top of page
Search

Automation in retail: opportunities and realities


Retailing is under pressure from all sides: suppliers are trying to pass their costs into the price of goods, competition requires higher investments and limits the ability to increase retail prices, and labor costs are constantly rising. At the same time, the requirements of customers are growing - the bar for quality and personalized service is rising higher, as are the requirements for freshness and quality of products. In this environment, retailers are struggling to survive as they seek internal resources to ease the pressure on profitability and customer demands. This struggle is not new, but retailers have fought traditional cost reduction methods and many have reached the limit of "perfection". But competitors continue to cut prices and lure buyers to them. If so, then a qualitatively different step is needed. Hooray! Salvation is automation!

The international consulting company McKinsey has been conducting research on automation initiatives in various industries over the past few years. These studies show that about half of the processes in retail can be automated with currently available technologies. McKinsey estimated that a typical grocery store or hypermarket could be managed with 55-66% fewer man-hours, category management could reduce time spent on technical work by 30-40% and redirect that time to more strategic activities that create value. high added value; and a comprehensive program to automate store processes, supply chain and administrative functions (especially category management) can generate about 3-5 percentage points of additional margin, which can be reinvested in development.

How can such a high level of automation be achieved in retail? Retail has access to a huge amount of data, there are a lot of routine processes in retail, and the rapid development of new technologies such as AI (artificial intelligence), Cloud (cloud), IoT (Internet of things), advanced analytics and robotics - allows you to realize this.

raises a question. If everything is so "chocolate pink" why is the level of automation in retail low or very low? Automation happens more in words than in deeds, and only some networks are active in introducing new technologies?

There are three main reasons:

· In rare cases, this is a lack of staff skills and abilities or limited knowledge of retail trends, good industry practices in other countries and companies.

More often it is not the determination of senior managers to initiate and implement organizational change.

· Most often, it is the habit of shareholders and supervisory boards to invest in brick walls and iron shelves of stores, and not in knowledge and technology. Although in private life we behave differently, trying to send children to the best schools and universities in order to provide them with knowledge and a future.

Automation means change. It is not enough to simply buy an innovative information system or other technology and hope for a miracle from the outside. It still needs to be implemented - to provide the necessary data, change internal processes, retrain the staff. To achieve a good result, it is necessary to overcome the temporary inconvenience of additional work and overcome the resistance of both managers and staff. Managers worry about losing influence, and employees are afraid of losing their jobs.

Most often, automation is presented or understood as a way to reduce the number of staff - this is a mistaken approach. We can't help but agree that automation frees up a lot of work hours for current staff, but that doesn't mean they should be fired. Automation also creates a need for new competencies, so there is a need to retrain staff, rather than looking for new workers on the side. For example, if a scanner was bought for an employee to receive goods, then he will carry out the acceptance faster than before, and in the free time he can work at the checkout during the peak. As another example, if a category manager has an assortment planning tool implemented, the freed up time can be spent on category analysis and negotiations with suppliers, thus increasing the profitability of the category. During the implementation of changes, usually more man-hours are needed than usual, and by combining automation with retraining, temporary freezing of hiring of new employees and continued development of the network, it is possible to naturally implement staff optimization where the current staff will not suffer. In summary, we can say that automation reduces the total number of positions, but they become more versatile and qualified, which means more paid. Thus, the involvement of the staff is growing, and after all, involvement is both the health of the company, and its intelligence, and competitive advantage.


Where to start and how to move? It goes without saying that every enterprise does not need to implement all possible solutions. If the network has not yet implemented an assortment management information system, you should not start investing in shelf scanning robots. Or if the stores are not large, you should not start investing in self-service solutions for scanning goods by customers in the hall. First, we recommend investing in well-developed solutions that will definitely give a quick return on investment. For example, in store operations - electronic price tags, self-checkouts, staff scheduling or category management - assortment planning, promo management, supplier portal.

What seemed like an innovative solution for ten years is now the norm. The future will come faster than we think, and investing in knowledge and technology is much better than investing in the walls and shelves of shops.

0 comments

Recent Posts

See All

Comments


bottom of page