Automation is leading the way to retail success
by Mark Thomson. The increasingly exposed vulnerabilities across retail ecosystems is driving action and change.Wednesday, 06 Jan 2021
by Mark Thomson. COVID-19 created a slew of unprecedented challenges for retailers in 2020. While these are numerous, the top three implications due to various shifts in shopper behaviour, are increased online shopping demand; the closure and reopening of non-essential stores; and a reduced frequency in shopping, combined with increased basket size when consumers do shop. The collective impact of these scenarios has acted as a catalyst to rapidly advance key retail technology projects; and the increasingly exposed vulnerabilities across retail ecosystems is driving action and change. Retailers are being forced to re-think their stores’ purpose and ensure they integrate physical and digital aspects into a total retail experience.
To truly benefit from digital transformation, retailers must start with a strong operating model and vision for their operations. Then, a solid understanding of the breadth of technologies available and how these may contribute to their vision – either from a productivity or a customer experience perspective. Due to the pandemic, many retailers previously thought they had years to expand and transform their operations, but found themselves forced into making necessary changes in a matter of months.
Secular trends such as ecommerce, supply chain optimisation, internet of things (IOT) and cloud services have all accelerated; as have pandemic-extenuated use cases like buy online/pick-up in-store (BOPIS), click and collect, and micro-fulfillment. The orchestrated adoption of these approaches will continue to drive retail growth in 2021, as will embracing the concept of intelligent automation.
Retailers are increasing their spend on process automation, which utilises robotics and augmented reality in conjunction with specific machine learning (ML) algorithms and artificial intelligence – and that will continue to rise. While impactful on any scale, the acceleration of retail automation is spanning the entire supply chain, from warehousing operations and distribution centres, to logistics and stores. All this has been heavily driven by the need to deliver directly to consumers.
Key benefits of retail automation
Retail automation is a combination of physical robots, physical mobile automation, fixed infrastructure like RFID, computer vision (CV) and shelf edge cameras, alongside intelligent data analytics. Leveraging the combination of these technologies provides continuous visibility inside a retail store environment, enabling retailers to ensure they have the right products in the right location to optimise revenues. Growth in intelligent retail automation has been facilitated by several factors, including more accessibility to artificial intelligence (AI), ML, robotics, and prescriptive analytics – as well as a popularity surge in consumer-centric virtual assistants like Alexa and Siri. With these technologies becoming prevalent in day-to-day life, retail enterprises are leveraging them more frequently to improve operational workflows such as replenishment, fulfillment, deliveries, and customer experience.
Amidst the many challenges posed this past year, retailers are currently facing an increase in physical store costs, while also navigating a decrease in revenue generated by these stores. For retailers to reduce the “cost to serve” for their stores, they need to understand where to implement retail automation to make targeted operational workflows more efficient. The right technology can automate actions, enable better decision making, and empower employees to focus on value-added tasks instead of mundane and repetitive tasks.
1. Streamlining omnichannel operations
Retailers are seeking new solutions to augment their omnichannel capabilities, given the impact the pandemic has had on consumer shopping behaviour. Increased demand for ecommerce means retailers need a strong digital presence while balancing fulfillment against demand, all while maintaining profitability. In addition to increasing deliveries, click and collect, drive-through, and curbside delivery are growing as top customer preferences. This is also driving retailers to adopt new technologies such as intelligent automation in the fulfillment area. Automating fulfillment centres is a critical requirement to better serve customers. The speed at which retailers are adjusting to sell their products online is forcing them to reorganise entire supply chains and fulfillment models. Some turn to micro-fulfillment centres – a small-scale warehouse facility that is closer to consumers and often adjacent to a store or reusing excess space at the back of a store as the need for large stores shrinks.
Other retailers are picking online-ordered products directly from their store shelves, creating the increased need for real-time visibility of available inventory. Deploying intelligent automation solutions across retail supply chains can help leaders effectively forecast and manage their inventories, reduce friction, increase substitutions, and other issues that can impact a retailer’s brand image.
Retail automation also helps staff save time and improve accuracy. The antiquated approach of using store associates to manually scan and track inventory is inefficient and prone to human error. Implementing an intelligent automation platform that can collect and synthesise inventory-related data in real time, can then direct staff to take appropriate actions. This helps enable retailers to empower store associates to increase overall productivity by eliminating time-wasting activities such as wandering the store to locate products or find gaps. In 2021, automating retail with data-driven decisions is regarded as one of the biggest industry trends, and technology designed to increase staff connectivity will be a key driver of this trend. Retailers need to keep leveraging intelligent automation to continually improve their store associates’ performance and create smarter retail networks and fulfilment centres. Another essential part of the automation process is the use of collaborative robots (cobots) – people working alongside robots to improve productivity and further reduce mundane, repetitive tasks.
2. Creating actionable insights
Many retailers realise the importance of data. The challenge now is the use and application of the real-time data that intelligent retail automation generates, turning data into actions – also known as prescriptive analytics. Prescriptive analytics helps retailers make decisions around resource planning, inventory optimisation, and other key operational aspects of business, using available data sources to generate near real-time tasks that drive meaningful improvements throughout the business. This approach will be key for retailers to improve efficiency, reduce shrinkage, and increase revenue.
3. Adapting to technology and consumer shifts
Technology, including intelligent automation, can help customers shop the way they choose, empowering them to embrace the omnichannel options available and purchase the products they need in the most convenient way for them. Whether individual consumers prefer to go into a physical store, order online for delivery, or use a click-and-collect option, retailers will have to continue satisfying customer desires while adapting to multiple evolving commerce models.
Retailers must remember that shoppers want – and frankly, expect – a great shopping experience. They need to offer the most frictionless customer experience possible if they want to succeed. Retailers who invest in intelligent automation will be offering customers a more efficient and better way to shop, whether that’s in-store or online. If done correctly, shoppers will not see intelligent automation in the works, but they will notice that retailers which leverage it are able to offer a better overall experience, thus creating a happier and more loyal customer. As shopper behaviour and environmental and societal demands continue to evolve in the pandemic’s “new normal“ and beyond, it will be critical that technology solutions, the companies developing them, and retailers utilising them, be nimble and ready to adapt to further change.
Mark Thomson is Director of Retail and Hospitality Solutions EMEA, Zebra Technologies (formerly Motorola Solutions). Thomson’s exploration of the global retail landscape helps retailers gain a focus on what’s real and what works when building a retail strategy in a digital world. He works closely with retailers and hospitality businesses on developing a vision for their retail business that aims to improve customer experience and drive business efficiencies.
– Receive the Retailing Africa newsletter every Wednesday • Subscribe here.