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by turnipla 2232 days ago
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.

2 comments

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.