German Supermarket Launches Tiny Store for the Digital Age

As the tiny house of supermarkets, teo is more than a store. It’s a meeting place for people, birds, and bees. It’s where you can shop for more than 1,000 essential items day or night. It’s the old mom-and-pop shop reimagined for the digital age.

Its ultra-cool, tubular design includes a rooftop garden and its unusual shape makes you want to step right in to investigate the grocery tunnel from the inside. Two large round windows allow natural light to permeate the space from the ends while the curved architecture provides sleek design.

German supermarket chain tegut… is piloting teo, a fully digital mini-supermarket concept in Fulda, Germany, and plans to have dozens of digital self-service stores across the country. The chain already comprises 300 supermarkets, but the new stores are meant to fill the gap in villages, industrial parks, university campuses, or other remote areas that don’t offer shopping options.

The mini stores, which require only electricity and Internet access to run, consist of prefabricated modules that are easy to set up on small plots. They can be erected and dismantled quickly to change locations if needed. And multi-functional elements such as a charging station for e-bikes, parcel pick-up points, or shelves for book swaps all help attract new customers.

Exceeding Expectations at tegut…

Project lead Soeren Gatzweiler and customer experience manager Verena Kindinger were not surprised to discover that the peak shopping hours at the pilot shop in Fulda, located 200 meters from the train station, were between 5:00 pm and midnight, and that the tiny store was popular on Sundays and holidays. They also learned that that the average age of shoppers is older than expected.

The pandemic was good for the project, they say. Shoppers of all ages seem especially pleased with the freedom and flexibility offered by a digital shop, and customers in general are impressed by the wide selection of products in such a compact space. Bananas and baked goods are among the bestsellers, while frozen foods like pizza and ice cream are also popular.

While tegut… has a long history of delivering fresh, organic produce, the idea behind the digital stores is to continue that tradition while making it easy for people to shop for essentials at any time. The customer app, called “tegut… teo,” is the key to the shop, providing access through a digital code, scanning products, and paying. Alternatively customers can also use their debit or credit card to enter and to pay for goods at self-checkout terminals.

Digitizing the entire value chain is what makes it sustainable and profitable.

It’s the Technology

“Such a range of products, which includes fresh produce, is not possible without the right technology,” said Ralf Petrausch, who is responsible for innovation and the implementation of SAP’s high-performance forecasting and replenishment system at tegut…. Since customer demands have changed dramatically over the years, automated forecasting helps retailers manage replenishment scenarios to help minimize spoilage and keep shelves stocked throughout the day.

SAP Forecasting and Replenishment helps companies like tegut… reduce surplus stock in distribution centers and stores, reduce manual workloads, and increase transparency in the supply chain. Ultimately, it helps minimize the total cost of ownership.

While the results of the tegut… teo pilot are very encouraging in a culture that was slow to adopt cashless shopping, the surge in popularity of such tiny shops will inevitably lead to the question of where to store reserve stock. To address this need, tegut… is already working on structural optimization of the interior and outlying areas.

In the meantime, they make do with one delivery per day from the tegut… logistics center in Fulda, and personnel restock shelves twice a day.

The important thing is to know what customers want. In a shop that offers 1,000 products versus the 25,000 items available in a regular supermarket, the focus is clearly on basics. As people go about their daily business in their local community, they need a central location where they know they can pick up their five to 10 must-haves. Whether that’s yogurt and muesli for a healthy breakfast or snacks and ice cream for a late night feast, teo has it all — every day and every night.

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This story originally appeared on SAP BrandVoice on Forbes.