Retail Automation and the Future of Commerce: How to Prepare

By Alexandra Sheehan

Automation is widely touted for how much it saves time. But automation does so much more than help you accomplish tasks more quickly. In fact, its benefits go so deep that it touches virtually every part of your retail business. 

And retail automation is growing. In fact, the global retail automation market is expected to be worth more than $19.5 billion by 2024

Make no mistake: retail automation is the future of commerce. 

Below, let’s take a look at what retail automation is and tactics you can consider now and in the future for your own retail business. 

What is retail automation?

Automation is the concept and practice of using computers and technology to set up systems, processes, and workflows to work independently and without or with minimal human involvement. Automation uses technology like machine learning and artificial intelligence (AI) to execute tasks and predict future scenarios. Retail automation can mean a number of things, depending on who you ask. It could pertain to:

  • Automating manual retail processes: This includes things like inventory management, accounting and bookkeeping, analytics reporting, purchasing, and other similar and repetitive tasks. 
  • Automated commerce: Here, we’re talking about automatic purchases, subscriptions, recurring payments, and similar concepts. 
  • Marketing automation: Technology makes it possible to set and forget email sequences, retargeting campaigns, and other marketing tactics to constantly promote your business without overwhelming upkeep. 

Benefits of retail automation

Though retail automation requires time and budget, especially upfront, it pays off like an investment. After you’ve invested in your retail automation, your business and employees will reap the benefits — much like your bottom line. 

Increase accuracy

According to one survey, more than half of manufacturers still rely on pen and paper to track processes and workflows. This makes businesses vulnerable to unintended human error, which can lead to costly business decisions made based on bad data. In fact, one test found that computers could read lips 95% accurately compared to humans’ 52% accuracy. 

When you automate specific retail tasks, computers bring an extra layer of accuracy that humans simply can’t match. These benefits especially impact inventory management, analytics reporting, accounting and bookkeeping, and payroll

Reduce labor costs

Labor productivity in retail is on a gradual rise, and many retailers have automation and technology to thank. As time-consuming tasks are reallocated to computers, this means you need fewer staff hours to accomplish the same results. Symbolic is one example of a company that develops retail robots, effectively lowering labor costs by 80%.

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Though affected disproportionately, there’s not a single area unaffected. According to one McKinsey & Company analysis, automation is expected to impact all areas of merchandising, for instance. 

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It’s important to note, though, that automation isn’t the decline of jobs. Per Fair Workweek, 62% of workers think IoT and retail automation will actually create new job opportunities.

Free up time

While you lower labor costs, you’re also freeing up time. Per McKinsey & Company, about half of current tasks could be automated. Another assessment determined that if a typical grocery store leveraged all the automation options available, they could operate with up to 55%–65% fewer hours. 

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In 2017, Target made a $7 billion investment dedicated to renovating and leveling up its retail stores. Part of that investment went into automating monotonous tasks.

Automated cash counters allowed associates to spend more time on the floor, assisting customers and building relationships. And in cases where automation isn’t necessarily replacing human intervention, it helps accomplish those manual tasks with more efficiency. 

Impress customers

Greater efficiency creates a more seamless backend experience, which translates into the customer experience as well. There are a number of ways where this comes into play, including: 

  • Preventing stockouts, which means you always have what shoppers need
  • Inventory visibility, allowing both online and in-store shoppers real-time insight into product availability
  • Personalized, data-driven communications, offers, and promotions
  • Fast order fulfillment, shipping, pickup, and/or delivery 

Protect your business

Fraud is a real threat for every retailer. In fact, it’s the top concern for most retailers. To protect your business, you can use technology and automation as an extra layer of security. You’d be joining the 70% of merchants who have machine-learning analytics high on their priorities for fraud mitigation.

Computers can flag what appears to be risky or fraudulent activity. This might happen in a credit card transaction, for example. 

Incorporating automation into your retail biz

Businesses are expected to increase technology spend by more than 50% between 2015 and 2030, and automation is undoubtedly a large part of that. 

Retail automation has been around for a little while now, so that means there are much pretty much infinite options to consider for your business. It all comes down to determining your unique goals and mapping your needs back to those goals. 

Self-checkout 

Self-checkout is one of the most straightforward and common uses of retail automation. And consumers love it. Two-thirds of shoppers want self-serve options, according to one survey, with most believing it will improve the customer experience.

Amazon Go is a commonly cited example, one of the first retail stores that went “cashierless.” Essentially, shoppers can walk in and out, while retail automation handles scanning, pricing, and payment processing. They’ve also placed self-serve Amazon Hub Lockers in more than 900 cities worldwide.

Even the car-buying experience has gone self-serve, with Carvana’s vending machines. And self-checkout kiosks are finding their way to stores that aren’t necessarily grocers as fashion apparel brands like Zara and Rebecca Minkoff test out the technology. 

In-store robots

Robots are also finding a place in stores, stocking shelves, assisting customers, and monitoring theft. One analysis anticipates more than 150,000 in-store robots by 2025. 

Walmart has as many as 1,000 stores using robots to scan shelves and alert staff of low stock, as well as packing orders to speed up the fulfillment process for online orders. 

Especially important in a COVID-19 economy, automated robots are also handling cleaning and sanitization as well as curbside pickup. Broad Branch Market in Washington D.C. has employed robots as delivery “drivers,” getting purchases to local customers during social distancing and lockdowns. Save Mart has done the same for curbside pickups at its flagship store in Modesto, CA. 

Inventory management

Automated inventory management is another big umbrella term, as it can mean a number of things: 

Vend Tip


Need to automate tedious inventory magagement tasks? Vend offers several tools to help you stay on top of tasks like stock orders and receiving, inventory counts, reporting, and more.

Learn More

Warehousing

According to one analysis, 61% of warehouses are expected to combine manual labor and automation in warehousing by 2024. And more than a quarter are expected to go fully automated. Many believe an appropriate balance between manual tasks and automated retail systems result in an equally balanced team and workload. 

And while you can use robots a la Walmart to help fulfill orders, there are many other areas you can automate. Some robots can help you optimize warehouse space and ensure no inch is wasted, freeing up space for new inventory or reducing holding costs along the way. 

You don’t need robots, either. Automated Put Walls, for example, makes it easier to pick, pack, and sort. Two to three workers can fulfill 2,400 items per hour when using the technology, while traditional put walls might need 10 times the amount of labor—and space.

You can also automate backroom unloading, barcode scanning and data collection, equipment maintenance and upkeep, and employee management, among others. 

Retail marketing

Retail marketing and automation come together in a number of ways, but it all boils down to saving time and improving the effectiveness of your campaigns. You can automate a number of things in marketing: 

  • Abandoned cart emails and retargeted ads
  • Email receipts
  • Personalized product recommendations
  • Customer retention campaigns

Many marketing automation platforms like Marsello make it easy to tailor and automate communications based on customer behavior and preferences. It’ll ping customers after they haven’t made a purchase in so long to keep you top of mind, as well as offer personalized promotions and perks for regular shoppers. 

Fashion retailer OnceWas automates email sequences to engage different customer segments. Marsello automatically groups customers and sends communications and promotions based on their behaviors. 

Related: 8 Retail Advertising and Marketing Tips That Can Drive Traffic and Sales >

Hiring and recruiting

Hiring and recruiting in retail are equally important and challenging. It’s important to find top talent, but retailers face many challenges — time being a big one. It takes a lot of time to find the perfect candidate, and busy professionals don’t always have that time. 

Here’s a mini case study about retail automation in hiring and recruiting: 

“One retailer we know, for example, designed an app-based hiring tool to streamline the recruitment of store associates. At the start of the project, the recruiting process was difficult. Each candidate would provide almost 50 documents and visit the company’s offices up to five times; end-to-end, the whole thing took an average of 45 days. To make matters worse, about 40% of the associates hired left within six months. To solve these problems, the company established an agile, cross-functional working team, which created minimum viable products in just ten weeks: for candidates, a mobile-app tool to help browse jobs and apply for them; for HR managers, a web-based tool to screen and identify potential hires. Now implemented in more than 1,000 stores, the solution has not only reduced hiring time by more than 80% and store administrative hours by 20% but also improved the quality of new hires through the application of advanced analytics to applications.” 

These perks come in especially handy during a busy period like the holidays, when you need to hire seasonal staff who can help you weather the spike in demand.

Here are some more resources to help you get your hiring and recruiting processes down pat, finding ways automation can help: 

Prepare now for the future of retail automation

While you might not be ready to invest in a fleet of robots, there are accessible ways to leverage retail automation now — as well as set yourself up for bigger and more advanced opportunities in the future. In every business decision, it’s important to consider not only what’s happening and what you need right now, but also to lay the groundwork for where you want to be in the future.

There are lots of retail automation products available to retailers, and it can feel overwhelming to narrow down your choices. When it comes to choosing the best tools for your business, look for options that can grow with you. Advanced features and third-party integrations, even if not on your radar now, should be important considerations in your search. 

When it comes to choosing a POS with powerful automation features, Vend POS has everything you need. Our software streamlines manual processes for merchants so you can focus more on your business. And our integration with Marsello also helps with marketing automation so you can build a loyal base of customers and brand advocates. 

Conclusion

Retail automation is here now and it’s shaping the future of commerce. It’s empowering small businesses with the technology they need to build amazing customer experiences and compete on a larger scale. Set yourself up with the right tools and strategies now to help you take advantage of business growth and technology advancements in the future.

About Francesca Nicasio

Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.