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Nuro expands its service in Houston

First groceries, now prescriptions.

Nuro’s fleet of autonomous vehicles is expanding its footprint in Houston, partnering with CVS to deliver prescriptions in a delivery service that is expected to begin as early as next month.

Mountain View, Calif.-based Nuro’s autonomous fleet made its Houston debut last year when it partnered with Kroger to deliver groceries. It later added Walmart to the list. The delivery vehicles to-date were staffed with operators to monitor the service, but Nuro announced earlier this year its plans to introduce a human-free product, the R2, to Houston roads.

The new prescription delivery service will start with a pilot in three ZIP codes surrounding the CVS pharmacy at 5430 Bissonnet St., Bellaire, according to a news release.

[…]

The service comes at a time when, due to the spread of the coronavirus, people are avoiding physical contact with one another. Especially those with underlying health conditions.

“We are seeing an increased demand for prescription delivery,” said Ryan Rumbarger, senior vice president of Store Operations at CVS Health. “We want to give our customers more choice in how they can quickly access the medications they need when it’s not convenient for them to visit one of our pharmacy locations.”

See here for the background. Nuro began its automated grocery deliveries in March, just as everything was starting to shut down. I’d had a lot of question prior to its launch about how popular that would be versus human-driven deliveries. How many people would prefer having their groceries unloaded and brought into their house – or at least to their front door – for them, versus having to walk out to the car and haul them in themselves? One presumes the pandemic has had some effect on that calculation, though we don’t get any insight into that from the story. Be that as it may, this does seem like a propitious time for this kind of service to debut. I would have been more skeptical of this a few months ago, but not so much now.

Nuro set to roll out

Ready or not, here they come.

Self-driving delivery vehicles that carry no humans will hit Houston roads next month.

Nuro, a San Francisco technology company, is planning to deploy its next-generation autonomous delivery vehicles in Houston after receiving federal approval. The R2, which features climate-controlled compartments and 360-degree cameras, radar and sensors, will carry grocery orders from Kroger and Walmart to customer’s homes, starting in March.

Nuro last year began piloting self-driving Prius cars in Houston, but the delivery vehicles still had a human driver and passenger to oversee the technology. The R2, which weighs about 2,500 pounds and has a maximum speed of 25 miles per hour, will have no human driver or passenger.

[…]

Several grocers, including Kroger, Walmart and H-E-B, are testing self-driving grocery delivery service in Texas. Supermarket chains are investing heavily in new technologies to win over online shoppers. Customers using the autonomous vehicle delivery service will have to pick up their groceries from the vehicle curbside, notified of their arrival via text message. They will use a unique code to pick up their groceries.

See here, here, and here for some background. I am very interested in three aspects of this. One is just how many people will use this service at all, and how that changes people’s grocery shopping habits. You still have to shop, you’re just doing it over an app instead of in person at the store, where your decisions may be affected by the sights and smells of the goods, the samples and specials that are being pushed, whatever other impulses you may have, and what your kids may be nagging you for if they’re with you. I could see this being used more heavily for last-minute and “oops, I forgot I needed this thing and I don’t want to go back to the store” needs than as a full substitute for doing the in-person stuff.

Two, how many people who already use some form of human-delivered groceries will switch to this. The Nuro option will surely be cheaper (and there’s no guilt about tipping), but you have to be home to retrieve the groceries. As I’ve noted before, when we’ve used Whole Foods’ delivery service, we put a cooler on the front porch and have them deliver while we’re at work. That’s a real time and effort-saver for us, and as such it’s worth the extra cost. How tight a delivery window will you get with Nuro? If I know I’m only going to be home or available while I’m at home for a short period of time, do I trust my order will arrive when I need it to? And of course some people will require assistance in bringing their groceries in, and some people will not want to leave their house on days that are cold or scorching hot or rainy to haul bags of groceries inside. How that will break down is not at all clear to me.

Finally, note that the top speed of these things is 25 MPH. That’s nice and safe and very pedestrian-friendly, but it’s also going to mean a lot of aggrieved drivers on Houston’s main roads doing dumb things to get around the Nuro cars. I suspect there will be some number of accidents that aren’t the Nuros’ fault but wouldn’t have happened if they didn’t exist. I can’t wait to see a study about that effect. Also, going back to my second point, how confident will Kroger and Walmart be in the delivery time estimates they give their customers? My guess is their algorithms will have to be tweaked a bit here and there over time. What do you think? Does this option excite you or is it just another tech thing you’ll never use?

Add HEB to the autonomous grocery delivery trend

In San Antonio, at least. Maybe in Houston later if it goes well for them.

Customers near an H-E-B in suburban San Antoni0 can soon get their eggs, fruit and tortillas dropped off by a vehicle with no one at the wheel.

The San Antonio-based company is working with Udelv, an autonomous delivery startup in California, to test self-driving vans on streets around the store starting this fall.

“The world is changing fast and our customers’ expectations are changing,” said Paul Tepfenhart, senior vice president of omnichannel and emerging technologies at Central Market and H-E-B. “We have a growing, thriving online business, and we’re trying to figure out how in the world we’re going to keep up with this emerging demand.”

During the first phase of the pilot, a Udelv employee will drive a van developed by the startup with a H-E-B employee along for the ride to help with deliveries.

As the technology collects and analyzes data and learns the optimal routes, it will eventually take over the maneuvering. However, H-E-B will still have the ability to control the van remotely, Tepfenhart said.

[…]

Kroger, Amazon and other retailers have experimented with autonomous vehicles, and Udelv is also working with Walmart to test its vans at Arizona stores and with XL Parts to try out the technology in Houston.

We know about Kroger. I see that bit at the end about Udelv and Walmart in Houston, but a little googling around did not find anything more on that. As for HEB, much like the Kroger pilot in Houston this is being limited to one store at first, in HEB’s case in Olmos Park, with the program set to begin later in the summer. This is clearly the next frontier for grocery stores, so get ready for a more widespread deployment soon. I still think there will be demand for some old fashioned non-autonomous grocery deliveries, for folks who can’t or don’t want to haul the groceries into their residences themselves. But if there’s enough demand to support this option, I’d guess it will be the bulk of the delivery market in short order. The Current and the Rivard Report have more.

The CFPB is almost ready to roll out payday lending regulations

I can’t wait to see what they come up with.

Whenever governments start thinking about cracking down on small-dollar, high-interest financial products like payday loans and check cashing services, a shrill cry goes up from the businesses that offer them: You’re just going to hurt the poor folks who need the money! What do you want them to do, start bouncing checks? 

A field hearing held by the Consumer Financial Protection Bureau today was no exception. The young agency has been studying how the industry functions for a couple years and is now very close to issuing new rules to govern it. To start setting the scene, CFPB Director Richard Cordray came to Nashville — the locus of intense payday lending activity recently — to release a report and take testimony from the public.

The report, building on a previous white paper, is fairly damning: It makes the case that “short term” loans are usually not short term at all, but more often renewed again and again as consumers dig themselves into deeper sinkholes of debt. Half of all loans, for example, come as part of sequences of 10 or more renewed loans — and in one out of five loans, borrowers end up paying more in fees than the initial amount they borrowed.

[…]

Passing a rate cap, however, is not the only remedy. In fact, it’s not even possible: The CFPB is barred by statute from doing so.* And actually, the Pew Charitable Trusts — which has been tracking payday lending for years — doesn’t even think it’s the best approach.

“The core problem here is this lump-sum payday loan that takes 36 percent of their paycheck,” says Pew’s Nick Bourke, referring to the average $430 loan size. “The policy response now has to be either eliminate that product altogether, or require it to be a more affordable installment loans.”

Bourke favors the latter option: Require lenders to take into account a borrower’s ability to repay the loan over a longer period of time, with monthly payments not to exceed 5 percent of a customer’s income. That, along with other fixes like making sure that fees are assessed across the life of the loan rather than up front, would decrease the likelihood that borrowers would need to take out new loans just to pay off the old ones.

See here for the background. It’s fine by me if the CFPB takes a different approach than usury caps. States and localities can still do that themselves if they wish, with the CFPB’s rules serving as a regulatory floor. It’s a step forward any way you look at it, with the potential to do a lot more if needed.

Now, the installment loan plan wouldn’t leave the industry untouched. When Colorado mandated something similar, Pew found that half of the storefront payday lenders closed up shop. But actual lending didn’t decrease that much, since most people found alternative locations. That illustrates a really important point about the small dollar loan industry: As a Fed study last year showed, barriers to entry have been so low that new shops have flooded the market, scraping by issuing an average of 15 loans per day. They have to charge high interest rates because they have to maintain the high fixed costs of brick and mortar locations — according to Pew, 60 percent of their revenue goes into overhead, and only 16 percent to profit (still quite a healthy margin). If they were forced to consolidate, they could offer safer products and still make tons of money.

Meanwhile, there’s another player in the mix here: Regular banks, which got out of the payday lending business a few months ago in response to guidance from other regulators. With the benefits of diversification and scale, they’re able to offer small-dollar loans at lower rates, and so are better equipped to compete in the market under whatever conditions the CFPB might impose.

Actually, there are two other potential players here as well: Post offices and WalMart stores, both of which could do a lot to streamline this industry by aggressively competing on price. If that happens to drive a lot of small, inefficient players out of the market, too bad for them. These options would unfortunately require an act of Congress to become reality, and the odds of that are vanishingly small. But the point is that those options exist, and if the regs that the CFPB does put forth winds up squeezing a lot of the existing players, the demand will be there for bigger dogs to come in. In most cases that would be bad, but this is the exception. We’ll see how it goes. And whatever does eventually happen, let’s not forget that if we had less poverty, we’d have less demand for payday lending. Consider that yet another argument for raising the minimum wage.

Check this out

Scan while you shop, and other technological advances to get you checked out faster.

In February, San Antonio-based H-E-B invited customers to try out a new scanning “tunnel” for the first time at its McCreless Market location on South New Braunfels Avenue.

The company spent about three years developing the so-called Fast Scan technology, which lets cashiers at the end of the register focus on bagging the already-scanned items, said Jaren Shaw, H-E-B’s vice president of customer service. She said the company is in the “very early stages” of testing the checkout system and will wait to decide on expanding the concept.

“We were introduced to the concept of 360-degree item scanners in Europe a few years ago and have been watching the technology emerge since then,” Shaw said in a statement. “H-E-B took an inclusive approach and developed the checkout fixture based on feedback from customers” and employees.

[…]

Like H-E-B, Wal-Mart cited customer feedback as the catalyst behind the development of its mobile scanning app that it has piloted at more than 200 locations across the U.S.

The Bentonville, Ark.-based retailer offers its Scan & Go service at stores in the Austin, Dallas and Houston areas.

There, shoppers can scan items on the Wal-Mart app, which then transfers the shopping list to one of the store’s self-checkout registers so customers can pay without re-scanning the products.

Wal-Mart plans to roll out the app to other mobile devices in the near future, spokeswoman Hardie said.

“We began testing the feature late last year in two markets, and so far this year, more than half of our customers have come back to use the technology a second time,” she said.

Recently, H-E-B has pulled the self-checkout registers from some stores.

“H-E-B’s top priority in checkout is to offer the best customer service while getting our customers through the line quickly,” spokeswoman Dya Campos said in an email. “We are not completely satisfied with the technology of self-checkout and the satisfaction of our customers as they interface with it.”

Eliminating self-checkout lanes follows a trend in other supermarkets. Wal-Mart is going the other way, with more reliance on self-checkout. That figures, since it means they can pay less on labor, which is the Wal-Mart way. That said, I like the idea of being able to scan purchases with one’s cellphone while shopping, so that when you’re done all you have to do is pay. Someday, that will be handled by your smartphone, too. I think that’s great as an option, but it’s not going to be for everyone, and it will be smart of retailers to give people more than one way to do it. What do you think?

“Ghostboxes”

Most people consider the opening of a big-box retail store in a community to be good news. But what happens when that store closes down?

As the recession takes its toll on big-box retailers, more communities across the country are having to confront not just the eyesore of giant empty stores, but also the loss of jobs and tax revenue that follow.

Many are trying to find creative uses for those near windowless monoliths. In Minnesota, one became a Spam Museum. In Texas, an indoor go-cart track. In Illinois, a church moved into an empty Wal-Mart. The new tenants, however, often generate less revenue for local governments.

And with the recent spate of bankruptcies and store closures, including Circuit City and Linens ‘N Things, more abandoned buildings will be added to a struggling commercial real estate market. There are already hundreds of empty “ghostboxes” around the country.

“There is not a landfill on earth able to handle all the big boxes that we have sitting empty,” says Julia Christensen, author of the book “Big Box Reuse,” who has been studying the trend since 2002.

Some have been transformed into museums, community centers, hospitals or schools. Future tenants, however, can be restricted by the former retail chain.

“Often, they sign leases that prohibit competitors from moving in there, so they’re willing to pay on an empty building for a long time,” said Christensen, also a visiting professor at Oberlin College in Ohio.

The Texas location mentioned is in Round Rock. That building has since been converted to a more standard multi-tenant space, with re-done landscaping; Round Rock’s city manager says they got lucky in how things turned out, though it took a few years to get there. I don’t know what, if anything, municipalities can do to protect themselves in the event one of their big-box stores closes on them. There’s no policy prescription in the story, and given the economic climate right now, it’s not clear that there’s much that could be done. Well, here’s one possibility in the event that demolition is an option, though I don’t know how well that would work in an exurban or even a suburban context. At least it’s something.

Always government handouts

Texans for Public Justice have put together a really good report on government subsidies for WalMart here in Texas that I highly recommend. Stories like this constitute another reason why I tend not to get too bent out of shape over things like the driving deputies. That story is about a couple thousand dollars, and it generates a front page story in the newspaper and a ton of outrage and snark. This one is about millions of dollars being funneled from counties and cities to one of the largest and most profitable businesses in the world, and it will largely be ignored. I confess, I don’t quite understand why that is. Be that as it may, read it and if you live in an area where your tax dollars are going to benefit WalMart’s bottom line, you might consider giving some feedback about that to the elected officials who made it happen.