According to Capgemini’s January 2020 study on smart stores, only 25% of retailers are actively working on implementing store automation, and only about one-third intend to do so in the next three years. But that was before U.S. retailers ever dreamed of a scenario like what’s happening as a result of today’s threat, causing mass store closures, consumers’ hoarding shopping behaviors, and a sudden substantial shift of traffic to online channels. Retailers that previously embraced automation are benefiting from those investments and likely wishing they had done more to advance their automation agendas. And the brands that haven’t embraced automation are wishing they had. Not only can automation help retailers address unplanned volume surges, it can help consumers to be more socially distant.
When consumers were surveyed for Capgemini’s report, 59% said they would shift their in-store purchases from a retailer with no automation to one that uses automation to improve their experience. They were specifically referring to automation that would reduce friction points such as long lines, lack of product information, out of stock products or inability to find a sales associate. Automations that enable these customer benefits include scan-and-go mobile apps, self-checkout, electronic shelf labels, robots, digital wallets, pickup lockers, click-and-collect picking and more. These automations can help retailers handle more volatility in demand without being dependent solely on store labor, and they can help consumers to avoid contact if they wish.
Automation Aids Demand Surge And Social Distancing
Let’s break down how automation can help both consumers and retailers during this time of crisis and in the new norm that will emerge when people resume their daily routines.
As consumers are observing stay-at-home mandates and are concerned about protecting themselves and their families, retailers have seen a massive surge in online shopping for orders to be picked up at stores or delivered to their homes. Retailers are faced with needing to fill as many as 200% more digital orders, which is an order of magnitude higher than peak season volumes. Additionally, they’re having to deal with this demand almost overnight without any time to prepare, compared to months of preparations for peak season volumes.
Further, they have to do it with a limited labor pool. Retailers that have mobile picking apps (i.e. with advanced wayfinding, two-way customer communication, and order queuing), leverage automation to enable real-time visibility into stock levels; and fully mechanized micro-fulfillment centers are in a much better position to make good on their commitments to customers. Without these automation technologies, retailers that are trying to meet this surge in demand are having to limit available pickup/delivery slots so that customers have to wait days or weeks for their orders or are simply unable to place an order. Plus, many are having to cancel orders that have been placed or only fill parts of what their customers ordered. All of these problems result in disappointed customers. While customers may be more understanding than normal due to the crisis, that grace period won’t last for long.
Consumers who are going to stores to do their own essentials shopping enjoy options to avoid the checkout lanes, whether it’s a fully automated store like Amazon Go stores or a mobile app such as Sam’s Club that allow them to scan items as they shop and then check out with their digital wallet — without ever having to come into contact with another human. And while in the store, they want the shelves to be fully stocked with the merchandise they want, which is more likely to be the case when a retailer can rely on help from a robot to stock the shelves.
During this time of change and uncertainty, consumers and employees alike have questions and need additional service as they attempt news ways of transacting, while dealing with entirely new circumstances. Retailers with AI-enabled bots can quickly tap into new sources of data (e.g. CDC or WHO) to provide up-to-date information or communicate new policies and procedures. Those with video chat capabilities can forge trust-based relationships with their customers who seek help and human connection.
Automation Is A Strategic Imperative For The Long Run
Whether a retailer is a leader or laggard in the journey to leverage automation, the coronavirus crisis should bring into focus the lasting benefits of automation being an enterprise strategic imperative. It has the potential to benefit the entire enterprise. It can help reduce risk and increase resilience during crises, or even day-to-day business challenges. It can help reduce operational costs. It can help increase customer satisfaction. Automation is a classic win/win — consumers win, and companies win.
There are many ways to implement a smart store approach. Here are strategic steps to get started on the right automated path.
1. Secure A Top-Down Directive
The most successful automation initiatives have executive buy-in that ensures the entire organization is on board. This starts with the CEO putting a stake in the ground that yes, automation is happening, and then backing that up with the resources to make it happen. From there, the CTO, COO or CCO (Chief Customer Officer) should drive the initiative further by assembling a task force that represents functions from across the organization. At a minimum, this should include an executive sponsor plus representatives from marketing, merchandising, digital, supply chain, stores and facilities.
2. Take A Cohesive Approach
Because automation has the potential to impact every single point in the retail value chain, companies should bring any disparate automation initiatives together in a singular strategy. The risk is that the merchandising department is working on pricing automation, the supply chain is looking at mechanized delivery, and the digital team is using AI for product content — and the departments are not aware of what the others are doing.
If the automation strategy isn’t aligned across the organization, the company runs the risk of creating poorly synchronized and misaligned customer experiences that may improve one experience but fail to elevate the experience across all touch points.
3. Prioritize Customer Needs
Retailers should step into their customers’ shoes and walk through the automation experience from their perspective. What does the technology offer the customer? What frustrations does it solve? How will the customer see the value? How can automation elevate the in-store experience as well as experiences across all customer touch points?
4. Understand The Operational Impact
As retailers move forward and begin to crystallize these concepts, they should consider several important questions relating to their existing operations:
- Once automation is in place, what should be the go-forward operating model?
- How will employees across merchandising, IT and store operations, etc. be impacted by automation?
- What kind of training is needed to ensure maximum success?
- How should the automation and resulting benefits be communicated both to employees and customers?
- How can automation contribute to the business continuity plan?
- How can a process of innovation be established to continue to expand automation capabilities throughout the enterprise?
5. Use An Agile, Data-Driven Approach
Retailers should pilot their automation plan, measure it and then scale it. Ideally, they should do so in an agile manner to allow them to gather consumer feedback, learn from the actual results and adjust their plans accordingly as they go. Ultimately, this data-driven approach will help quantify the value they’re realizing and use that as a case to fuel ongoing investment.
Once retailers take the automation leap to further enhance the experience, they’ll see that it delivers value at speed and scale for both their business and customers alike. This win-win-win result makes “smart stores” a smart idea for smart retailers everywhere.
Shannon Warner is a Capgemini Invent consulting partner providing transformation advisory services for the retail, consumer products and distribution sectors in North America. She has more than 25 years of experience working in the retail industry (at Target) and as a management consultant. Her areas of specialty include customer experience, seamless commerce (digital and stores), customer centricity (personalization) and digital marketing.