Retail Automation: Keeping Up with Modern Tendencies

Retail Automation Realities

Automation in the retail industry is shifting the existing business models. So it’s a good idea to start with finding out what the new realities are.

Retail automation: demand, not an option

There's no way to compete on the fast-changing market with increased retail-margin pressure, investments in e-commerce, lack of specialists – and thus a high demand on them – using traditional cost-reduction means. That's primary why retailers are turning to automation to support and increase their profits.

Idle automation and its reasons

Retail and consumer products executives expect automated retail solutions to increase annual revenue growth by up to 10%. Still, few retailers rush to implement them in their stores.

The reasons are all about the lack of skills, capabilities, and money. In most companies, 90% of year's capital expenditures reprise those of the previous year. And it may be too hard for businesses to break free from the tight budget circle covering hardware and software expenditures.

No automating is losing a fight to competitors

Let’s check the famous Amazon example: they operate more than ten Amazon Goautomated retail stores and plan to expand the business to 3,000 units by 2021. And Amazon isn't alone on this path. More and more companies like Walmart or Bingo Box start investing in automation and AI technologies – for the sake of their customers and employees.

For instance, Kroger (one of the US' largest supermarket chains) uses digital shelves that show prices, digital ads, nutrition details, and offer coupons. These details are updated directly from a central source, no need for local interruptions. And an eventual goal for the company is no less than moving the shelves to customers' smartphones.

Much bigger than operations

Retail automation allows vendors to spend more time on strategic activities. Planning is often a key to success, and advanced planning systems can easily automate analytics and help with developing scenarios. In turn, this reduces the time needed for merchandise planning and decision-making.

What's more, supply chains also offer some use cases for automatic retailing. For now, Walmart and Target partnered with Swisslog, a Swiss company specializing in automation solutions for warehouses. They’re planning to build warehouses with automated case picking.

Another company, Ocado, works on their own Smart Platform – a proprietary e-commerce warehousing solution – planning to sell it to other retailers.

Retail Automation Solutions and Strategies

Of course, automation isn’t just tools and technologies. No matter how modern the company is, people remain to be its driving force. So let's focus on the workforce of the future or find out how to create one.

Transforming the ways of working

Retail automation market brings new capabilities to the business, and new employees’ responsibilities come along. So it’s the right time for retailers to change their operating models: from headquarters to each store.

For example, robots with shelf-scanners can take care of most store managers' tasks. And the workers can switch to other, more important errands like assisting customers or checking online orders.

To fully benefit from automation in the retail sector, along with technologies, tools, and new roles, businesses should accept agile methods of working. This means moving from strict hierarchies to working in teams to end-to-end accountability.

The redeployment of the workforce

Most companies turn to automation due to its efficiency, but for retailers adoption of automated retail concepts is the best way to survive. By introducing the technology, they create a bank of hours with high-qualified employees. And workers can distribute some of these hours to more valuable tasks.

This way, Best Buy, a consumer electronics retailer, created new customer-service roles with their new programs. The company focused its attention and investments on In-Home Advisor and Total Tech Support, reskilling and deploying employees for them.

Prepare for skilling and reskilling

Retail process automation totally reshapes activities, skills, and their demand. The need for physical and manual skills declines, while the need for tech, social and emotional ones grows. For now, there are three options for retailers: hire new employees, outsource, or reskill hired workers.

Reskilling takes a great deal of effort, but it offers a higher return on investment. Besides, it saves HRs' time needed to find and recruit new workers. To start and complete the reskilling program, lots of companies turn to collaboration with schools and universities.

For instance, Walmart’s Dollar a Day tuition program was created with the help of Guild Education – company that provides coaches to help employees go through the university application process. What's more, Walmart partnered with Bellevue University, Brandman University, and the University of Florida that are known for their focus on adult learners and high graduation rates.

Updating hiring strategies

Now, employers pay more attention to workers’ comfort when making crucial decisions like choosing the location of their offices. And many are ready to move their headquarters to optimize for talent. For example, an online grocer Peapod has already moved their headquarters from the outskirts of Chicago to the heart of downtown.

Today, engaging gig workers and outsourcing are the main alternatives for hire. No wonder: one-third of US workers are freelancers, and their number will predictably be the majority of the workforce by 2027.

By turning to these options, retailers can not only fill the gaps quickly but reduce the costs. After all, they are paying only for the outcomes of the work done.

Both small and large retailers begin to understand these benefits. Coca-Cola, for example, invested in the gig-economy platform called Wonolo. It connects workers with employers, and Coca-Cola itself is among its top customers, along with North Face and Uniqlo.

Invest in wages, strategically

Automatic retailing leads to fewer but more skilled jobs. That's why vendors must invest in high wages and think of additional benefits for their workers. Many companies still offer higher wage only when they can't find or retain the right person. And that's a very unwinnable strategy, considering the market realities.

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