Automation in the Retail Industry: What’s the Current Scenario?
Automation in retail, just like any other disruptive technology, is steadfastly penetrating its way into retail organizations with one promise – that change is inevitable.
For the forward-thinking retailer, this is the best opportunity to address long-standing retail bottlenecks and reshape old and dying business models to meet the future head-on. Powered by a new-age skilled and agile workforce, retailers who are willing to embrace this widespread change will easily be able to out-maneuver their competitors by a large degree.
Why Automation in Retail is the Need of the Hour
1. Margin Pressures
The retail industry has been observing a profit margin squeeze for quite a few years now. E-commerce penetration has considerably worsened the issue, as price-sensitive customers gravitate towards lower online prices. A quartz study has forecasted that the six countries it surveyed will face a drop in pre-tax margins to 3.2% by 2025.
Rising industry competition and demand for higher wages has increased the pressure to lower product costs, and retailers have no more traditional cost reduction tactics to turn to. Thus, to raise their bottom line, retailers are now turning towards a full-blown automation integration across their stores, supply chain, merchandising, and headquarter functions.
2. High Competition
Walmart recently launched warehouse and supply chain automation in 25 of its regional distribution centers. Kroger has also raised the stakes by opening its first $55 million automated warehouses in Monroe, Ohio. Powered by robotics, this warehouse can assemble a 50 item order in approximately six minutes, down from an average of 30-45 mins it would take an employee to assemble the same order.
Amazon Go, a fully automated retail center, has already managed to capture consumer approval and interest. An online poll conducted by Pipslay on 30,000 US adults revealed that over 60% of the respondents would like to have an Amazon Go in their area.
As these top retailers adopt large-scale automation, other incumbents are eagerly hopping on the bandwagon to boost their margins and enhance their productivity through automation innovation.
Thus, automation in retail is now becoming a necessity for industry incumbents, especially if you want to stay relevant in the new environment.
3. Operational Efficiency and Beyond
AI and automation are already streamlining and speeding up operational workflows. From in-store cashless checkouts and robot assistants to warehousing, order fulfillment, and inventory management, retail automation can markedly fastrack product lifecycles and raise employee productivity.
Apart from effective process optimization, strategic processes like advanced analytics, demand forecasting, customer behavior predictions can also be automated. Thus, instead of investing time in conducting advanced analysis, executives can instead take astute decisions proactively, with all the insights they need available at their fingertips.
4 Hottest Automation Trends in Retail
1. Smart Inventory Management
Products these days are being sold through various channels, constantly traveling from one warehouse to another across different locations. Inventory management has thus become complex, giving rise to problems like overstocking, understocking, and sub-optimal inventory storage costs.
Through automation, businesses receive an accurate real-time count of their stock, as their POS systems automatically update stock units available. Apart from that, automation software can reorder products when stock is low and accurately forecast future stock demands based on customer behavior trends.
2. Semi and Fully Automated Warehouses
A recent study conducted amongst retail IT decision-makers revealed that 27% of respondents plan to implement full warehouse automation by 2024. Retail giants like Amazon, Walmart, and Kroger have already opened fully automated warehouses where sorting, organizing, picking, packing, and moving of goods is done by robots and drones, requiring minimal human intervention.
For retailers who don’t have the resources to go fully automatic, semi-automated warehouses provide a great opportunity to extract the best of both worlds. Shared workload gives employees time to focus on productive tasks, at the same time a significant human-error reduction speeds up all warehousing operations.
3. Cashless Checkouts and in-store Robots
We’ve already talked about Amazon Go’s cashless self-checkout and the popularity it is garnering. Apparel and footwear brands like Zara and Nike have placed self-checkout kiosks across many of their outlets. Mobile checkout solutions and instant purchase options backed by barcode scanning are gaining traction among many retail stores.
Apart from this, in-store automation also involves robot assistants that help in stacking shelves and scanning in-store inventory for shortages. Though Walmart recently scrapped its decision to have 500 robots scan its store’s isles, many retailers are adopting robot technology thanks to pandemic-induced labor unavailability and increased turnover rates.
4. Conversational AIs
Conversational AIs or digital shopping assistants can improve customer journeys, perform spare tasks and handle queries in the place of customer service executives, and also collect a large amount of customer behavioral data. These digital assistants can place orders and track packages for customers, answer FAQs, give personalized recommendations, support live agents with information lookup, and manage customer complaints independently.
Embracing Structural Changes is the Only Way Forward
Automation leads to large-scale technology penetration is bound to bring drastic grass-root level changes like retail jobs and workforce culture. For starters, retailers will have to reskill and upskill their current workers to empower them to operate automation tools and systems.
Secondly, automation will eliminate many old workflows and introduce new ones, prompting retailers to rethink workforce job descriptions across all departments. For example, an in-store executive of a retail chain that deploys robot assistants across its stores will no longer have to scan shelves and keep track of inventory. The executive will then have to be assigned additional in-store responsibilities to supplement ones that have been eliminated by automation technology.
Retailers will also have to redefine their workforce skill requirements. Next-gen technology and workflows demand workers that are comfortable with operating new equipment and software, even if a steep learning curve is involved.
Many retailers fear that automation in the retail industry will bring about massive job losses as automation technology replaces humans. In its executive summary report, McKinsey has confidently challenged this fear. It has provided evidence-based reasoning that not only will automation in retail increase job opportunities, but more skill-intensive workloads will increase job satisfaction, thus bringing down the high turnover rates the retail industry is observing right now.
Don’t Know Where to Start?
If you want to kickstart your retail automation journey and can’t decide where to begin, consider employing a Conversational AI-based digital assistant to your website and online store. Conversational AIs are relatively easier to employ, and the data-based customer insights they provide can help inform the rest of your automation journey.
As a digital shopping assistant, AskSid is poised to disrupt the online retail industry with its proprietary Retail AI Brain, a unique knowledge repository converting raw brand data into tweet-sized Q&As, product tags, intents, and utterances. This powers impactful shopping experiences and drives conversions across chatbots and voice bots, while simultaneously extracting deep customer insights, helping brands uncover new business opportunities.
Looking to deploy a vertical AI-based digital shopping assistant for your retail business?