In a digital era driven by high consumer demand for efficiency and immediacy, brands and retailers are increasingly turning to automated technologies to facilitate a smoother customer journey. Back in 2015, New York-based designer Rebecca Minkoff introduced smart mirrors and self-checkout kiosks in her US flagship stores; last year, Hong Kong-based luxury retailer I.T rolled out plans to implement autonomous payment terminals and shoppable touchscreens across its stores worldwide.
But automation’s potential goes far beyond improving in-store customer experience and intrigue – it can equally benefit the broader value chain. According to a 2019 report by McKinsey, half of retail’s manned activities can be automated, while a store can operate up to 65 percent faster with automated technologies compared with traditional manpower.
“Half of retail’s manned activities can be automated while a store can operate up to 65 percent faster with automated technologies. ”
While these alarming figures hint at an imminent loss of jobs, they also suggest an opportunity for evolution: rethinking roles within the workforce creates far fewer layers in an organisation, as employees are freed from tedious tasks to focus instead on more diverse and valuable responsibilities, such as personalised services.
As the demand for manual skills declines, the need for social, emotional and technological skills will rise, thus reskilling staff will become essential. McKinsey even suggests that it will offer a higher return on investment than rehiring: replacing an employee can cost between 20 and 30 percent of an annual salary, while reskilling requires less than 10 percent. The shift to automation is undeniably reshaping the entire retail business model, so businesses are being forced to adapt in order to successfully evolve. Below, ORDRE spotlights three more ways in which automation will help retailers.
“Merchandisers should leverage automated technology solutions to support faster decision making.”
1. Supply Chain
Currently, the biggest use of automation is in the supply chain. Widespread applications of smart robots can help with numerous mundane warehouse tasks such as storing, retrieving and transporting goods, as well as repetitive production tasks.
Stand-out examples of this include: in 2017 when Adidas established a heavily automated manufacturing facility in Germany, which includes 3-D printing capabilities, robotic arms, and computerised knitting to make running shoes. In addition to this, Gucci’s 2018 venture involved an in-house patent-protected robot, used in its ArtLab factory in Florence, which can assist the assembly of its USD$650 sneakers.
Commercialised drone delivery is another practical application on the rise: While the US and Europe are just catching up with the technology, China is already racing ahead. In January, the country’s leading e-commerce giant, JD, launched a drone trial in remote areas of China, with the aim to reach a wider customer base living in further proximity to shopping hubs. In May, DHL launched its own initiative, kicking off China’s first regular autonomous deliveries.
Merchandising – the core function of every retail organisation – is in a state of flux: over the past few years, the role and scope of merchandisers have evolved to cater to rising consumer demands for endless assortments and seamless omnichannel shopping experience.
McKinsey states that instinct and experience are no longer enough to drive fruitful merchandising strategies; instead, merchandisers should leverage automated technology solutions to support faster decision making. The report suggests that automating analytics with advanced planning systems can generate predictive scenarios and significantly reduce time taken planning merchandise. Other time-sensitive processes such as pricing, promotions, markdowns and space planning are areas where automated systems can be instrumental, enabling merchandisers to increase their time spent on more strategic activities.
While Radio Frequency Identification (RFID) technology – smart labels which embed digital data into products – is nothing new, it is becoming increasingly prevalent amongst brands and retailers to manage inventory and provide a unique customer experience.
In 2017, Burberry fitted all of its products with RFID chips, giving shoppers information about how items were produced, along with styling recommendations. That same year, Rebecca Minkoff launched a limited-edition line of smart handbags equipped with RFID tags, which unlocked exclusive perks such as private styling sessions, style recommendations, video content, and fashion show invitations.
But personalising the consumer experience is not the only advantage of automating inventory: RFID also allows items to be tracked throughout the supply chain, from the warehouse to the shop floor, helping retailers replenish stock quickly and efficiently. Additionally, the technology enables the in-store automated checkout process, allowing customers to make purchases instantaneously, using mobile phone apps such as Google Wallet or Apple Pay.
While it is tricky to predict mass scale automation’s complete direction and impact, it’s safe to say the technology is rapidly seeping across all core functions of the retail sector; the winning brands and retailers will be quick to embrace and prepare for these shifts.