Retailers ramp up automation in race for survival
- Retailers are racing to automate their stores to cut labor costs, improve front-end efficiency, and become more competitive in their use of data, according to a report in The New York Times.
- This call-to-action is being spurred, in part, by the opening of Amazon Go, the highly automated stores the online giant has developed. The web giant is reportedly considering opening six more units this year, according to Recode.
- Retailers are moving forward with technologies that have been in development for some time. Kroger is rolling out its shelf edge technology, while Walmart is deploying in-store drones and shelf-scanning robots.
The need for speed and productivity is driving retailers to develop more and better automated technologies. Companies hope this also will reduce errors and prevent losses, while achieving the ultimate goal of better servicing their customers’ wants and desires. But the underlying goal is survival.
Enhanced automation is a two-edged sword. Automation will cut down on labor costs, which likely means a reduction in jobs. More far-reaching and effective data-driven marketing means greater knowledge about the retailer’s customers, but also raises serious privacy concerns. As their technology evolves, retailers must reassure shoppers about how they are going to use their data and, as much as possible, reinvest that labor savings into improving high-touch customer service.
Grocery retailing has always depended on advances in automation. Telephones and motor vehicles enabled the first home shopping and delivery. The tools and techniques that led to the first supermarkets left smaller stores in the dust, and that trend continued with larger and more sophisticated stores eclipsing smaller units. At first that automation amounted to front-end conveyor belts and state-of-the-art (at the time) cash registers. The roller conveyors stores unveiled in the 1950s moved customers’ shopping bags from inside the store to curbside for pickup, and that was seen as a major labor saving innovation. In light of this history, it’s difficult to weigh the cost versus benefit of automation when the alternative to not keeping up is eventual failure.
Headquarters, warehouse operations, transportation, and marketing – all have seen, and are seeing, advances in automation. Whole Foods and Target are using an automated ordering system known as order-to-shelf or “store ready” distribution. Kroger is using sensors and predictive analysis to anticipate when more cashiers are needed at the front end, The New York Times noted. Meanwhile, Walmart is leading U.S. retailers in many areas of technology, including robots that scan aisles for out-of-stocks and measure merchandising productivity.
The battle is intensifying, with e-commerce and mobile commerce evolving and with drones being considered for multiple applications, including package delivery by Amazon and produce field inspections by Walmart.
With their massive capital expenditures budgets, Amazon and Walmart are developing automated technologies that will be out of reach for most retailers. But by carefully weighing the cost and benefit of each advancement, grocers can adopt automated processes that save money and enhance their core proposition of offering good food to shoppers.
- The New York Times Retailers Race Against Amazon to Automate Stores