Shawn is a 20-year veteran of the retail industry and the Director N.A. Sales for SmartSight, Zebra’s intelligent automation retail service.
Brick-and-mortar retailers are no strangers to change. They’ve spent the last several years trying to remain relevant amidst the rise in ecommerce competition. Enhancing the “offline” in-store customer experience while establishing a sustainable online business has not been easy or economical for most brands. The shift to ecommerce fulfillment models is eroding margins by the minute. Yet retailers know that if they can’t figure out a way to become relevant in the digital realm, then the consequences of brand erosion will be far greater.
With Covid-19 accelerating consumer adoption of curbside and delivery services, retailers and grocers must find a way to differentiate the customer experience in stores and online. Moreover, they must do so while improving profitability — or at least without broadening financial deficits beyond recovery potential.
The ‘Benefit Of Bulk’ Is Bygone
The acceleration of ecommerce adoption has forced brick-and-mortar retailers to use stores as online order fulfillment centers to meet shopper demands for convenience and delivery speed. The cost of having to handle individual items versus pallets in the stores has become quite significant. It has also become expensive to maintain a wider product assortment and increase store staffing to facilitate omnichannel fulfillment actions.
The “labor headwinds” of turning stores into fulfillment centers can eat up 2%-3% of a retailer’s profitability on its own, per McKinsey and Co.’s estimations. Of course, some of that can be recovered by leveraging analytics tools to improve inventory management (1%-2% profitability boost) and focusing on ways to improve the in-store customer experience (which has the potential of providing another 1%-2% profitability increase).
Yet much of what goes into the latter can be addressed via intelligent automation, which, by McKinsey and Co.’s calculations, can potentially add 2%-4% to retailers’ profitability due to the considerable productivity gains achieved by removing the mundane tasks from store staff — and this estimation may be a bit conservative.
With the right intelligent automation solution, you’ll be able to:
• Empower staff to serve more customers without burning out. It’s hard to improve inventory availability without real-time visibility. Yet asking staff to manually scan and track inventory, pricing and merchandizing is time-consuming and error-prone. It’s also a drag on morale. Fortunately, intelligent automation solutions collect and synthesize inventory-related data in real-time and then direct staff to take meaningful corrective actions that drive revenue and customer satisfaction levels higher by reducing the number of out-of-stocks and substitutions.
Often, items missing from the shelf are in fact somewhere in the back room or front of store. Staff may have just set up the display wrong — or in the wrong place — and neither associates nor shoppers know where to look. An intelligent automation solution surveying the aisles can identify out-of-stock items, determine the location and quantity of inventory needed to restock the item in its primary shelf location and then notify employees to take action. This all helps to free up staff to focus on revenue-generating activities such as efficient ecommerce picking.
• Expand market share and improve margins: Intelligent automation helps reduce the financial ramifications associated with labor churn, lost sales and pricing variations. It enables you to prove inventory position for supplier negotiations, monitor replenishment performance and reduce the time store associates must spend monitoring inventory overall. It can also help you identify and address missed revenue on items sitting in the backroom during stockout or see when demand for certain items intensifies or eases so that you can fine-tune forecasts, further optimize your supply chain and adjust planograms accordingly.
• Capitalize on opportunities to conserve cash: Intelligent automation no longer requires significant capital expenditures (CapEx). There are now subscription-based solutions that allow for rapid deployment so that you can immediately start re-allocating labor resources, identifying and correcting the root cause of sales losses and expanding e-commerce fulfillment capabilities. You’ll gain a faster return on investment without tying up precious capital resources.
How Do You Know Which Solution Is Right?
This is the million-dollar question. Not all intelligent automation solutions are created equal, and not all are suitable for retail applications. For example, automation is primarily used to augment the work being done by associates versus replacing workers as you may see in manufacturing. In fact, the ROI for intelligent automation is very dependent on the subsequent human action taken.
Therefore, when doing your due diligence, make sure you partner with a solution provider who will:
• Ensure the solution gives you full visibility into what’s happening within your stores and, particularly, with your inventory.
• Help you continuously refine solution utilization to ensure actionable data is reaching associates in real-time.
• Assist you in building team members’ trust in the solution and the data provided.
Give an honest cost-benefit analysis. There is more than one way to deploy and manage an intelligent automation solution. For some, an owned on-premise solution will be feasible, while others may need the convenience and support offered by a subscription-based robot-as-a-service offering. Consider the costs and resources required to deploy, secure, monitor, maintain and optimize your solution before deciding which model is going to deliver the fastest and/or most significant ROI.
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