Stephen Beardsley wants to out-convenience the c-store industry. Beardsley is president of AutoCart LLC (Las Cruces, NM), a company that plans on building a $13 million to $18 million “Drive-Thru Supercenter” that will enable Bubba to shop for groceries, rent movies, get keys made, buy a cake and grab flowers for the wife all in about 25 minuteswithout ever leaving his car. The first AutoCart is planned to open in New Mexico in late 2006 or early 2007.
“At first, we called it the ‘The World’s First Drive-Thru Mall,’ but the name brought about confusion because people thought it was like a JC Penney and it’s not that at all,” Beardsley says. “So we went with the Drive-Thru Supercenter.”
Beardsley hopes his Supercenter will offer products in 17 retail categories, including grocery, pharmacy, banking, DVD rentals, a QSR, office supplies, a copy center, lotter y ticket sales, liquor and a bakery. He intends to “rent” warehouse space to traditional retailers, or rather, their products, such as, hypothetically, Staples office supplies, Albertsons groceries and Blockbuster DVDs.
“For the last three years, we’ve invested a serious amount of time and money in consumer research and we’ve identified the categories that we feel represent the best mix,” Beardsley says. “Groceries are No. 1 because when we asked people, ‘What’s the No. 1 errand you run,’ grocery shopping came out on top. For young people, video and game rental is No. 1.”
Beardsley, an entrepreneur who ran his family’s office supply store for more than a decade, believes the Drive-Thru Supercenter is a natural descendant of the convenience store.
“People have two consumables that, once they spend them, they never get them back: time and money. AutoCart is going to save both,” he says. “The vendors coming in know that the prices in an AutoCart will be lower than prices offered at a traditional location. The average errand takes 13 to 18 minutes to run. So if someone could go to AutoCart and run multiple errands in the same amount of time, they’re going to do it.”
Here’s how it works: A driver enters the AutoCart distribution center and receives a wireless touchscreen that hooks onto the steering wheel. On that screen, the consumer orders product. A $4 million software system then communicates to laborers who pick items off shelves and place them onto a conveyor belt.
“When you hit the button that says, ‘My order is complete,’” Beardsley says, “you’re directed to a pickup lane.”
The products are routed to an accumulation area and packed into a fiber box. The consumer pays with cash, check, credit card or with a Speedpass-type card.
“According to the Wall Street Journal,” Beardsley says, “the average grocery purchase is 21 items (it varies by region). If I’ve ordered my 21 items, and it ranged from various vendors, the wait is 18 minutes or less once I’m at the pickup window. A large screen comes down while I’m waiting so I can watch CNN, FOX or MTV.”
If someone doesn’t want to wait, AutoCart will offer the customer another option.
“If you order ahead from your office before you leave for work, you make the same decisions and go through the same process,” Beardsley says. “You also tell us what time you’re going to be there. We pick your order and store it in an appropriate climate. When you come in, we’ll release the order. You will go to the appropriate lane and your order will be waiting for you. If we get everybody to pre-order, we could handle 7,000 to 12,000 cars per day (not that he expects all his customers to pre-order).”
If AutoCart comes to fruition the way Beardsley envisions it, one of the huge advantages it will offer tenants is savings on overhead and labor. There are no store-fronts and no tenant-hired employees.
“Our warehouse is set up by size, not vendor,” Beardsley says. “We’re trying to get the maximum number of SKUs in the minimum amount of space. Green beans can be next to Ticonderoga No. 2 pencils. We have our people trained to pick extremely fast, and our testing shows a 98% accuracy rate.”
Tenants will pay a monthly fee based on how much space their SKUs take up. Additionally, they pay a fee for labor.
“Rent for a vendor is going to be far less,” Beardsley says. “The grocery store is only charged the labor that it takes to pull items. Here’s the beauty: Right now, when you walk into, say, the bakery, there are three guys standing around who are being paid. In our process, the labor is only paid when they work for you.”
Beardsley thinks a grocery store offering the same products in an AutoCart that it does in a traditional store will save about 95% on labor.
“In a small grocery store, they employ 65 to 70 people,” he says. “But in an AutoCart store, they can use three to five people.”
And because retailers won’t be paying for signage, equipment and labor, Beardsley thinks AutoCart can create an enormous margin increase.
“In the grocery industry, it’s safe to say they’re making a 3% margin,” he says. “We hope to get that to the 16% range.”