Hacker News Reader

Comment by pram | Hacker News Reader

I’ve been doing “big data” in the retail space for almost a decade now and it’s pretty clear to me how it affects the bottom line. It really can be as simple as “we need more of this milk” and “the spicy queso is very popular”

View on HN

I'm at least somewhat skeptical. The face of the last data warehousing fad in the 90s was around things like optimizing retail through things like putting diapers and beer [1] close together. But pretty much, even when there was some correlation, stores never did much about it.

[1] https://canworksmart.com/diapers-beer-retail-predictive-anal...

I can imagine that one reason is that you also need customers to be able to find things, which is difficult when not sorted into some meaningful categories. That said, I think at the Target near me the beer and the diapers are relatively close.

Actually you want customers to not be able to find things, so they have to wander around, and 'find' other things (in large displays for example) that you want them to buy. If the beer and diapers are always together then they won't discover the new high-margin sausage rolls. So what's better for the customer from a correlated data perspective may not be better for the business from a maximizing profit perspective.

Taken to the extreme though, I'm going to be taking up employee time asking where something is and eventually stop shopping at a store if it's too frustrating.

a) most people don't take things to extremes; b) employee time is not a problem, as they're there anyway; c) if all grocery stores act like this (and they do), you have to keep shopping there anyway (and they know this).

So what will actually happen, with you and me and everyone else, is that we'll grumble about how they moved the cheese again, we'll wander around the store until we find it, and we'll be exposed to some more products and implicit advertising in our search, and we'll forget about it as soon as we exit the store. Over time the store will increase its profits 1.3%, and the competing store "where everything is always in the same place as last time" struggles because their prices aren't maximally optimized with the same grocery store software everyone else uses.

Eh. I have several grocery stores--and grocery departments--that I more or less favor for various reasons depending on what I'm buying. If one of them makes my life less pleasant whether because they're always moving stuff around, they overly rely on self-service, they tend to be crowded, or whatever--I'll probably go elsewhere. I do consider pricing but I don't really comparison shop so that only loosely factors in.

> you want customers to not be able to find things, so they have to wander around, and 'find' other thing

This seems to be the Loblaw/NoFrills model in Toronto. They relocate products with alarming frequency.

Want milk? That's in the dairy section. Want organic milk? That's in the health food section at the opposite end of the aircraft hangar sized store. Nuts? Either in the snack foods, health foods, or baking ingredients depending on unknown critera - one literally has to check all the places.

To be clear, the linked article debunks the whole thing. The correlationa were largely apocryphal, spurious, or useless.

That's not quite what the article says. Although it doesn't explicitly say so, there was apparently a (possibly valid) correlation. But Osco didn't act on it, instead removing a bunch of slow-moving SKUs instead.

Though that also makes the point that making things easier for customers to find is probably more important than any minor co-purchase optimizations.

I think there have been more recent fads. (If fad is the word for it.) There was the story about Walmart stocking up on Pop-Tarts during hurricane season that was in the news fifteen or twenty years ago.

There was the original "Big Data" and Hadoop, Chris Anderson's "The End of Theory" and Clive Humby coining "data is the new oil" around the same time. Probably others.

This is funny to me. In the old days, this was called: cost accounting to determine the profit of any particular item you sell and market analysis to see how many of which things your customers are likely to buy. Join the two results to optimize your profits. It's not rocket (/data) science.

Actually neither of these is particularly easy to do for unorganized companies.

I'll really would like that the reatailer prepared for me my montlhy basket based on my previous and recurrent consumption.

And if stores had meals pre-shopped in bags you could just remove unwanted items from. Grocery stores seem ripe for simple optimizations even without big data

Grocery stores would be better served by not being giant chains with optimization problems, at least in North America.

Better zoning laws that allow mixed-use zoning would enable more, smaller grocers embedded in neighbourhoods. Personalized service would be much easier on a smaller scale. And you wouldn't have to travel far to pick it up.

This is a recipe for significantly higher grocery prices which is the exact opposite of what you want for one of the staples of stability: food.

I’d beg to differ. The current system optimizes for large grocery trips for bulk items that require long shelf stability.

Most people would agree that produce should make up the bulk of ones diet, yet it’s pretty plain to see that the footprint of the produce section doesn’t scale with the size of the store.

Produce is something best shopped for frequently, and is something I’d personally be willing to pay a higher upfront cost for the convenience of closer smaller stores where I can get in and out quickly. Because while we may pay a lower sticker price, the elephant in the room with the massive hidden cost that we pay but rarely account for: food waste.

You're also likely someone with a higher than average income, and general closeness to potential store locations. If you were poorer, or had to drive farther it's less likely you'd use those as optimization points.

Also fresh food is great for the diet and health, but when some even occurs that interrupts things like distribution of fuel, food, or power just having it around may lead you to getting hungry really quickly. This is something you have to look at on both a personal and national level. Food security can quickly lead to destabilization.

Conversely buying in bulk implies having enough room in your house to store food items.

It’s not like the typical Costco shopper is low income. Our grocery system is optimized for moderately well to do suburbanites with SUVs and large houses. Low income people tend to live in “food deserts”.

Consider the experience of shopping for food in America if you’re dependent on public transit, which a much larger proportion of the low income population are. Requiring a car to get groceries is extremely expensive.

Oh come on.

Fresh food without preservatives lasts at least a week.

You realize that a lot of people shop less frequently than that right?

Aside from specialty shops, I'm not sure there's any great virtue in smaller markets, often with higher prices and less selection, other than there are probably more of them you can walk to if you live in a denser urban area. And my observation at least in the UK is that most of those smaller grocers are giant chains like Tesco and Sainsbury.

Not smaller markets, just operating under a large one in a more decentralized fashion. Small grocers sourcing and selling local-first will of course be more responsive to local needs and more resilient against large supply chain shocks. Not to mention cut out a lot of traffic on trucking and shipping lanes.

"... this is just the rise of this new general store, and how all specialty stores look the same now, so none of them are actually really that special."

https://www.marketplace.org/2023/02/02/why-are-boutiques-and...

Being the giant chain is the optimization. Grocery stores have razor thin margins; operating at scale is the only way to keep prices reasonable.

This is also one of the few domains where people are very price sensitive, and they regularly see and think about costs. I couldn't tell you what my local automotive guy charges for an oil change, but I can absolutely tell you the price of flour and cheese.

No one is going to pay $10 for a single apple, and if you raise prices hard enough people are going to start gardening.

It's ironic that low food prices are not for ensuring equitable access to food.

Update: Go buy an apple in a food desert and I guarantee that if they have one you will pay more than a dollar for one. Grocery chains are optimized for maximizing profit not distribution.

A more expensive local grocer will not make that apple cheaper.

And not having to own a car and live in an expensive neighborhood might actually make it reasonably affordable.

It's funny that we are always chasing after 'personalization', which is of course only a problem created by industrialization and massive scale.

Most people don't want to pay extra for personally-provided grocery service.

If the giant chain (or a network of smaller grocers) had good personalization, it would make the stocking the small local pickup point more practical.

I live in a diverse multicultural community. A small local grocer can't stock everything my neighbors and I want.

Most online grocers do this.

It's a great way to make sure people never try new things.

How so? It could include new recommendws things.

My household would really like it if Amazon foods merely provide the same list we bought form last time to adjust for this delivery — we absolutely hate having to start from scratch every time (and that's not even mentioning their issues with substitution).

Heck, the local wine & beer outlet lets me just open up the last purchase list and buy that again (and adjust the quantities if desired).

WTF is wrong when a local store can get it so right, yet Amazon, with it's emphasis on "always be hungry like a startup", so totally forks it up?

Substitution was the real issue I had with online grocery delivery when I last used it 15 years ago. Things would get substituted that I didn't really think were equivalent and essential ingredients for some meal would be left off the order.

It was "OK" at the time; I was on crutches and could go to the store but not easily do a full grocery shopping. But I haven't done online grocery since.

15 years is a long time in tech

From what I hear from people, "tech" doesn't really solve the substitution or out of stock problem.

I also mostly would just as soon go to the store.

I believe you, because the store is always out of the most popular products, and nobody ever seems to figure out that they could simply shift production towards the more popular products and make more money?

You sure about that?

On a local basis I can go to two of the same store a few miles apart and one will out of products X, Y, and Z, but the other store may be out of X, T, and R. Localized buying trends can have significant differences.

Also, there may be many other effects here. For example, if a popular product is actually popular and the pipeline to make the product is months long, well there's going to be outages. Shifting production generally isn't easy and trends pass quickly.

In addition, perceived popularity can be used to manipulate consumer pricing. "X is always out. Oh look X is in stock now, I should buy it for 50% more"

Yes, I am sure. I go to grocery stores in multiple locations and they are all much more likely to be out of a particular version of a product than other versions. It has been this way for years. They do not price this version differently than the other versions. And this is true for multiple products even in different kinds of stores.

I think some suppliers just aren't that good at adapting supply to demand.

> for years

prior to covid? last few years have not been representative about how well the supply chain works over the past 50 years.

Yep, it's been a thing in grocery stores for as long as I can remember. Maybe a little worse now.

Reply on news.ycombinator.com