WSJ What’s News - How Robots Are Changing the Grocery-Delivery Business

Episode Date: October 10, 2024

P.M. Edition for Oct. 10. WSJ real estate reporter Kate King talks about reinventing grocery delivery with robotics. And WSJ economics reporter Harriet Torry on what the new U.S. inflation data mean for future interest-rate cuts. Plus, Donald Trump says he wants to make car-loan interest payments tax free. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This podcast is brought to you by Wisdom Tree Portfolio Solutions. Elevate your portfolio management with our bespoke strategies, comprehensive reviews, and in-depth collaboration. Our services help you streamline operations, allowing you to dedicate more time to grow your practice. Visit wisdomtree.com backslash portfolio solutions for details. US inflation is cooling, but not quite fast enough. Inflation is a big issue for voters because although the pace of inflation is

slow, that doesn't mean that prices have gone down. And Hurricane Milton appears to have spared Florida of the worst outcomes. Plus, how robots are reshaping the grocery delivery business. It's Thursday, October 10th. I'm Tracy Hunt for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

U.S. inflation is cooling more slowly than expected, new data showed today. According to a report from the Labor Department, the consumer price index rose 2.4 percent from a year earlier, after rising 2.5 percent in August. Core prices, which exclude volatile food and energy items, climbed 3.3 percent over the previous 12 months, slightly hotter than the 3.2% in August. That was also above expectations. Joining us now is WSJ reporter Harriet Tory. Harriet, prices are getting lower, but not as much as we expected.

What does that tell us? That is correct. And it just shows that bringing inflation back down to the Fed's 2% year-over-year target is a bit of a bumpy road. This report is not terrible. It's probably not likely to make the Fed seriously question what it's going to do at its next meeting or anything like that. But it is just another sign that these problems that have been vexing the Fed over the course

of this year, which is bringing down inflation sustainably to 2% is not an easy road. And following up on the Fed, they are actually meeting next month to consider another interest rate cut. How will this affect the Fed's decision? The Fed cut rates by 50 basis points in September. And after the September meeting, a lot of market participants were betting that they would follow through with another 50% basis point cut in November. But that looks to be largely off the table and there are two reasons for that.

One is the jobs report for September was very strong. That came out last week. It showed that hiring really didn't slow down or cool much this summer. And then now the CPI report as well also shows that inflation is just taking its time coming down to 2%. So expectations are for 25 basis point cut in November, but it looks like 50 is really off the table now. What are the factors still driving this inflation? It's largely food. Food was particularly strong in September. So the price

of a lot of food items went up and notably eggs, they had their biggest jump since January 2023. Services like people are continuing to go out and spend, they're spending on transportation, they're spending on rent, they're spending on medical care, and this is having a corresponding effect on prices, even in a month where we did see quite a notable decline in gasoline costs that actually didn't help ultimately to bring down the headline inflation rate by all that much. ultimately to bring down the headline inflation rate by all that much. Many companies have been mentioning inflation in their earnings reports.

Um, what should they be expecting? It doesn't look like there's, you know, a particularly clear path. It's a little bit muddied. And of course we also have an election coming up in November and inflation is a big issue for voters because although the pace of inflation has slowed, that doesn't mean that prices have gone down. You know, things are still a lot more expensive than they were before the pandemic. And that does cause a lot of frustration for households. Harriet Torry is the Wall Street Journal's economics correspondent for the Western US.

Thanks, Harriet. Thank you. After the hotter than expected inflation report that sparked questions about the Fed's next move, U.S. stocks declined today. The S&P 500 fell 0.2 percent and the Dow declined 0.1 percent. The Nasdaq slipped less than 0.1 percent. Hurricane Milton has spared Florida the catastrophic devastation that many feared, but left at least five people dead and more than three million customers without power after it blazed

a tornado-filled path across the state. Today in a news conference, Florida Governor Ron DeSantis said Milton caused serious destruction and damage. What we can say is the storm was significant, but thankfully this was not the worst case scenario. Milton compounded the hardship created by last month's hurricane Helene while avoiding a direct hit in the Tampa Bay region. Milton maintained its strength as it marched through central Florida and pulled away from Florida's East coast early this morning as a category one

storm, still powerful enough to cause destructive storm surge. The White House said President Biden was briefed on initial impacts of the storm and spoke to DeSantis. Biden reiterated that he would provide the state with any additional response and recovery support. Donald Trump today said he wants to make car loan interest payments tax deductible and that he would impose a 100% tariff on Chinese cars built in Mexico and export it to the U.S. He shared his plans aimed at strengthening

the American auto industry at an event before the Detroit Economic Club. He also said he would renegotiate the U.S.-Mexico-Canada agreement to address his concerns about Chinese cars. U.S.-Mexico-Canada agreement to address his concerns about Chinese cars. Chinese car companies don't currently sell vehicles in the U.S., nor do they have immediate plans to import them from Mexico. But fear is mounting in Detroit that they could eventually target American buyers with cheap electric cars that have gained popularity in Europe and other parts of the world. Trump's car loan deduction adds to his continually growing list of tax breaks aimed at key constituencies. Coming up, how robots are changing grocery deliveries and how Elon Musk plans to change

the taxi business with his robo-taxis. That's after the break. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast. Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI. OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wallstreet, oracle.com slash wallstreet.

Discount Grocer Save-A-Lot is open for business in Brooklyn, New York. But instead of a brick and mortar store, it's delivering groceries through online orders and using robots to do it. Save-A-Lot is one of many companies using robotics to make grocery deliveries faster and cheaper for consumers and companies. My colleague, Anthony Bansi, spoke with our real estate reporter, Kate King, about the advantages of this kind of automation and its impact on online grocery shopping. The advantage is definitely saving on labor. This warehouse right now has 10 workers across two shifts doing all the work that a typical

grocery store would require dozens of workers to do. Most of the work is done by the technology, and that's monitored by a technical specialist who's at a remote location. And so that also saves on cost because in other warehouses that use this type of automated technology, you usually have to have a technology specialist on site. And those are high salaries. The robots also save on just time and space. A typical save a lot grocery store is 12,000 square feet and this warehouse is 4,000 square feet. So having this smaller warehouse to store the groceries makes it more cost effective for the company to operate in New York City, which is a very expensive place to get a lease.

How does this kind of program in particular fit within like the larger grocery e-commerce picture? It's hard for retailers to make money from e-commerce no matter what type of retailer they are. But grocery stores already operate on really thin profit margins. So that means there's not really a lot of room to add the additional costs that come up with e-commerce. So a warehouse, people to fulfill the orders, shipping costs, all that stuff eats into the profits that retailers make from e-commerce. How are other big grocers handling this? Online grocery shopping surged during the pandemic,

but it still accounts for only 10% of total grocery sales. Grocery retailers during the pandemic, they offered online shopping to their customers. But as interest in buying your groceries online has increased, grocers have realized, okay, we can't lose money on this. Some are just avoiding it entirely. For example, Trader Joe's says, we're a great shopping experience in store, and we're going to focus our resources on making that experience as good as possible. Other grocers, for example, Wegmans, have partnered with third-party services like Instacart and are just charging higher prices for items they

sell online. So that's how they're making up for the extra cost of delivering. And then there are retailers like Walmart, which are trying to use robots and automation to make the process of fulfilling online orders more cost effective and efficient. That was our reporter Kate King speaking with my colleague Anthony Bansi. And in more robot news, Tesla Chief Executive Elon Musk has for years teased plans for a fully autonomous robo-taxi that can shuttle paying customers around town. And tonight, in a much anticipated event, Tesla is expected to unveil its first driverless car.

It'll also release details of a forthcoming robo-taxi service that would put it in direct competition with Alphabet's Waymo, a self-driving car venture launched more than a decade ago. WSJ's heard on the street columnist Dan Gallagher told our tech news briefing podcast about the challenges of setting up a robo taxi company. Obviously, they'll have to get the necessary approvals. And right now, based on what analysts have looked at, they don't have yet the permits to run that kind of service

At least here in California It could be a multi-year process in fact before Tesla actually has a Actual rebel taxi fleet out that people can hail and use and in that time they have to have a base of users that are Willing to do that now there's been speculation that what they're gonna do is combine it into a broader, almost car sharing type thing where if you own a Tesla, you might make it available on this app, or you write out your car to use for somebody. You can hear more about this in today's episode of our tech news briefing podcast. And finally, South Korean author, Han Kang, was awarded the Nobel Prize for Literature

today. The Swedish Academy in Stockholm, which decides the winners, credited her for her unique awareness of the connections between body and soul, the living and the dead, and for her innovative and experimental style. Hana is the first Asian woman to win the award. And that's what's news for this Thursday afternoon. Today's show was produced by Pierre Bienneme and Anthony Bansi, with supervising producer women to win the award. And that's what's news for this Thursday afternoon. Today's show was produced by Pierre Bienneme and Anthony Bansi with supervising producer

Michael Kosmitis. I'm Tracy Hunt for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast. Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI. OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic.

Take a free test drive of OCI at oracle.com slash wall street, oracle.com slash wall street.