Retail margin pressure is ever-mounting due to increasing competition, the meteoric rise of e-commerce, and rising wage demands. Thus, the most successful retailers of the decade have evidently looked to stay ahead by improving customer experience and internal efficiency. Just look at Amazon Go.
Where many retailers have jumped on the self-service checkout trend, Amazon leapt ahead of the automation game with their brick and mortar play; a convenience store that uses computer vision, deep learning algorithms and sensor fusion to completely remove the need for a checkout system, which was rather replaced by the Amazon Go app.
While numerous kinks need to be ironed out, the stores prove the possibility of the complete removal of staff from a brick and mortar store with the help of automation. Combining this with electronic shelf labels, self-checkout terminals, shelf-scanning robots, and partially automated backroom unloading, a physical store can reduce costs by 55%-65% according to McKinsey.
In store automation is on the rise, but will likely soon take a back seat to merchandising automation.
“The winners of the sector will be those who understand [the implications of automation] and act quickly to address them” (McKinsey)
McKinsey suggests, “automatable activities account for approximately 30 to 40 percent of the time of merchants”. Their extensive report lists numerous opportune areas through which retailers can access the benefits of merchandising automation.
The merchandiser’s role differs between organisations, but for the most part involves the holistic management of product appearance and supply in pursuit of long term sales increases.
Merchandise planning, accounting for roughly 20% of a merchandiser’s time, can be optimised through the automation of extensive historical analytics used to create accurate predictive scenarios that empower faster and better decision making for merchandisers.
In addition, predictive impact analytics have the capacity to significantly increase revenue through targeted and personalized promotions. An Oracle Retail spokesperson explains they have, “seen more than a $75 million increase in revenue at a medium-sized retailer turning over between 500 million and a billion dollars, just by optimizing targeted offers at the point of pickup”. Oracle Retail is often touted as a leading enterprise resource planning solution for realizing the benefits of automation. Other areas within merchandising that strive to widen margins and enhance sales include macro space optimization, inventory allocation and invoice matching.
It's difficult to estimate the value automation will have in merchandising specifically as of yet, but if anything is a surety, it’s that retailers are beginning to realise the possible benefits of merchandising automation, and it is those companies that appear to be forging a new age of retail.