button press takes four seconds. So we multiply four seconds by 200 million items every week — that is a lot of time somebody is pressing machine buttons."
Those four seconds could be better spent interacting with customers, and Starbucks hasn't worked out quite how to recoup that time, he said.
But it has figured out how to eliminate other drains on the baristas' time.
In the past 12 months, Starbucks worked with Comcast to develop a system to automate temperature checks on its refrigerators. Starbucks has about 15 refrigerators in each store, and needs to check them twice a day to ensure they stay below 40 degrees. This takes 25 minutes per day, multiplied by about 9,500 company-owned stores in the U.S., Venkatakrishnan said.
The average life of a refrigerator in this setting is five years, he added. And since they are big metal boxes, it's hard to get a wireless signal from a sensor placed inside them. And even if the sensors work, they must not get damaged or dislodged when the refrigerator gets restocked.
"It seems very simple, but by the time you deploy it in [over] 9,000 stores in 50 states, it's an enormous effort," Venkatakrishnan said.
But the end result is the store manager can now check all fridge temperatures by glancing at an app. And that frees up 25 minutes of barista time in each store, every day, to focus instead of taking payments and brewing coffee.
What's cooking at Kroger
Kroger's task is a bit different.
The grocery chain is an innovator in its own right, with payment systems such as "Scan, Bag, Go," which allowed shoppers to scan their purchases in the aisles rather than at the checkout counter. Customers still had to pay at a kiosk before leaving (this program was
It also developed its own Kroger Pay app before enabling NFC payments such as Apple Pay and Google Pay. Like Starbucks, Kroger saw a broader audience for its innovations, and teamed with Microsoft in 2019 to test and market a
Kroger's latest undertaking, launched in October 2022, is the use of a "digital twin" store developed with Nvidia, a company best known for developing computer graphics cards.
"A digital twin is an electronic representation of something real," Wesley Rhodes, vice president of technology transformation and research and development at Kroger, said at the NRF Big Show.
It's more than just a virtual map of the store, though that's how it starts. The digital twin then incorporates data Kroger already collects on how people navigate the checkout currently, and predicts how changes to the layout affect traffic flow, queue times and other factors that affect the checkout experience. A new layout may seem efficient but falls apart if customers are constantly bumping into each other.
"We really wanted to get an understanding of that front-end experience [of] how you check out. We want to reduce the labor, we want to reduce the time, and so forth, that it takes to get out of the store," Rhodes said.
In one example, a store with four cashier-staffed lanes and four self-checkout lanes may have one of those cashier lanes unattended due to the ongoing labor shortage. It can use the digital twin model to determine whether converting the unused cashier lane into two self-checkout lanes would improve queue times enough to be worth the trade-off. In this example, the digital twin showed that it would save 27 seconds, reducing average checkout times from 80 seconds to 53 during the labor shortage (Rhodes clarified that this is a hypothetical and not based entirely on real-world data).
While Kroger is currently focused on the payment and checkout experience, it expects to apply the same technology to other departments, such as its bakery, where it can use the digital twin to determine how much bread to bake in a given day. This, in turn, produces data that can be fed into the digital twin of the checkout lanes.
The alternative is costly trial and error, according to Azita Martin, vice president and general manager of artificial intelligence for retail and consumer packaged goods at Nvidia.
"Making changes like that in a real store is expensive and can really have a negative impact," Martin said.
