Retail Automation Can Boost Operational Efficiency and Profits

The News: According to the “2023 Connected Retail Experience” study conducted by Incisiv in collaboration with Verizon Business, retailers plan to automate up to 70% of routine store tasks by 2025, and they are prioritizing technology investments to boost operational efficiency leading to reduced costs and higher profits. The survey polled 233 total respondents, with 55% from companies with more than $1 billion in annual revenue and 65% from companies with more than 500 brick-and-mortar stores. Survey respondents put real-time inventory management at the top of their retail automation to-do list, which is not surprising considering continuing supply chain issues. Read more about the study on the Verizon Business website.

Retail Automation To Boost Operational Efficiency and Profits

Analyst Take: According to the “2023 Connected Retail Experience” study conducted by Incisiv in collaboration with Verizon Business, retailers plan to automate up to 70% of routine store tasks by 2025, and they are prioritizing technology investments to boost operational efficiency leading to reduced costs and higher profits. The survey polled 233 total respondents, with 55% from companies with more than $1 billion in annual revenue and 65% from companies with more than 500 brick-and-mortar stores. Survey respondents put real-time inventory management at the top of their to-do list for retail automation, not a surprise considering ongoing supply chain issues. The retail automation research revealed that retailers are expected to have 71% of tasks automated by 2025. According to the study, common types of process automation include real-time inventory management, with 54% of specialty and department stores planning to deploy by 2025, and curbside sensors for order pickup/delivery, which 36% of grocery and general merchandise stores planned to deploy by 2025.

According to retail automation research by the McKinsey Global Institute, about half of retail activities can be automated using current, at-scale technology. The automation will be less about job loss and more about the evolution of jobs, the creation of new ones, and reskilling. McKinsey Global Institute believes only about 5% of all jobs can be fully automated with current technology, and that retail automation will lead to the creation of jobs as companies invest in growth. Many retailers plan to use the benefits in various forms such as redeploying staff to operations (28%) or shifting staff to more customer-facing tasks (18%).

Retail automation processes include:

• Returns: Processing returns has become a more important aspect of commerce, particularly due to the increasing number of online orders. Automation can manage every return, from database entry to reversing the customer billing, with little or even no input from human workers.
• Retail Workflows: Automation can be introduced into many human resources (HR) or management processes, such as work schedules, payroll, employee performance, and invoicing. In addition, retailers can automate reports on stock levels, inventory losses, and buying patterns of repeat customers, as well as automatically generate alerts for short shelf-life products that are nearing expiration.
• Store Planning: Retailers can implement automation to determine to which products customers are drawn and how store layouts can positively benefit CX and sales.
• Inventory Management: Retailers can set up automated replenishment of stock and automated delivery, as well as synchronize all of their sales channels into one system.

Factors driving retail automation include a tight labor market, rising wages, and reduced consumer spending. Robotic automation has already taken hold in store cleaning, warehouse management, supply chain logistics, food ordering, and grocery checkout.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

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