Comment by bflesch | Hacker News Reader

Comment by bflesch | Hacker News Reader

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That's the thing I tried to point out in my original comment: They don't embrace automation because it will 100% lower prices in the whole industry.

In the German market, ALDI/LIDL/REWE currently have a healthy oligopoly. Why destroy end user prices and your own margins by automating?

Amazon is not directly attacking their store-focused model because for the billions needed in investment to reach the automation needed for main-stream adaption, they can get way higher margins in other categories (e.g. non-food).

IMHO the perfect supermarket of the future is not food delivery, but a drive-in/pick-up model where you can go 24/7 and where your order is packed 100% by robots. Until we reach this point in terms of technology, the traditional supermarkets will not change due to the above-mentioned oligopoly.

How does this make sense? Automation lowers prices, not margins.

The prices go down because you don’t have to pay people. If it costs the same, you don’t lower prices just because you’re using automation.

Of course automation lowers prices, but only for the customers, for LIDL it will first of all decrease revenues.

Once LIDL's (and other discounters) customers move towards ordering on the internet, they will not queue up at the cashiers' any more and therefore the revenue with LIDL's highest-margin products - the trash & cheap alcohol that is stocked in the cashiers desk waiting area - will evaporate.

It took me a long time to understand this relationship, but while discussing this with a machine learning expert hired by LIDL it suddenly clicked: this is basically why they don't innovate further in terms of offline retail experience.

You’re talking about ecommerce, not automation.

Automation is unrelated to where products are sold.

Automation might just mean one fewer cashier at a regular store.

That's in the long term; in the short term the investment does lower margins.

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