Why Automation is the way forward for The Retail Industry?

In the retail space, dependency on human interaction is a significant source of costs. Retailers intend on cutting costs as much as they can as profit margins in the retail industry are minimal. Profit margins in the retail sector essentially depend on the number of sales rather than a high-profit margin per product sale. The pressure to maintain profit margins is high in the current business environment. Competition is increasing at an unprecedented scale & the spurt of the match brought by the e-commerce industry’s upswing growth curve is driving old-school retailers to adapt and cut costs expeditiously.?

The Coronavirus pandemic has already hit the industry hard, and due to that, the demand for an increase in wages has risen. Businesses face the difficulty of retaining talent and mounting attrition rates. While these cost pressures may not be a novel change in the market, many retailers have already expended their available options at cost reduction. Hence, many retailers are looking towards automation solutions to cut these costs and ease out the business activities associated with retailing.

But what does Automation mean for businesses in the retail industry?

Simply put, Automation is a term for setting any object on a system that essentially serves as an autopilot for that object’s activities. Any specific parameters are set, and that data serves as a base to determine which specific action should occur. Hence, meeting certain criteria kickstarts the systems and tools will implement the next steps.?

Retail Automation utilizes technology to reduce human labor for tasks that require repetition. Automation saves time and money as the demand for human work involved in completing such repetitive tasks can be minimizes through automation. The only costs involved in automation are an investment in the installation of the system and the collection of data required for the process, which has to be subjected to automation. After inputting the data, the automation software handles the task completely with minimal human involvement.

Companies have realized that tech and retail have to go hand-in-hand to maximize profits. The rising cost to benefit ratio motivates several companies to switch to automation systems. For retail companies involved in high-volume customer interaction and related transactions, the design of Point of Sale is a good automation tool to have. The Point of Sale system, also known as POS, is when a customer completes payment for products or services at a retail store. Simply put, every completed transaction by a customer signifies the completion of a POS transaction.?

The newer versions of the POS software take care of multiple business facets like credit card processing, contactless payment options, eCommerce integration capabilities, and more.

For security and tracking, various automated surveillance tools have also come to the fore in the market. Retail businesses have the opportunity to cut human labor costs in the aspect of surveillance by utilizing automated surveillance systems.

There are various ways in which Automation is already penetrating the retail industry. Amazon utilizes autonomous trucks and forklifts in its supply chain management to cut delivery costs, leading to profit maximization. There are talks of introducing Blockchain-based systems that can record transactions in the entire supply chain of a retail business. It can help such retail businesses reduce fraud and have impeccable, lucid, and systematic data regarding the company.

Some retail businesses like Adidas are also heavily investing in virtualization for product sampling to generate virtual products that may be customized enough to fit a customer’s needs. A future where a retail customer receives a 3D printed shoe based on AI-backed analysis of the customer’s needs and physical standards is not reasonably distant. Such innovations can improve customer experience and reduce the human labor costs involved in maintaining a store.?

The degree of Automation required fluctuates tremendously according to the markets, product categories, and the scale of implementation. Retail businesses that have Consumer Packaged Goods as the primary genre of products have had to bring Automation in their operations as the potential for cost reduction by Automation is the highest, and profit margins are the lowest at such places.?

For example, P&G has incorporated automated workflows in their operations, which directly minimizes exceptions and executes end-to-end planning. Another example of Automation can be seen at Target, the second-largest discount store retailer in the USA. Target has created automated fulfillment systems that enable the staff to get accurate time information about the stocks for several stores simultaneously from their workstations, which help them plan for restocking effectively.

Another tech that can help in the Automation of various retail business tasks is the Internet of Things, commonly known as IoT. The Internet of Things is a system of physical objects with sensors, software, and other associated technologies incorporated into them. The use of IoT in the retail industry is connected to GPS and RFID technologies that help brands track products through the supply chain process. It gives retailers the visibility they require to monitor product movement conditions, track location, and predict a precise delivery time.

Hence, it is evident that utilizing automation tech is the way forward for the Retail Industry. Fascination and awareness regarding the benefits of AutomationAutomation in the retail sector are growing fast. A lot of companies are jumping onto the automation bandwagon. Retail companies that have started incorporating Automation in their business processes have realized that the sooner its potential is measured, the sooner the levels of services will get improved and standardized. Automation shall help people use their skills efficiently with technology, making cost-cutting attainable.?

Ref Books?

Retail Automation Market - 2021 edition?

The secret life of groceries - Benjamin Lorr?

Remarkable Retail - Steven Dennis?