The Future of Retail

In 1974, a pack of Wrigley’s Juicy Fruit chewing gum changed retail forever.

At a Marsh grocery store in Troy, Ohio, it was the first product ever sold via a barcode. And, in the years that followed, it ushered in a wave of efficiency – and profits.

Before the barcode, stock clerks used pricing guns to stick price labels on items. At checkout, cashiers looked at the price stamped on the item and punched it into the cash register.

Restocking was also a slog. Most daily restocking was based on “eyeballing” it. A manager would walk the aisles with a pad of paper, see a hole on the shelf, and write down that they needed to order more of that item.

About once a month, stores would close their doors for an entire day to perform manual inventory counts.

The barcode turned inventory and pricing into a data-driven science.

Checkout costs went down, and by some estimates, speed went up by 40%. Between 1976 and 1980, the number of stores using barcodes grew from 104 to 2,207.

Barcodes also made “just-in-time” manufacturing possible. Companies like Walmart have since mastered the science of holding only what they need, drastically reducing warehouse costs.

As a result, more grocery stores began to generalize. They added pharmacies, electronics, clothing, and flowers.

In 1960, there were only about 33,000 larger-format grocery stores in the United States. Today, there are more than 305,000.

That scale happened because automation technologies like the barcode – and those that followed – squeezed a lot of the inefficiency out of the system. This drove more money into companies’ profits… and shareholders’ pockets.

For instance, a $1,000 stake in Costco’s IPO in 1985 – when the warehouse giant began using digital inventory tracking to undercut traditional retail prices – would be worth roughly $572,000 today. By comparison, the same $1,000 stake would be worth only $34,372 today in the S&P 500.

And if you’d caught the next wave of retail automation with Amazon – the company that used e-commerce to put many brick-and-mortar stores out of business – a $1,000 investment at their 1997 IPO would be worth over $3 million today. By comparison, the same $1,000 stake would be worth only $8,678 today in the S&P 500.

Today, artificial intelligence (AI) is taking efficiency to a whole new level.