In the current retail landscape, where competition is fierce and overhead keeps rising, efficiency counts. Retailers must examine every task and every labor hour — and labor hours that aren’t customer-facing are subject to even further scrutiny. Additionally, every task that can be outsourced or automated must be optimized. It’s no wonder, therefore, that a recent study predicted that the retail automation market is growing at a CAGR of 10.96% and will be valued at $18.99 billion by 2023. Let’s examine what’s behind this laser focus on operational efficiency and what retailers are doing to make sure they’re achieving the results they need to thrive.
The Role Of Stores Is Evolving
The need for stores to act as fulfillment points is quickly growing. Case in point: Target filled 70% of online orders in stores during the 2017 holiday shopping season. However, doing so effectively demands new approaches to daily store operations. Retailers have long faced the challenge of maintaining inventory on shelves by stocking either during or outside of business hours and relying on vendors to do the same.
Those same challenges are being amplified as fulfillment from stores becomes more commonplace. To that end, some retailers are allocating additional labor hours to support Buy Online/Pick Up In-Store (BOPIS), Ship from Store (SFS) and DFS. In many cases, handling these orders using the same store staff that should also be stocking shelves or helping customers on the sales floor is creating a backlog of lower priority tasks.
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These are some of the best opportunities for automation, and a new generation of technologies may very well be the right answer for retailers dealing with this kind of scenario. Outsourcing order picking is not new, but the tools and consumer expectations in order accuracy, timeliness and reduced cost have changed, altering the definition of shopping itself. A new blend of convenience and experience is at the heart of many retail strategies, and automation is increasingly important to managing cost and consumer expectations.
Retail Tools Must Also Evolve
Replenishment, cycle counting, back office/bookkeeping and price changes are ripe opportunities for automation, as they occupy some of the greatest pools of non-customer facing labor hours in the store. Technologies such as electronic shelf labeling (ESL) for price changes, robotic process automation (RPA) for the back office, and outsourced/automated cash management and cameras for cycle counting have been steadily maturing and now seem to be truly ready for wide scale deployment. Robotics-based solutions are rapidly advancing to help identify low stock conditions and are on their way to help refill empty shelves.
But, that’s just the beginning. Retailers are once again going through the process of re-evaluating tasks and finding vendor partners to help develop new solutions to automate as many of them as they can. The industry stands at the brink of widespread automation, from the loading dock to the checkout line. Retailers are already making serious moves to eliminate traditional checkout lines that go beyond the simple “self-checkout” that has been around for a few decades. Now retailers are relying on a new generation of devices, apps, processes and camera and sensor technologies to enable customers to check themselves out and pay for their purchases without itemization or physical interaction.
Online retailers have already shown the way to automate warehouse, distribution and fulfillment centers. Now, new concepts in intermodal transportation automation and last-mile delivery are being testing to reduce time and cost.
Now Is The Time For Retailers To Act
Although retailers are traditionally slow adopters of new technology innovation, industry disruption is forcing many of them out of their conservative “wait and see” positions. With the many new advances in automation available today, the timing couldn’t be better. It’s very likely that the opportunities to automate will fundamentally change retailing, as consumers will become more accustomed to seeing these same technology innovations in their daily lives and will expect those same advances and benefits whenever and wherever they shop.
Paul Burel is Director of the Retail Solution Portfolio at Fujitsu America, Inc. Burel joined Fujitsu in 2006 following 14 years in IT and Store Operations Senior Management with The Home Depot, where he was responsible for Front-End Operations companywide as well as IT Operations, Desktop Services, Strategic Networks, Deployment Services and Store Systems Engineering. At Fujitsu, Burel has held a number of different roles including Senior Retail Consultant and Director of Retail Business Development.
