Robots in retail

Answer

One of the striking movements during the pandemic has been the acquiescence of automation technologies by a formerly tepid society. Disruption, as observed across all industries, impacts all elements of the value chain, and this is no different in retail.

Retail has been forced to fast-track the development of automation, including robotics, which will result in a quick rollout over the next few years. Innovation is occurring from sourcing and manufacturing to distribution and point of sale, and across all components data has become the liberator. Retailers are now accelerating their deployment timelines to reap the advantages now and into the future.

Retail value chain: sourcing, manufacturing and fulfilment

Sourcing 

Hours are being saved in sourcing goods and services by automating the creation of ‘request for’ documents and running the sourcing processes through robotic process automation (RPA). Innovative software tools (eg, Procurify, a leader in retail procurement automation) allow multiple stakeholders to communicate in real-time and run multiple sourcing events simultaneously using fewer resources.

Administrative tasks are being streamlined; a prime example being contract management – a labour intensive and often badly managed function of the procurement process. Today, advancements in leading edge technologies such as blockchain have fuelled the creation and adoption of ‘smart contracts’, which automate the execution of agreements or detailed steps of administrative workflows, triggering the next action when conditions are met. Each action, as long as the task is repeatable, can be undertaken by robots that can execute with 100% precision in real-time, all the time.

Manufacturing

Manufacturing is perhaps the most obvious and well-known component of the retail value chain impacted by robots. This is, after all, often the most hands-on part of the lifecycle and our fascination with building robots with human-like capabilities has not waned. Our timelines are filled with videos from Tesla Giga factories showcasing a symphony orchestra of alien-like machines rigorously assembling vehicles. We have been wooed with the promises of 3D printing allowing retailers to hold less inventory, or better yet, consumers to print goods directly from their own homes.

The rate of innovation in this arena is astounding. Despite this, not all retail manufacturing is centred on robots replacing humans. Augmented reality (AR) tools are increasingly common in retail manufacturing plants to enhance workers’ ability to carry out core tasks. Companies such as SlashGear provide AR tools to overlay precise 2D and 3D guidance onto machinery and help train workers on new skills without having to slow down production. Accessing better real-time information is central to innovation across the manufacturing process and robots are sending more data to operational teams than ever before. Organisations are using IoT-enabled remote machine monitoring to enable staggering levels of machine uptime while predictive fault detection systems alert technicians to potential faults, reducing unplanned downtime. There is almost an inevitability that robots will cover an increasing number of tasks during the manufacturing process. The workers that will remain are likely to be highly specialised but even they must adapt to their new ‘always on’ counterparts.

Fulfilment

A glaring question, given the increased rate of sourcing and production, is: how do retailers more effectively distribute the increasing volume of goods they make?

Warehouses are handling more inventory, tasks are scaling yet repeatable, staff turnover is typically high – is this not a perfect mix for robotic innovation? That appears to be the case as retailers’ reliance on robotics grows to fulfil e-commerce orders and mitigate labour shortages. Today, warehouses use smart robots to facilitate AI-driven picking systems in distribution centres, self-driving vehicles and shelf-scanning robots that manage inventory.

Retailers, especially in e-commerce driven environments, have progressively become aware of how effective automating the fulfilment process can be to protect their narrow margins. As such, according to the Association for Advancing Automation, robot orders in the food and consumer goods industries were up 31% year-over-year in quarter one 2021 compared to a 20% increase in industries overall. As an indicator of just how fast the pace of change in fulfilment is, Gartner reports that at least two of the top 10 global retailers will establish “robot resource departments” to manage non-human workers by 2025.

Leaders and incumbents

As is widely documented, leading the pack with robotic automation across the retail value chain is Amazon. After acquiring Kiva systems in 2012, the retailer has been operating robots behind the scenes to help with inventory management long before competitors. The company has pioneered robotic automation in fulfilment, for example, being the first to implement robots that move heavy pallets to improve efficiency as well as safety.

To further protect their margin and bolster their capabilities, Amazon began to vertically integrate the creation and deployment of robots by establishing the Amazon Robotic division. This strategic move has helped Amazon store 40% more inventory in its centres and apply increased competitive pressure to slower moving incumbents. With the unparalleled surge of Amazon during the pandemic, physical shopping around the UK is in decline, as is the case virtually everywhere around the world. As retailers aim to shave costs and streamline processes, particularly along the supply chain, robots will continue to become entrenched in retail’s day-to-day operations.

Fulfilment is not the last stop for robotic innovation and Amazon is indeed proof that robots' work will certainly not be limited to warehouses. Following the opening of its five signature 'Just Walk Out' Amazon Fresh grocery stores in London, the e-commerce giant continues its relentless push into physical retail with the opening of department stores. These stores will allow Amazon to showcase the latest innovations from automated customer service and point of sale technology. This newest experiment of Amazon could take a similarly high-tech approach to selling clothes items as they have done with groceries in the supermarkets, with the stores concentrating on customer convenience, using a plethora of technology solutions. For instance, once in a fitting room, customers may ask for more items using a touch screen, which could then be brought to them by robots or automation to streamline the shopping experience. Amazon have been building consumer data for some time by tracking purchase behaviour online, but this is becoming increasingly harder to track with the frequency of returns and too much inaccurate data. Now, Amazon will be able to glean new types of customer data and innovate on the physical retail experience by literally tracking our gaze.

Many other retailers, from John Lewis to Sainsbury’s and even digitally native e-commerce disruptors such as Shopify, are feeling the pressure imposed by Amazon. This has led to widespread M&A activity in the industry. John Lewis has announced numerous partnerships with various UK robotics companies in the past few years to create a blueprint for human-robot interaction as it continues to develop its own autonomous robots. Shopify acquired 6 River Systems, a software vendor using cloud-based software and mobile robots that assist employees with inventory replenishment, picking, sorting and packing for $450 million in late 2019. Ocado closed acquisitions of Kindred systems Inc, and Haddington Dynamics Inc for a combined total of $287 million following an acquisition of a stake in US robotics start-up Myrmex. Tesla is “doing an Amazon” in the automotive industry and is planning on releasing an AI-powered robot next year to do "boring, repetitive and dangerous" work, including delivering groceries. The 'Tesla Bot' will use a mixture of artificial intelligence and the same computer chip the company's self-driving cars use as well as eight cameras. Founder Elon Musk stated that the Tesla Bot would have "profound implications for the economy" – similar tones to Amazon founder Jeff Bezos when announcing their automation plans. The deal activity in this space will likely continue to grow proportionately with the increasing pressure on retailer margins.

Robots versus humans

A common characteristic of these snapshots into the future of manufacturing is a distinct lack of human intervention. There is an inevitable ‘leaning out’ of the retail workforce given such technological progress and it is those workers with repeatable daily tasks that are most at threat. “Will my job be taken by a robot?” is something that has been on the minds of workers ever since ‘disruption’ moved into the mainstream vernacular. This worry has only compounded in recent years given the increasing rate of innovation and acceleration of automation across industries. Further, there are macro trends that only exacerbate the need to find alternatives to human capital. Following Brexit, the worker shortage in the UK remains rife, with tens of thousands of warehouse and retail workers having to leave the country. Retailers up and down the country simply do not have the store staff to continue operating.

Despite this, it is not all doom and gloom for retail workers in the UK. Automation technology is still in its infancy for widespread job replacement. There are still fundamental hurdles for mass adoption, particularly in the high street where space is limited, and the risks associated with interacting with members of the public are higher. Further, not every task associated with a particular job can be easily automated, and therefore many jobs will not be eliminated. To date, one of the big benefits of using humans over technology in retail roles has been superior cognitive and social abilities. Robots need to seamlessly take over the mundane tasks first and in turn, leave human employees open to doing more high-value roles which require a human touch, like customer service. For example, instead of spending time finding items on store shelves, employees could interact with customers to teach them about new products and, ideally, boost sales. However, the plan is for future automation to fuse enhanced robotic dexterity and increased cognitive ability (through AI), increasing the likelihood of the more cerebral tasks becoming automated. However, the fact that we do not have a developed robotic infrastructure in the UK (like our US and China counterparts) coupled with the hampered production of smart tech around the globe due to the pandemic, means there is still some way to go before robot adoption reaches much talked about levels.

The pandemic push

A catalyst to the adoption timeline has been the covid-19 pandemic. Changing consumer behaviours and needs have constantly been redefining the retail environment and as a result, businesses are increasingly turning to automation in order to meet demand. According to Gartner, the need for retailers to optimise costs, due to labour shortages and minimum wage increases, is deemed critical and is driving continued retailer interest and significant investment in smart robots this year. When considering how the covid-19 pandemic has shaped consumer shopping habits, two words spring to the forefront: toilet paper. Retailers experienced unparalleled out-of-stock levels and there were eventually imposed limits on purchases per visits, but not before confronting chronically empty shelves. But what if retailers had been able to get an early indication of mass purchases of products like toilet paper?

While robots possess the ability to scan merchandise to report on inventory levels and performing price checks on items, the hope for the not-too-distant future is that they can also derive insights on buying habits on micro trends. For example, if a robot in the aisle had identified an unpredicted drop in toilet paper provisions, that could have led to improved inventory management in advance. The real-time discovery would trigger an automated order for increased shipments from warehouses for more toilet paper to be sent to a specific store. By detecting sudden and unexpected shifts in inventory, the robot would be able to respond quickly without human intervention. This is the real value of smart robots that retailers are investing in; the ability to capture granular data. This should see companies keeping more promises to customers and stores, accelerating throughput, lower costs and protecting the safety of people and inventory.

Closing thoughts

The pioneering applications and effect of robotics in the retail industry offers remarkable potential and opportunity. From robots that monitor and analyse customer experiences to operational robots, such innovations are guaranteed to deliver considerable benefits, both to shoppers and vendors.

Robots may be restricted in the manipulation and demonstration of complex thinking and by their inability to provide reactions that require a high level of social awareness or intuition. However, these innovations can be tackled in the future, with improvements in AI and deep learning technology. At present, robotics in retail has moved to facial and voice recognition features, enhanced responses, interpretations and reactions.

While robots in retail are still fairly novel, their growing adoption and evolving sophistication will make them ubiquitous in the years to come. For customers, the increasing presence of well-trained robots in stores will provide a personalised and stress-free shopping experience. The expansion of robots will:

• realise enhanced productivity;
• improve customer experiences;
• slash costs; and
• boost profits.

It is this plethora of benefits that retailers will be able to capitalise on. Robotics, when combined with digital technologies (eg, analytics, AI and machine-learning) has the potential to deliver substantial value and revolutionise the retail value chain; and the cogs are already in motion for that transformation to materialise.

Shaina Majithia is a first-seat trainee in the corporate department at RPC.